Revenue from unapproved claims in the financial statements of Polish construction companies listed on the Warsaw Stock Exchange

Abstract

Purpose: A contractor’s claims for increased remuneration frequently occur in construction projects. Despite their uncertainty and risk of estimating future cash inflows, accounting standards allow them to be recognized as revenues. The purpose of the arti-cle is to present the conditions for recognizing them as revenues and to propose a checklist of required disclosures. Against this background, the article evaluates the sufficiency of disclosures of Polish construction companies.Methodology/approach: The analysis of the professional literature and accounting regulations, especially IFRS 15 „Revenues from Contracts with Customers”. The empirical research concentrated on yearly financial statements of 27 Polish construction companies listed on the Warsaw Stock Exchange.Findings: The research showed that recognition of revenues from not yet approved claims requires significant disclosure. Polish construction companies do not present enough necessary information about such revenues or their impact on their financial statements. The vast majority of companies do not disclose any information. Those companies that do disclose such information do not always present the full scope of required disclosures, and the data presented are difficult to compare as their scope and where they are placed in the notes are not uniform.Originality/value: The paper complements the scientific achievements in the financial reporting of companies that conduct longterm construction contracts. It proposes a checklist of required disclosures about revenues from not yet approved claims. It identi-fies a lack of required disclosure of Polish construction companies.

Keywords

• long-term contracts
• financial reporting
• revenues
• claims
• construction