Home  Journals  Economic Analysis: Theory and Practice  46(445) - 2015 December

Going concern in financial statements and accounting policy: forecasting the economic and social impact

Vol. 14, Iss. 46, DECEMBER 2015

Article PDF Version

Received: 1 July 2015

Received in revised form: 23 August 2015

Accepted: 28 September 2015

Available online: 16 December 2015

Subject Heading: BUSINESS PERFORMANCE

JEL Classification: 

Pages: 44-55

Subject The article addresses the problem of forecasting the economic and social implications of the going concern assumption in financial statements and accounting policies of organizations.
     Objectives The study aims to perform a comprehensive analysis of the impact of significant accounting policies formed on the basis of the going concern principle on the decisions of financial statement users, and on honoring the interests of public significance.
     Methods We applied general scientific methods, namely, analysis and synthesis, induction and deduction, comparison, and economic and statistical methods.
     Results The article formulates economic and social implications of implementing the going concern principle when building the accounting policy based on systematization of interests of users of financial statements; determines the structure of information required for interested users to draw conclusions about the company’s ability to continue as a going concern. On the case study of financial statements of companies, we highlight important indicators needed to justify the degree of disclosure of significant provisions of accounting policies subject to their impact on business continuity.
     Conclusions Forecasting the economic and social implications of implementing the going concern principle should draw on the integrated methodological approach that includes the prediction of consequences of non-compliance with the going concern principle and the degree of realization of the principle in accounting policies of the organization. This approach enables to create an information base to disclose facts enhancing the validity of conclusions and decisions of users regarding the prospects of economic entities’ operations.

Keywords: accounting, going concern, financial statements, uncertainty, mathematical modeling

References:

1. Maksimova G.V., Yakimova V.A. Kompleksnaya otsenka auditorskikh dokazatel'stv [A comprehensive assessment of audit evidence]. Baikal Research Journal, 2011, no. 6, pp. 9–15. (In Russ.) Available at: Link.
2. Shaposhnikov A.A., Ustinova Ya.I. Entropiya uchetnoi sistemy: vzglyad auditora [The accounting system’s entropy: an auditor's opinion]. Auditorskie vedomosti = Audit Journal, 2010, no. 3, pp. 3–7.
3. Ovchinnikova N.N. Potrebitel'skaya kooperatsiya: otsenka nepreryvnosti deyatel'nosti [Consumer cooperation: assessing the ability to continue as a going concern]. Auditorskie vedomosti = Audit Journal, 2009, no. 9, pp. 54–59.
4. Sorokina K.V. Integrirovannaya otchetnost' – novaya model' otchetnosti dlya biznesa [Integrated reporting as a new reporting model for business]. Korporativnaya finansovaya otchetnost'. Mezhdunarodnye standarty = Corporate Financial Statements. International Financial Reporting Standards, 2011, no. 7, pp. 88–94.
5. Maksimova G.V., Nechaev A.S. Problemy perekhoda Rossii na mezhdunarodnye standarty finansovoi otchetnosti [Problems related to Russia’s transition to International Financial Reporting Standards]. Izvestiya Irkutskoi gosudarstvennoi ekonomicheskoi akademii = Izvestiya of Irkutsk State Economics Academy, 2004, no. 1, pp. 22–25.
6. Shaposhnikov A.A., Ovchinnikova N.N. Finansovaya otchetnost' organizatsii: informatsiya o nepreryvnosti deyatel'nosti [Financial statements of companies: information about going concern]. Auditorskie vedomosti = Audit Journal, 2010, no. 2, pp. 83–89.
7. Sokolov Ya.V., Bychkova S.M. Dostovernost' i dobrosovestnost' sostavleniya bukhgalterskoi otchetnosti [Reliability and integrity of financial statements]. Bukhgalterskii uchet = Accounting, 1999, no. 12, pp. 87–90.
8. Sokolov Ya.V., Bychkova S.M. Printsip postoyanno deistvuyushchego predpriyatiya [The principle of a permanent establishment]. Bukhgalterskii uchet = Accounting, 2001, no. 4, pp. 56–59.
9. Sokolov Ya.V., Bychkova S.M. Printsip nepreryvnosti deyatel'nosti organizatsii [Going concern]. Auditor, 2006, no. 5, pp. 32–37.
10. Pyatov M.L. Pol'zovateli bukhgalterskoi informatsii i ikh interesy [Users of accounting information and their interests]. Bukhgalterskii uchet = Accounting, 2008, no. 13, pp. 34–39.
11. Amanzholova B.A., Ovchinnikova N.N. Nepreryvnost' deyatel'nosti potrebitel'skikh kooperativov: teoreticheskie i metodicheskie osnovy otsenki [Going concern of consumer cooperatives: a theoretical and methodological framework for assessment]. Audit i finansovyi analiz = Audit and Financial Analysis, 2013, no. 2, pp. 320–328.
12. Shalanov N.V. Matematicheskie metody i modeli v sinergetike [Mathematical methods and models in synergy]. Novosibirsk, NHI Publ., 2006, 259 p.
13. Shalanov N.V. Sistemnyi analiz. Kibernetika. Sinergetika: matematicheskie metody i modeli. Ekonomicheskie aspekty [Systems analysis. Cybernetics. Synergy: mathematical methods and models. Economic aspects]. Novosibirsk, NSTU Publ., 2008, 288 p.
14. Amanzholova B.A., Naumova A.V. Ekonomiko-matematicheskoe modelirovanie v otsenke sistem vnutrennego kontrolya [Combination of economic and mathematical methods to assess internal control systems]. Audit i finansovyi analiz = Audit and Financial Analysis, 2008, no. 1, pp. 151–157.

View all articles of issue

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

Journal current issue

Vol. 23, Iss. 3 March 2024

Archive