On qualitative characteristics of financial reporting
Journal Title: Visnyk Ternopilskoho natsionalnoho ekonomichnoho universytetu - Year 2017, Vol 3, Issue
Abstract
The article generalizes the role of accounting and reporting in information provision for enterprise activities. It is claimed that, on the one hand, financial reporting provides a guide in identifying accounting items, accounting nomenclatures, and information flows of synthetic and analytical accounting. On the other hand, a balance sheet and other reporting items are used to complete the reporting process, and afterwards on the basis of detailed accounting data a number of summarized indicators are calculated for different users of information. Special emphasis is given to the fact that with advancing computer and telecommunication technology it is becoming easier to achieve the required timeliness and completeness of accounting and reporting data. Thus, the focus should be on ensuring a high level of accounting and reporting information. The paper reveals some essential qualitative characteristics of reporting information targeted towards consumers and necessary for decision-making. The latter, the focus on using information for making decisions, is exactly what reporting should be primarily aimed at. A number of essential qualitative characteristics and limitations of usefulness of reporting information for management are comparatively assessed. These characteristics include relevance which comprises timeliness, necessity, and feedback as well as reliability of information: verification, representational faithfulness and independence. Comparability of reporting information is singled out among matching qualitative characteristics. In addition to qualitative characteristics, one should pay due attention to limitations related to comparison of benefits and costs of information, significant restrictions in response to the prudence concept (conservatism), and accept threshold (materiality). Other qualitative characteristics proposed by different authors are also analyzed. The article also highlights important approaches to improving the quality of reporting information in order to fully meet the needs of different groups of users, harmonize national and international regulations for generating key performance indicators in financial reporting, and attract foreign investment to Ukraine’s economy. The current issues of accounting and financial reporting in accordance with national and international standards are considered. A comparative assessment of qualitative characteristics is carried out in fulfilment of the international regulations (The Conceptual Basis of Financial Reporting) and National Accounting Standards of Ukraine. Some proposals on harmonization of national and international standards for the formation of financial reporting are put forward.
Authors and Affiliations
Yaroslav Krupka, Mariia Muzyka
Keywords
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