Reikningssamhengi

Reikningssamhengi, a term originating from Icelandic, directly translates to "accounting consistency." It refers to the principle that an organization should apply the same accounting methods and principles from one accounting period to the next. This consistency is crucial for ensuring that financial statements are comparable over time, allowing stakeholders to accurately analyze trends and performance.

The core idea behind reikningssamhengi is to prevent arbitrary changes in accounting practices that could distort a company's financial picture. For example, if a company changes its inventory valuation method from FIFO (First-In, First-Out) to LIFO (Last-In, First-Out) without a valid reason, it could make profits appear higher or lower than they actually are, hindering meaningful comparisons with previous periods.

While consistency is paramount, reikningssamhengi does allow for changes in accounting methods under specific circumstances. These typically include situations where the new method provides more reliable and relevant information, or when required by a new accounting standard. However, any such change must be disclosed in the financial statements, along with an explanation of why the change was made and its impact on the financial figures. This transparency ensures that users of the financial statements are aware of any deviations from past practices. Ultimately, reikningssamhengi is a fundamental tenet of sound financial reporting, fostering trust and enabling informed decision-making.