Czechia: How to account for and valuate security-print valuables

The latest International Guideline by the National Accounting Board provides helpful guidance when it comes to the accounting treatment and valuation of security-print valuable documents, including the matter of how to post certificates without a par value, what valuables may be converted to Czech currency, and how to account for them in the company’s books

The latest Interpretation Guideline issued by the National Accounting Board (Národní účetní rada – NÚR) this year bears the title “Reporting and valuation of security-print valuable documents”. In it, the Board provides guidance how to post such valuables, and at what value if no par value is printed on them, and which of them may be revalued in Czech crowns as at balance date. Generally speaking, companies are accustomed to accounting for security-print valuable documents as “cash on hand”. However, this particular group of accounts is only proper for those security-print valuables which
– are easily and quickly (i.e., as a rule, within three months) exchanged for a predetermined amount of cash; or
– can directly be used as a means of payment to purchase goods and services of an unspecified nature.
This category of security-print valuables includes e.g. tobacco revenue stamps, or a meal voucher (if received and accepted by a company as a means of payment with the prospect of being able to exchange it for cash).

Other valuables or instruments cannot be properly considered a “security-print valuable document” (cenina), and the NÚR in fact refers to them in the Interpretation Guideline as “voucher” or “certificate”. These include e.g. postage stamps, flight tickets, bus and train tickets, pre-paid phone cards, or meal vouchers used by the company as a benefit for its employees. Such vouchers should be accounted for:
– by the issuer: as sales of pre-paid services, goods, taxes, or fees;
– by the distributor (who bought the certificate for resale): as goods;
– by the end customer: as pre-paid services, goods, taxes or fees received from the issuer.

Another difference between a cenina proper and a voucher lies in the valuation. The former are valuated at their nominal value. Vouchers are valuated differently: the issuer valuates them at own cost, whereas the distributor and the end customer valuate them at the acquisition price. The acquisition price is also the correct valuation for vouchers on which no par value (nominal value) in valid currency is stated, because a different unit is used (for instance, Czech postage stamps are marked only with a letter of the alphabet). If the price for the services or goods for which such voucher was issued subsequently changes, then this is no reason to revaluate the voucher.

Security-print valuables that are accounted for in foreign currency shall be revaluated in Czech crowns as at balance date, but only if they have been accounted for as Cash on Hand (and thus carry an exchange rate risk). This is yet another reason why companies should carefully consider which security-print valuables to post to Cash on Hand, considering that they are obliged under the Accounting Act to keep their accounts such that they provide a true and fair picture of the company’s assets and liabilities, earning situation and financial standing.

NÚR – Interpretation Guideline I-49 Reporting and Valuation of Security-Print Valuable Documents
Accounting Act

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