Risk-based internal control of key business processes as a mechanism of economic agent's sustainable development

Subject. The article discusses theoretical and practical principles of internal control from the building stage to maintaining its effectiveness at a high level. Objectives. The aim is to examine various interpretations of internal control and internal control procedure concepts, detect difficulties of economic entities in developing, implementing, and managing the internal control, offer a model, enabling to systematize these processes through focusing on risk management of key business processes and harmonization of internal control procedures. Methods. The study rests on general methods of research, like logical analysis, generalization, grouping, and modeling. Statutory instruments in the sphere of financial and fiscal accounting and works by domestic authors serve as a theoretical framework for the study. Results. I analyze the internal control, considering the industry affiliation of economic actors. The interpretation of internal control concept is supplemented by a new element, i.e. ‘identification of key business processes’. The paper presents a matrix of internal control management, which is intended to mitigate risks inherent in key business processes. Conclusions. The said matrix may be used by any economic entity as a theoretical and methodological basis for building internal controls. The offered model and matrix enable to cover risk areas and mitigate significant risks, ensure the accuracy of financial reporting, and, as a result, sustainable development of economic entity.

APPROACH TO ASSESSING THE EFFICIENCY OF THE USE OF ENTERPRISES’ FIXED ASSETS

To date, there are a variety of indicators for assessing the effectiveness of the company's fixed assets, using which it is possible to obtain a comprehensive analysis of the key aspects of the use of resources, their structure, dynamics, degree of reproduction. At the same time, the nature of the use of fixed assets varies significantly depending on the industry affiliation or scale of activities, which dictates the need for adjustments to take into account all these factors. Most of the fixed assets used at Russian enterprises were acquired 12-20 years ago, which causes a decrease in the efficiency of their use. The low level of fund recovery, and its subsequent decline in the country as a whole, and especially in industry, suggests the need for in-depth analysis to find the impact of factors and their subsequent impact. When calculating performance indicators, efficiency indicators are used, which are reflected in the accounting statements, which do not reflect the total volume of products produced. The nature of equipment use is low by the degree of involvement in the production process. All of these factors together have a negative impact on the performance of the means of production. The article provides a possible option for using factor analysis methods, the use of which will allow for informed management decisions on the structure of equipment, its replacement, nature and intensity of use.

BALANCED SYSTEM OF INDICATORS AS A TOOL OF THE FORMATION OF THE CREATIVE POTENTIAL OF COMPANIES

The modern driver of the country’s economic development is the creative economy, which is considered by many scientists as a new model of the growth. Ukraine has not stayed away from the process of forming a creative economy. According to the rating of the Global Creativity of the Martin Prosperity Institute, Ukraine ranked 45th among 139 countries. Analysis of the content of the Global Index suggests that it is the high rating of the Talent Index (24 positions) that caused a fairly high Global Index. The reinforcing components of the High Talent Index are the number of the highly educated people and the share of creative workers. The Technology Index is quite high (43 positions). As for the Tolerance Index, Ukraine ranked 105th. The considered components of the indices allowed us to draw a conclusion about the existing unrealized and powerful reserves of Ukraine’s creativity. An important component of the formation of the creative economy of Ukraine is the creative industries. However, research has shown that the sources of creative potential are in non-creative industries. The basis of such sources is a human capital. It is important to find tools that will increase the creative potential of any business structure, regardless of its industry affiliation. However, research has shown that this problem has gone unnoticed by scientists. The article proves that such a tool is a balanced scorecard. The aim of the article is to analyze a balanced system of indicators in terms of their compliance with the requirements of the creative economy and to find sources for adapting this system to new requirements. The system is not only evaluative, but also serves as a means of the strategic management, as it allows you to direct the development strategy of the organization in the plane of specific strategic objectives and indicators. The advantages of the system are the ability to identify performance indicators to determine the main direction of the organization, and for individual units; use of feedback; bringing specific goals to each specific performer; motivation of employees of the enterprise depending on the results of the task; universality of application of the system. Analysis of the essence of a balanced scorecard allowed to identify sources of creativity for each of the four components of the system (financial, customer evaluation, business process efficiency, staff). The search for sources of system adaptation was carried out for BAKER TILLY Ukraine LLC. The company uses a balanced scorecard, which has its four main components and does not belong to the creative industries. As a result of the analysis of the company’s activity, the sources of increasing the creative potential were identified and the methods of their implementation were proposed. Keywords: creative economy, human capital, creative potential, balanced scorecard, sources of creativity. Formulas: 0; fig.: 0; tabl.: 2; bibl.: 15.

Assessing impact of determinants on enterprise value in producing and processing industries

The article is devoted to studying the evaluation of the determinant factors of the value of state-owned companies, which present the competitive and investment-attractive segment of the economy with high export potential. There are considered the applied aspects of the problem and the influence of financial and non-financial factors on the value of companies, such as: return on assets, return on equity, return on invested capital, leverage, earnings per share, dividends per share, company size, company age, share of fixed assets. The research hypothesis that the selected determinants are significant and affect the value of companies with state participation are examined. The analysis is based on data from public reports of Russian producing and processing companies. The sample includes the data for 2010-2019. Companies with state participation and industry affiliation were selected; a database of indicators of financial statements of selected companies was formed; the financial indicators-factors have been calculated; the relationship of factors with the resulting indicator is determined. It has been inferred that the determinants “earnings per share” and “net working capital” are statistically significant and have an impact on the enterprise value in the industry under study

Features of Formation of Multinational Work Teams in Modern International Companies

At the present time the role of management based on modern achievements of management theory and practice is constantly increasing. At the present stage of management development, one of the most promising directions is not only the improvement of personnel management, but also the development of practical models and management schemes that allow using individual propensities and qualities of the employee. Improving human resources management in international companies is becoming particularly important. These companies represent the basis of mechanism of modern global economy. International economic relations are constantly getting stronger which increases the need to foster international staff members within transnational corporations. At the same time most of such companies address these issues without any well-established models which would ensure positive results. The correct choice of human resources management strategy in an organization determines the company’s success in general. The article examined the experience of international companies in training personnel and creating multinational teams, defined the methods to systematize the work on the creation and development of multinational work teams in existing global companies regardless of the country and industry affiliation of such companies.

Signalling and Legitimacy Theories for Explaining Climate Information Disclosure by Russian Companies

This paper studies the factors influencing the level of climate-related disclosure by Russian companies. It has several distinctive features in comparison to previous works: 1) climate change disclosure by Russian companies is studied for the first time; 2) textual analysis is used to evaluate the level of disclosure, and a new Russian glossary on climate change is compiled; 3) a unique set of indicators is used to assess the impact of factors on climate change disclosure. Legitimacy and signalling theories are used to formulate the hypotheses. The sample consists of 47 Russian companies with the largest market capitalization. Their 235 annual and sustainability reports for 2015-2019 are analysed. Using regression analysis, we show that a company’s absolute amount of greenhouse gas emissions, size, industry affiliation, and CDPrating positively affect its level of disclosure about climate change. In contrast, state ownership and a high debt burden have a negative impact. At the same time, the newness of assets, capital expenditures, interest coverage and company growth opportunities have no effect on climate change disclosure. Empirical results have confirmed the applicability of legitimacy theory to the Russian market. The present study will provide investors and regulators with tools for predicting a company’s impact on climate based on its level of climate change disclosure.

Innovation intensity and skills in firms across five European countries

This study attempts to establish the importance of specific formally achieved higher skills for the innovation intensity in firms across a group of European countries. Innovation expenditures are calculated as the ratio to turnover and the main explanatory variable is the proportion of highly skilled employees (tertiary education in ICT-oriented or other fields). The analysis employs official data on innovation activities (Community Innovation Survey) in firms for the period 2004–2010, linked to registers on education and businesses as well as to the Structural Business Statistics including 34,000 observations. Estimation results show a strong significantly positive relationship between the innovation intensity and the proportion of highly ICT skilled employees. Higher skills outside the field of ICT are also important for the innovation activities. Control variables reveal that the innovation intensity significantly increases with joint national and EU funding while the role of firm age varies. The significant and negative link to firm size reveals a lack of advantages of scale, a finding possibly related to the use of a comprehensive measure of innovation activities. There are also indications that industry affiliation is essential for the innovation intensity.

PROJECTS IN THE SYSTEM OF BALANCED SOCIO-ECONOMIC DEVELOPMENT OF TERRITORIAL SYSTEMS

The article analyzes the structure and types of investment growth in the regions of the Volga Federal District of the Russian Federation. The unevenness of their dynamics was revealed, which is due to the focus of investments on solving various problems. The paper also examines the essence of projects as a tool for balanced socio-ecological and economic development of territorial systems. For this, from the entire set of projects, those are selected that are aimed at solving the corresponding target tasks. In terms of the degree of impact on the quality of the socio-economic space, the authors singled out system-forming projects that supplement and serve the territorial development. Their qualification features are shown: sequence and contribution to the development of the territory. It is proposed to establish the priority in the implementation of individual projects based on the degree of cost recovery, the impact on the leveling of existing imbalances, the creation of the necessary conditions for the development of specialization industries. The requirements for backbone projects are substantiated, taking into account their industry affiliation. The work proposes three types of backbone projects: increasing the potential of existing backbone enterprises, ensuring import substitution and providing for the production of fundamentally new types of goods and services. Taking into account the scientific potential of the Republic of Bashkortostan, one should expect the emergence of new backbone projects in the field of biotechnology, informatics, pharmacy, the production of herbicides and pesticides, the production of engines, vehicles and agricultural machines.

РОЛЬ ВИСТАВОК В УПРАВЛІННІ ІННОВАЦІЙНИМ РОЗВИТКОМ ПІДПРИЄМСТВ

The article provides insights into the role of exhibitions in managing innovative development of enterprises in various industries, with or without consideration of risks posed by the COVID crisis. Based on the results of previous research, the findings reveal that the process of innovation development management should involve management decisions made both on each of its structural elements separately and overall. An emphasis is put that the choice of company innovative development strategy and its market promotion strategy for products / services affect the significance and relevance of company exhibition participation as well as the need to plan the exhibition participation costs. The results of the survey of managers and executives in various sectors of the economy who participated in exhibitions during 2019-2020 demonstrate that these costs might also depend on the exhibition objectives and the formats perceived by managers within the overall plan of company innovative development management. The study discusses the major exhibition participation goals in the framework of implementing alternative strategies of enterprise innovative development along with providing evidence that exhibition participation is of the highest priority in case of implementing a novel strategy, and the lowest – in case of using a retro-innovation strategy. The case studies from the selected companies of consumer goods industries presented the goals and a brief description of the specifics of their participation in exhibitions in the process of managing their innovative development. The conclusion has verified that the exhibition participation priorities in the process of enterprise innovative development management vary significantly subject to industry affiliation and the selected strategy for innovative development as well as may result from various restrictions imposed by a pandemic, in particular. Apart from the above, the findings have identified the risks of exhibition activities during the COVID period and outlined anticipated trends of change in business decisions as to exhibition participation. It is argued that online exhibitions have proved a good alternative to traditional exhibitions activities, however they challenge the application of advanced digital technologies. The results of this study can be used to enhance enterprise innovative development management practices.

Principles for managing innovative activities of entities in Russia during the transition to the digital economy

Subject. Budgeting as a management technology is highly sought after by enterprises and groups of companies all over the globe regardless of their industry affiliation and scale of operations. The budgeting methodology is a dynamically developing field of scientific research; it provides tools enabling to solve urgent problems, namely those related to data bulk processing at the stage of planning and generation of budget versions. Objectives. The study aims to justify principles of data modeling in management accounting and budgeting; to develop data modeling tools aimed at achieving the objectives of an enterprise or a group of companies. Methods. In the study, I employ logical analysis methods and a systems approach. Results. The paper substantiates data modeling principles in management accounting and budgeting systems of enterprises and groups of companies. Based on the formulated principles, I developed data modeling tools for implementation in spreadsheets, special applications, and cloud-based technologies. Conclusions. Developing and elaborating the budgeting system of enterprises and groups of companies should be based on data modeling under the principles and approaches to their systematization and structuring formulated in the paper. The offered data modeling tools may be useful in the organization of management accounting and formation of a budget model on all automation platforms, as well as in Microsoft Excel, using Power Pivot and Power Query add-ins.