Home  Journals  Economic Analysis: Theory and Practice  38(389) - 2014 October

Improving internal controls over intangible assets in the conditions of innovation-driven economy

Available online: 12 October 2014

Subject Heading: AUDITING

JEL Classification: 

Pages: 42-48

In the conditions of innovation-driven economy, Russian companies need to implement a set of measures aimed at improving their operations to maintain competitiveness on the market and increase profitability. The availability of intangible assets as part of company resources increases the market value of enterprises, enhances their investment appeal, and ensures the protection of their rights. Nowadays researchers do not have a unanimous opinion on the definition and classification of intangibles. According to the author, intangible assets have two specific criteria: they do not have a material form and can provide economic benefits (generate income). Using a wide variety of methods, the author has analyzed the existing classification of intangibles, specified the concept and classification of intangible assets, and defined the most important tasks of their auditing. The author proposes using the international concepts to assess and improve the internal control of intangible assets. The article describes a methodological approach to internal control over effective use of intangible assets, i.e. control of efficiency, productivity and effectiveness of intangible assets usage in the operations of a company to achieve its objectives. Applying the methodological approach will enable to determine the degree of effectiveness of intangible assets usage in the innovation-driven activity of an enterprise. The author identifies the elements of internal control of intangible assets for their assessment by an external auditor: control environment; risk assessment process of a business entity; information system, including the associated business processes required for financial reporting; means of control; controls monitoring. The author concludes that an effective system of internal control over the use of intangible assets creates a positive image of a company and increases its cash flows.

Keywords: intangible assets, internal control, accounting, auditing, efficiency

References:

1. Bruking A. Intellektual'nyi kapital [Intellectual Capital: Core Asset for the Third Millennium]. St. Petersburg, Piter Publ., 2001, 288 p.
2. Kozyrev A.N., Makarov V.L. Otsenka stoimosti nematerial'nykh aktivov i intellektual'noi sobstvennosti [Valuation of intangible assets and intellectual property]. Moscow, RF Central Command of Armed Forces Publ., 2003, 398 p.
3. Sravnenie kontseptsii vnutrennego kontrolya [A comparison of the concepts of internal control]. Available at: Link. (In Russ.)
4. Shatrakov A.Yu., Parfenova M.Ya., Voropanova I.N. Dissimmetriya intellektual'nogo kapitala predpriyatiya [The dissymmetry of an enterprise’s intellectual capital]. Moscow, Ekonomika Publ., 2007, 174 p.
5. American Institute of CPAs. Available at: Link.
6. Committee of Sponsoring Organizations of the Treadway Commission. Available at: Link.
7. Guthrie J. The management, measuring and the reporting of intellectual capital. Journal of Intellectual Capital, 2001, vol. 2, no. 1, pp. 27–41.
8. The Measurement and Management of Intellectual Capital. IFAC, 1998.
9. Lönnqvist A., Mettänen P. Criteria of Sound Intellectual Capital Measures. Proceedings of the 2nd International Workshop on Performance Measurement. Hanover, June 6–7, 2002.
10. Roos G., Burgman R. The New Economy – A New Paradigm for Managing for Shareholder Value. Accenture, 2005.

View all articles of issue

ISSN 2311-8725 (Online)
ISSN 2073-039X (Print)

Journal current issue

Vol. 23, Iss. 3 March 2024

Archive