scholarly journals TO THE PROBLEM OF THE METHODOLOGICAL INCORRECTNESS OF THE SUBSTANCE OVER FORM PRINCIPLE IN MODERN ACCOUNTING IN THE INTERNATIONAL BUSINESS CONTEXT

2021 ◽  
Vol 5 (40) ◽  
pp. 145-155
Author(s):  
A. Semenets ◽  
O. Panfilov ◽  
Ye. Kuzkin ◽  
S. Kuznetsova ◽  
I. Hladii
Keyword(s):  
International Business ◽  
Financial Reporting ◽  
Real Life ◽  
Financial Statements ◽  
Jel Classification ◽  
Theory And Practice ◽  
Professional Judgment ◽  
Economic Activities ◽  
Normative Documents ◽  
Advantages And Disadvantages

Abstract. The article analyzes the historical process and factors contributing to the formation and development of the substance over form principle in both domestic and global accounting practice, its impact on doing business in specific countries and in international business. The organization and maintenance of accounting is based on a set of accounting principles that should ensure that economic events are properly accounted for and, as a result, converted into financial statements, which serve as a source of information for management decisions by various users of financial and economic information, international entities among them. Among these principles we can name the one of the substance over form. The philosophical basis for defining and applying the substance over form principle has been studied. It is discovered that the definition of the substance over form principle combines dialectically incompatible concepts. Namely, a set of internal, stable and defining links reflecting the main features and development trends of objects and processes (in this case, accounting and financial reporting in business transactions) prevails over the mode of existence and expression of meaning, organization and structure of accounting and financial statements. Such a combination of dialectically incompatible categories may lead to different interpretations of the substance of accounting records and, as a result, of the content of the financial statements. Cases of applying and using the substance over the form principle both in normative documents and in real-life accounting are considered. The main advantages and disadvantages of the application of the substance over form principle in the theory and practice of accounting while performing financial and economic activities and doing international business are analyzed. The research has shown that the application of the substance over form principle increases subjectivity in accounting and is largely determined by the qualifications of the accountant doing professional judgment and their moral and ethical qualities. The main causes of conflict situations while applying the substance over form principle are identified and ways to overcome the existing contradictions arising in the process of reflecting economic events in accounting between their legal (documentary) design and economic content are suggested. Keywords: methodology, principle, substance, content, form, accounting, international business, international relations. JEL Classification B41, M41, F23, F50 Formulas: 0; fig.: 0; tabl.: 1; bibl.: 25.

IFRS IMPLEMENTATION AS ONE OF THE FACTORS FOR IMPROVING THE INVESTMENT CLIMATE IN UKRAINE

2017 ◽  
Author(s):  
Kateryna Sova ◽  
◽  
Natalia Yatsenko ◽  
Denys Zagirniak ◽  
◽  
...  
Keyword(s):  
Financial Reporting ◽  
Direct Investment ◽  
Financial Statements ◽  
International Standards ◽  
Investment Climate ◽  
The European Union ◽  
Economic Activities ◽  
Financial Reporting Standards ◽  
Almost All ◽  
The Impact

The article is devoted to the study of the impact of the introduction of International Financial Reporting Standards (IFRS) on changes in the investment climate in Ukraine. The relevance of the topic is that improving the practice of applying IFRS as a tool for exchanging financial information is one of the key conditions for improving the investment climate in Ukraine. The authors have created the generalized scheme that illustrates the chronological list of enterprises that are required by law to prepare financial statements in accordance with IFRS. It was noted that in 2018, in accordance with Part 2 of Article 12 of the law on accounting and financial reporting in Ukraine and resolution of the Cabinet of Ministers of Ukraine No. 547 from 11.07.2018, the criteria of enterprises that are required to prepare financial statements in accordance with IFRS were updated. This step significantly increased the level of application of international standards due to the adoption of such a decision at the legislative level. The dynamics of the number of IFRS enterprises in Ukraine was analyzed. The analysis showed that over the past three years, the number of almost all enterprises that must apply international standards has been growing. The advantages of using IFRS for different users of financial statements were determined. It was determined that the priority users of IFRS financial statements are investors. At the same time, it was noted that the main advantage for other users of financial statements prepared in accordance with international standards is the improvement of the investment climate. The dynamics of the Investment Attractiveness Index of Ukraine based on the Likert scale in the period from 2016 to 2020 was analyzed. The direct investment receipts to Ukraine from the European Union countries were studied. The dynamics of direct investment in the Ukrainian economy was analyzed for two types of economic activities that should form financial statements in accordance with IFRS, namely, the extractive industry and quarrying, as well as financial and insurance activities.

scholarly journals Reliability of Financial Information from the Perspective of Benford’s Law

Entropy ◽  
2021 ◽  
Vol 23 (5) ◽  
pp. 557
Author(s):  
Ionel Jianu ◽  
Iulia Jianu
Keyword(s):  
Financial Reporting ◽  
Capital Market ◽  
Financial Statements ◽  
Financial Information ◽  
Benford’S Law ◽  
Professional Judgment ◽  
Reporting Standards ◽  
Financial Reporting Standards ◽  
Benford's Law ◽  
Before And After

This study investigates the conformity to Benford’s Law of the information disclosed in financial statements. Using the first digit test of Benford’s Law, the study analyses the reliability of financial information provided by listed companies on an emerging capital market before and after the implementation of International Financial Reporting Standards (IFRS). The results of the study confirm the increase of reliability on the information disclosed in the financial statements after IFRS implementation. The study contributes to the existing literature by bringing new insights into the types of financial information that do not comply with Benford’s Law such as the amounts determined by estimates or by applying professional judgment.

Approaches to the Organization of International Accounting in Russian Enterprises

TEM Journal ◽  
2021 ◽  
pp. 249-258
Author(s):  
Ekaterina V. Surkova ◽  
Galina A. Skachko ◽  
Larisa K. Nikandrova ◽  
Maria M. Starkova ◽  
Nina F. Sakharova
Keyword(s):  
Financial Reporting ◽  
Accounting Information ◽  
Financial Statements ◽  
Reporting Standards ◽  
Optimal Method ◽  
Accounting Standard ◽  
Financial Reporting Standards ◽  
Advantages And Disadvantages ◽  
The Individual ◽  
Selection Of

The article discusses current issues of transformation of accounting information in accordance with international financial reporting standards (IFRS). This study is primarily aimed at developing approaches that determine the need for Russian enterprises to provide accounting information comparable at the international level. The authors analyze methods of transferring data from the Russian Accounting Standard (RAS) to IFRS. The methods used to form financial statements in accordance with IFRS are discussed. The issues of the application of these methods, as well as their advantages and disadvantages, are discussed. The author's approach to the selection of the optimal method of transformation is proposed taking into account the individual needs of organizations.

scholarly journals Financial statements as the main source of information on the enterprise activity

2021 ◽  
Vol 11/1 (-) ◽  
pp. 27-30
Author(s):  
Nina OVSIUK ◽  
Zhanna SHALIIEVSKA ◽  
Kateryna HULKO
Keyword(s):  
Financial Reporting ◽  
Financial Statements ◽  
International Standards ◽  
Foreign Banks ◽  
Practical Implementation ◽  
Economic Activities ◽  
Management Decisions ◽  
Economic Relations ◽  
Intelligent Technology ◽  
Transparency And Disclosure

The essence of effective management of each business entity depends primarily on transparency and disclosure of information about its financial and economic activities. The financial report itself covers all important information about the state of the enterprise and provides an opportunity to obtain financial status with it by the interested user for further analysis and decision-making on further activities. As a rule, investors of creditors, state bodies, representatives who are preparing in construction with the business entity are interested in financial reporting. In order to provide more detailed and informative financial reporting to users, it is necessary to compile it with international standards, which act as tools for globalization of the economy and contribute to the development of global economic relations. During 2020–2021, the activities of enterprises took place in extremely difficult conditions, which is why the pandemic significantly affected the financial reporting indicators. Today, there is an appropriate use of intelligent technology and computer technology in the formation of financial statements. Financial statements based on taxonomies of financial statements for IFRS are prepared and presented in a single electronic format using Extensible Business Reporting Language (XBRL). XBRL is a generally accepted international standard for presenting financial statements in accordance with IFRS in electronic form. With the help of IFRS, Ukrainian companies have more effectively solved the following tasks: attracting investments and loans from the world's largest companies and banks, the ability to service financing from foreign banks and other organizations; placement of shares on international stock exchanges; providing the company's management with reliable information for making management decisions, as well as evaluating their adoption. Thus, today the economy of Ukraine depends on the choice of IFRS as a conceptual basis for accounting and its practical implementation. After all, the financial statements are fully open to internal and external users to make informed management decisions regarding cooperation with the relevant entity.

scholarly journals Relevance of financial reporting quality - Theory and practice in Vietnamese enterprises

2017 ◽  
Vol 1 (Q2) ◽  
pp. 119-128
Author(s):  
Thuan Quoc Pham
Keyword(s):  
Conceptual Framework ◽  
Financial Reporting ◽  
Accounting Standards ◽  
Reporting Quality ◽  
Professional Associations ◽  
Financial Statements ◽  
Theory And Practice ◽  
Financial Information ◽  
Financial Reporting Quality

Financial reporting quality is one the most interesting topics which draw a great deal of attention to researchers and scientists in the field of accounting (Céline Michailesco, 2010). In the review of research on financial information from 1980 to 2016, Pham (2016) found that characteristics of useful financial information are relatively diverse with as many as 15 attributes being identified. In addition, he also found that all research in any period has employed the characteristics published by professional associations such as American Institute of Accountants, Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB as theoretical basis. Research on the quality of financial information is diverse yet have many things in common, above all is the Relevance characteristic which considered to be the basic qualitative component of the quality of financial information in financial statements. Conceptual Framework officially issued by FASB & IASB in 2010 (FASB & IASB 2010) has further confirmed Relevance is the basic quality component of financial information. Compared with previous announcements, there has been a considerable change in the criteria and attributes used to evaluate the appropriateness of Relevance characteristic of financial information in financial statements. This study aims at confirming the importance of the Relevance component in evaluating the quality of financial information, clarifyingg the characteristics of Relevance measurement before and after Conceptual Framework 2010 and constructing relevant scales as well as measuring the qualitative characteristic of Relevance among enterprises in Vietnam.

scholarly journals Benefits of using Blockchain technology as an accounting auditing instrument

2021 ◽  
Vol 13 (1) ◽  
Author(s):  
Maervelym Pâmella de Andrade Simões ◽  
Janeide Albuquerque Cavalcanti ◽  
Janaina Ferreira Marques de Melo ◽  
Cristiane Queiroz Reis
Keyword(s):  
Financial Reporting ◽  
Financial Statements ◽  
Professional Judgment ◽  
International Literature ◽  
Audit Process ◽  
Blockchain Technology ◽  
Potential Benefits ◽  
Relationship Of ◽  
The Relationship ◽  
Selection Of

Purpose: Analyze the possible benefits of using Blockchain technology as a tool for accounting auditing. Methodology: In order to achieve the objective of this study, a theoretical essay was conducted through a selection of national and international literature on accounting auditing and the potential benefits of Blockchain technology, analyzing the relationship of these potential benefits with the procedures adopted by the accounting auditor. Results: Findings from the literature show that despite the complexities, Blockchain technology offers an opportunity to improve financial reporting and audit processes. Adoption of this technology may allow auditors to develop procedures to obtain audit evidence directly from Blockchains and to adapt procedures to reap its benefits, as well as address incremental risks and that while the audit process may become more continuous, auditors may They will still have to apply professional judgment in analyzing accounting estimates and other judgments made by management in preparing the financial statements. Contributions of the Study: It is believed that this work contributes to an active and continuous dialogue regarding the use of Blockchain in audit processes, as well as the knowledge of advantages that this technology offers to professionals, as well as arouse the interest of research on the use of Blockchain technology in accounting auditing.

scholarly journals On Evaluating Likely Misstatements in Financial Statements of Economic Entities

2019 ◽  
Vol 26 (7) ◽  
pp. 20-32
Author(s):  
M. A. Alekseev ◽  
V. V. Glinskiy ◽  
L. K. Serga ◽  
M. L. Pyatov
Keyword(s):  
Financial Reporting ◽  
A Priori ◽  
Financial Statements ◽  
Financial Ratios ◽  
Professional Judgment ◽  
Accounting Data ◽  
Registration Errors ◽  
Food And Beverage ◽  
User Groups ◽  
Normal Probability Distribution

The article presents and discusses the results of the research regarding the identification of the user groups of financial statements (internal and/or external). Possible misstatements of financial reporting are aimed at developing the ≪desired≫ behavior of these groups. The authors introduced the following theoretical, methodological, instrumental and informational constraints of the carried-out experiment: financial reporting was postulated as an open system of economic measurement; accounting ≪paradoxes≫, formulated and considered by Sokolov Ya.V., were used as the theoretical basis of the a priori probability of existence of inaccurate accounting data in the information space; the formation of learning samples and the general population was carried based on the reporting data on certain business activities. Concurrent fulfillment of these conditions ensured the correct application of the central limit theorem, resulting in a valid statistical conclusion. The ≪paradoxes≫ were divided into complementary pairs with their subsequent formalization through the relevant financial ratios. Actual series of the financial ratios’ distribution were compiled based on the existent populations. The significance of deviation of the obtained series from the normal probability distribution (Gaussian distribution) was estimated. The multimodality of series of the financial ratios distribution was identified and estimated, suggesting the possibility of the existence of intentional, systematic registration errors, and, as a result, presumable manipulation in accounting (financial) reporting. It was found that some economic entities knowingly tamper with financial results, effectively aggravating the ≪paradoxical≫ state. The directions of probable manipulation were revealed, making it possible to define the user groups, whose professional judgment and decisions are affected by the presumed misstatements. The SKRIN database (financial and accounting reporting of 10.0 thousand of food and beverage manufacturers) and government statistics were used as a basis for research; calculations were made using Statistica12 software.

scholarly journals Motivation for the use of creative accounting techniques in the conditions of the globalized business environment

2020 ◽  
Vol 74 ◽  
pp. 01004
Author(s):  
Aneta Cugova ◽  
Juraj Cug
Keyword(s):  
Financial Reporting ◽  
Financial Statements ◽  
Current Theory ◽  
Business Environment ◽  
Financial Accounting ◽  
Modern Concept ◽  
Fraudulent Financial Reporting ◽  
Advantages And Disadvantages ◽  
Business Results ◽  
Creative Accounting

Although creative accounting is a modern concept, the improvement of business results, their manipulation and fraud in accounting have been known long before its introduction. It is not easy to prepare the conditions for practicing creative accounting, however the current theory is full of knowledge, practices and techniques for its application. The company’s economic results are important especially for owners, investors, the state, banks or competitors. Most often, creative accounting is used to manipulate financial accounting to meet state requirements. Companies are trying to underestimate their economic result in order to minimize the tax liability. Various methods and procedures can be used for this purpose. The aim of the paper is to characterize the creative accounting and motivation that leads to the use of individual techniques of creative accounting, taking into account the specific conditions of the globalized business environment. The paper also presents the advantages and disadvantages of creative accounting. Creative accounting is the boundary between the alternative approaches allowed by legislation and fraudulent financial reporting. Businesses take advantage of weak control and therefore, they can easily hide handling of financial statements. On the other hand the application of creative accounting may be desirable and tolerated under certain circumstances and it can save the business from failure.

Conceptual principles: Contractual obligations and liabilities as items of financial reporting

2020 ◽  
Vol 23 (7) ◽  
pp. 726-741
Author(s):  
V.S. Plotnikov ◽  
S.S. Kanapinova
Keyword(s):  
Financial Reporting ◽  
Institutional Economics ◽  
Balance Sheet ◽  
Financial Statements ◽  
Theory And Practice ◽  
Integrated Reporting ◽  
Economic Resource ◽  
Accounting Practice ◽  
Business Operations ◽  
Contractual Obligations

Subject. The article provides a rationale for reporting obligations and liabilities in accounting records as economic phenomena of entity's business operations and items of financial reporting. Objectives. We explain how the substance of obligations and liabilities is defined in accounting, implying that the economic phenomena should be recognized in financial statements more completely. The study is to unveil the substance of obligations and liabilities so as to harmonize the regulatory and positive economy in the accounting process. We determine their purpose as part of accounts when they are aggregated into the balance sheet. Methods. We determined promising lines of the accounting theory and practice by analyzing the institutional economics, Conceptual Framework for the Financial Reporting, Integrated Reporting Concept that amplified the scope of accounting, since they recognize economic phenomena of business operations, such as obligations and liabilities. Results. Contractual obligations should be considered as a consequence of obligations that an entity has due to part events. The substance of the contractual obligations depend on the economic resource to be transferred in the future. Contractual obligations should be entered into accounting records and measured as of the signing date of the contract. The economic substance of the contractual obligations significantly differs from the accounting view of accounts receivable and payable. Conclusions and Relevance. We believe it is necessary and possible to develop the accounting practice by introducing new economic phenomena, such as obligations and liabilities. They help change the retrospective format of the information as new items get added.

scholarly journals Management Report as a Component of Nonfinancial Reporting in Ukraine: Theory and Practice of Drafting

2021 ◽  
Vol 12 (3) ◽  
pp. s054-s070
Author(s):  
Olena Petryk ◽  
Alla Basok ◽  
Tetiana Marenych ◽  
Natalia Yatsenko ◽  
Sergіy Kalinichenko
Keyword(s):  
Performance Measures ◽  
Financial Reporting ◽  
Financial Statements ◽  
Theory And Practice ◽  
The European Union ◽  
Regulatory Requirements ◽  
Legislative Framework ◽  
European Union Legislation ◽  
Management Report

The article covers the issue of compiling the Management Report. The need to implement a management report in Ukraine is caused by the processes of implementation of the European Union legislation on accounting in the national regulatory framework. The purpose of this report is to complement the annual financial statements with the necessary information, which should contain a reliable overview of development, activities and condition, as well as a description of the main risks and uncertainties in the work of an enterprise. This paper reviews the legislative framework for the preparation and publication of the Management Report and analyzes the Management Reports of domestic enterprises for compliance with regulatory requirements and the quality of these indicators. It has been defined that the lack of common normatively approved qualitative issues of the report and requirements for it are the significant problems. The format, scope, structure and accuracy of the information are determined at the discretion of an enterprise. The contained performance measures of enterprises significantly differ from each other and are not always given in comparison with the similar measures for the previous periods. Such presentation of data causes poor and uninformative reports. The results of the study prove that the Management Report should be based on the following principles: reliability and completeness, materiality, conciseness, integrity and comprehensibility; comparability of indicators. It is necessary to apply a risk-oriented approach and adhere the logic of presenting information with the elements of its visualization for its preparation. The study is based on the requirements of Directives 2013/34 / EU and 2014/95 / EU, the Law of Ukraine On Accounting and Financial Reporting in Ukraine, Methodological recommendations for the preparation of a management report, as well as empirical data obtained in the analysis of reports on management of Ukrainian enterprises.

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