FINANCIAL STATEMENT PLANNING IN THE PRESENCE OF TAX CONSTRAINTS

We present a mathematical model of financial statement planning in the case when there is a strong interdependence between taxation and the books. This is the case in Finnish accounting and taxation legislation , making the planning of the financial statements quite complicated fo r Finnish companies. We present a general model for the planning proce ss and use this model to describe different kinds of situations that c ompanies can find themselves in when developing their financial statem ents at the end of the year. We also shortly describe how this model i s implemented in an expert system for financial statement planning.