INCREASING INCIDENCE AND UNDERSTANDING OF THE FINANCIAL STATEMENTS OF THE IFRS
Abstract
The key aspects of improving the appropriateness and comprehensibility of financial statements prepared in accordance with International Financial Reporting Standards have been considered in this article. It has been determined that IFRS is currently the most promising accounting system in terms of global application, management and use by businesses in many developed countries. The financial statement accounting information provides tremendous business opportunities for economic decision making. In particular, the approaches to improving the structure and content of the main financial statements are analyzed. The trends of implementation of changes in the IFRS project “Financial Statements”, which include three main areas of improvement, are presented: the statement of cash flows; statement of financial performance; improving the disaggregation of items in the financial statements. The analysis of the area of interim results of the statement of financial results is carried out. The introduction of the category "investment income" is proposed. This category includes income and expenses from investments, from financial investments of associates and joint ventures. It is also proposed to introduce a pre-tax income that includes financial activities. This total excludes financial expenses (such as interest expense on loans or bonds) and tax. Approaches to improving the disaggregation of items in the financial statements have been identified. Many of the components of the income statement are now combined into “other income or expenses”. For many investors, the information grouped in these articles is not comparative, complicating analytical procedures for them. All this will be part of a better communication initiative. Therefore, improving the disaggregation of financial reporting items may increase the amount of information available to users. Proposed changes to the Cash Flow Statement include the elimination of classification options (interest / dividends). According to the results of the research, alternative ways of solving the issues of increasing the reliability and comprehensibility of the financial statements in the context of integration processes of information needs of users are proposed.
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