UDC: 657
Anastasia Khazaniuk,
student of economic faculty
direction 6.030509 “Accounting and audit”
Scientific supervisor: Yulia Kharchuk,
PhD in Economics, Associate Professor at the department of finance
ACCOUNTING OF FINANCIAL INVESTMENT OF THE ENTERPRISE UNDER NATIONAL AND INTERNATIONAL ACCOUNTING STANDARDS
The essence of financial investments of the enterprise is disclosed in the article, their classification is given. The problems of organization of accounting of investments and their harmonization with international accounting standards were investigated, recommendations were given on improving the organization of accounting of financial investments.
Key words: financial investments, financial asset, financial instruments, international accounting standards.
ОБЛІК ФІНАНСОВИХ ІНВЕСТИЦІЙ ПІДПРИЄМСТВА ЗГІДНО З НАЦІОНАЛЬНИМИ ТА МІЖНАРОДНИМИ СТАНДАРТАМИ БУХГАЛТЕРСЬКОГО ОБЛІКУ
У статті розкрито суть фінансових інвестицій підприємства, наведена їх класифікація. Досліджено проблеми організації обліку інвестицій та його гармонізація з міжнародними стандартами бухгалтерського обліку, надані рекомендації щодо вдосконалення організації обліку фінансових інвестицій.
Ключові слова: фінансові інвестиції, фінансовий актив, фінансові інструменти, міжнародні стандарти бухгалтерського обліку.
УЧЕТ ФИНАНСОВЫХ ИНВЕСТИЦИЙ ПРЕДПРИЯТИЯ В СООТВЕТСТВИИ С НАЦИОНАЛЬНЫМ И МЕЖДУНАРОДНЫМ СТАНДАРТАМ БУХГАЛТЕРСКОГО УЧЕТА
В статье раскрыта суть финансовых инвестиций, приведенная их классификация. Исследованы проблемы организации учета инвестиций и его гармонизация с международными стандартами бухгалтерского учета, даны рекомендации по усовершенствованию организации учета финансовых инвестиций.
Ключевые слова: финансовые инвестиции, финансовый актив, финансовые инструменты, международные стандарты бухгалтерского учета.
Formulation of the problem. Today, investment is an integral part of an entity’s business, as it allows an investor to increase its profits. At the same time, the demand for additional financial resources and the need for investment leads to the instability of the financial market. The effective management of investments depends on the flourishing or decay of the business entity and the achievement of a high competitive position. Therefore, the assessment of financial investments and the harmonization of their accounting with international financial reporting standards becomes of increasing importance.
At the current stage of economic development, reporting in accordance with international accounting standards is one of the important steps that open up the possibility for Ukrainian business entities to attract foreign capital, requiring transparency of financial information about companies’ activities and reporting to investors. As long as a foreign investor will not be able to trace and understand through the financial statements how the capital represented by them is used, Ukraine will remain an area of increased risk and, accordingly, lose to other countries in attracting financial resources from international markets.
Analysis
of recent research and publications. The research of the essence, classification, estimation
and accounting of financial investments is devoted to the scientific works of
such domestic scientists as Bondar M., Golov S., Kryvorot O., Nebyltsova O.,
Orlova V., Suk P., Shmorgun N. and others. However, further research will
require the development of proposals for the convergence of financial
investment accounting with the requirements of international financial
reporting standards.
The purpose and tasks of the study. The purpose of the study is to develop
recommendations for the harmonization of accounting of financial investments of
the enterprise with international financial reporting standards by generalizing
theoretical and practical aspects of selected topics.
In order to achieve this goal, the following tasks should be performed: to define the purpose of the organization of accounting of financial investments; to reveal the essence of the concept of “financial investment”; consider their classification; to investigate the synthetic accounting of financial investments in an enterprise; to analyze the organization of accounting of financial investments according to national and international standards and to determine the possibilities of their harmonization.
Main
material presentation. Under conditions of
insufficient level of state support for business, destabilization of the
national banking sector, and a decrease in the efficiency of domestic
enterprises, there is a significant increase in the need for additional
capital, the most optimal in terms of terms of attraction and value of which is
the use of financial investment instruments, that is, the attraction or
placement of investments in securities through their acquisition in the process
of issue or circulation.
V. Sdrenyk, the purpose of accounting for financial investments at the
enterprise considers the provision of objective assessment, timely registration
and full display of operations related to financial investments in the
accounting registers, generalization of information on such transactions in the
reporting in order to provide information needs interested parties [5].
According to O. Levchenko, the purpose of accounting for
financial investments is to ensure an objective assessment, timely registration
and full display of operations related to financial investments in the
accounting registers, the possibility of generalizing information on such
transactions in the reporting in order to provide information needs
stakeholders, as well as with the procedure for their internal audit and
analysis in order to enable the growth of the efficiency of the investment
activity of the enterprise [7].
The purpose of accounting financial investments is reduced to the following
provisions:
- ensuring timely registration of accounting transactions related to financial investments and generalization of information about an object in the registers of financial and managerial accounting;
- determination of the application of measures for internal and external control to prevent the occurrence of distortions in the accounting information about financial investments;
- providing interested users with true, complete, prompt and understandable information on the flow of financial investments and their value;
- Continuous improvement and revision of the accounting traditions of the company in terms of accounting for financial investments to increase investment attractiveness and ensure profitability [4].
In the general sense, financial investment is the placement of free funds in securities in order to transform funds into highly liquid securities, save asset value, generate profits, establish control over the issuer, and so on.
The methodological principles for the formation of financial information about financial information disclosure in Ukraine and its disclosure in Ukraine’s financial statements are regulated by National Provision of Accounting Standard 1 “General requirements for financial reporting”, Provisions of Accounting Standard 12 “Financial investments”, Provisions of Accounting Standard 13 “Financial Instruments”, Provisions of Accounting Standard 19 “Association of Enterprises», Provisions of Accounting Standard 20 “Consolidated Financial Statements”, as well as the Instruction on the application of the Account of Accounts of Assets, Capital, Commitments and Business Operations of Enterprises and Organizations. However, accounting for financial investments is regulated by International Accounting Standard 39 Financial Instruments: Recognition and Measurement and International Accounting Standard 28 Investments in Associates.
According to Provisions of Accounting Standard 13, financial investments are assets held by the enterprise in order to increase profits (interest, dividends, etc.), increase in the cost of capital or other benefits to the investor [16].
However, there is no single approach to the interpretation of this concept. Therefore, there is a need to systematize the scientific views of the definition of “financial investment” (Table 1)
Table 1
Interpretation of the essence of the concept of «Financial investments of the enterprise»
Source: developed by the author on [1, 2, 3, 9, 11, 13, 18]
Thus, in our opinion, it is advisable to formulate such a definition of the category of “financial investment” as investing in financial assets of business entities, as well as the acquisition of a stake in another enterprise.
In accordance with International Accounting Standard 39 Financial Instruments: Recognition and Measurement, financial assets are:
- cash and cash equivalents;
- a contract that gives the right to receive cash or another financial asset from another enterprise;
- a contract that gives the right to exchange financial instruments with another enterprise on potentially favorable terms;
- equity instrument of another enterprise [15].
Financial instruments that are objects of financial investment are divided into:
- the main ones – shares, bonds of internal and external states, bonds of local loans, bonds of enterprises, bills of exchange, treasury obligations of the state, investment certificates;
- derivatives – forward (futures) contacts, options (variants); depositary receipts (certificates).
For the efficiency of accounting for financial investments, they need to be classified. The division of financial investments into subspecies is presented in fig. 1.
Fig. 1. Classification of financial investments in accounting
Source: developed by the author on the basis of [8]
When organizing the accounting of financial investments of enterprises, it is important to allocate them to Financial Investments initially evaluated and reflected in accounting at cost. The cost of a financial investment consists of the price of its acquisition, commission fees, duties, taxes, fees, compulsory payments and other costs directly related to the acquisition of financial investment [14].
To summarize information on financial investments, the following accounts are used:
- 14 «Long-term financial investments»:
- 141 «Investments to related parties by the method of accounting for participation in equity»;
- 142 «Other investments to related parties»;
- 143 «Investments to unrelated parties»;
- 35 «Current Financial Investments»:
- 351 «Equivalents of cash»;
- 352 «Other Current Financial Investments».
Analyzing domestic and international approaches to accounting for financial investments, one can conclude that there are some differences between them (Table 3), which consist of different regulation and financial reporting. Although Provisions of Accounting Standard is not primarily contrary to International Accounting Standard, since Provisions of Accounting Standard is developed taking into account international requirements for the procedure for compiling and submitting the financial statements set out in International Accounting Standard.
Table 2
Comparative characteristics of the accounting of financial investments in accordance with Provisions of Accounting Standard and International Accounting Standard
Source: developed by the author on the basis of [17].
The disclosure of information about financial investments in Ukraine’s financial statements in Ukraine is mainly theoretically informational (the list of enterprises, the size of their share in capital, the basis for determining the fair value of financial investments, etc.).
Comparing the accounting for financial investments for Provisions of Accounting Standard 12 and International Accounting Standard 28, one can conclude that there is a problem such as determining the initial value of financial investments, which are valued using the equity method. Such financial investments should be valued at cost.
Also, in Provisions of Accounting Standard 12 it is expedient to extend cases when the use of the equity method is impracticable as defined in International Accounting Standard 28. In such cases, it is necessary to include the following:
- the investor is a wholly-owned subsidiary, or is a subsidiary that is partly owned by another entity, and its other owners, including those not otherwise entitled to vote, were informed that the investor does not apply the equity method;
- long-term debt instruments or equity instruments of the investor are not sold or purchased on the open market;
- the investor has not registered and is not in the process of registering his financial statements with the securities commission or other regulatory organization in order to issue any class of instruments to the open market [6].
The accounting standards for investment operations are international and unified. However, when implementing International Accounting Standard and Provisions of Accounting Standard, it is important to take into account the important fact that the interpretation of international standards is very different in different countries. The reasons for this are the differences in the political and economic environment in which business is conducted, different accounting practices, and the fact that investment activities are carried out under uncertainty. At the same time, the problems of lack of or inconsistency of the regulatory and legal framework are profound; the absence of an active market for a significant number of financial instruments; the harmonization of the fiscal policy of the state of tax reporting and accounting, which is based on Provisions of Accounting Standard. In domestic practice, the construction or acquisition of non-current assets for own needs of the enterprise is considered capital investment, and investments in other entities – financial. Consequently, this is one of the most important features that distinguishes national accounting standards from international investment, which should be evaluated positively [10].
Conclusions. Thus, the deepening of Ukraine’s entry into the world economic space necessitates the harmonization of national accounting standards in accordance with international standards. This is due to the improvement of the accounting system, one of the determining elements of which is the accounting of financial investments.
Today, there are some differences between national and international requirements for determining the nature, valuation, and correctness of accounting for financial investments, therefore, there is a need for approximation of the regulatory framework of Ukrainian accounting to international law. The suggestions indicated in the study will allow Ukrainian enterprises to increase the trust of foreign investors by increasing the transparency and reliability of financial reporting.
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