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ИД «Финансы и кредит»






International Accounting

Del credere reserve as a decrease factor in the financial risks of the organization

Vol. 18, Iss. 29, AUGUST 2015

Received: 11 August 2015

Accepted: 31 August 2015

Available online: 6 October 2015


JEL Classification: 

Pages: 19-28

Kulikova L.I. Kazan Federal University, Kazan, Republic of Tatarstan, Russian Federation

Yakhin I.I. Kazan Federal University, Kazan, Republic of Tatarstan, Russian Federation

Importance Forming provisions for doubtful debts and del credere reserve is one of the issues the contemporary accounting practice tackles. Currently, the effective Russian legislative acts and regulations on accounting fail to stipulate specific methods for accruing the said reserve. The article presents a historical overview of the del credere reserve concept, its origination and the process of forming and using this reserve in modern accounting practices.
     Objectives The research analyzes historical experience as views on the del credere reserve and devises a method for forming and using this reserve so to improve the contemporary theory and practice of accounting.
     Methods The methodological underpinning of the research includes proceedings by renowned Russian and foreign scholars in accounting who lived in the early 20th century. The reliability of findings we obtained was proved with the logic use of such methods as analysis, synthesis, observation, comparison, and logic generalization.
     Results Following the research, we propose a method for assessing the provision for doubtful debts, which would allow implementing the principle of mitigating financial risks of the entity. We also recommend a tailor-made approach to forming the del credere reserve per each item of doubtful debt. It is necessary to analyze reasons why counterparties delay in repayment of accounts receivable, and prepare internal statistical reports on timeliness of debt repayment. We present our method for assessing the reliability of counterparties on the basis of the past experience with debtors and suggest classifying counterparties per the reliability level and consolidating them into four risk groups. It is practicable for internal control over debtors, and disclosure of accounts receivable in financial statements.
     Conclusions and Relevance The provision for doubtful debt should be formed upon evaluation of the current corporate position and expected future economic benefits from repayment of accounts receivable.

Keywords: reserves, doubtful debt, formation, use, accounting, risk


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ISSN 2311-9381 (Online)
ISSN 2073-5081 (Print)

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