The countries of central and eastern Europe - Albania, Bulgaria, Hungary, Poland, Romania and the states formerly incorporated into Czechoslovakia, the USSR and Yugoslavia - are in the course of a socio-economic transformation. As a consequence of repudiating the former socialist regimes in the period 1989- 91, an attempt is being made to transform command economies into market economies and to integrate with western Europe. The prospect of economic transformation has made the consideration and implementation of accounting reform inevitable.

In the command economy, accounting was subordinated to the need for centralized direction of economic activities. Its integration into the centralized economic administration was achieved through the implementation of a comprehensive and obligatory standardized accounting system. The purpose of accounting became the routinized accumulation of data for the compilation of periodical accounting reports, or returns, for the central authorities. There was no public disclosure of accounting information.

In the 1990s, the formerly communist-ruled countries of central and eastern Europe began to adopt the accounting practices of the advanced industrial economies through the introduction of new accounting legislation, reform of accounting education and training programmes, and the creation of new accounting institutions. However, the requirements of the central authorities for accounting data tend still to predominate over those of participants (such as creditors and investors) in market activities. Both the nature and rate of accounting reform varies significantly among these countries.