TRANSPARENT REPORTING IS A KEY TO INTEGRATION INTO GLOBAL COMMUNITY
A.B. Omasheva, Ph.D. in Economics, Assistant Professor of Accounting, Audit and Analysis
Department, L.N. Gumilyov Eurasian National University, Astana, Kazakhstan Zerek97@mail.ru
Z.Turgynbek, L.N. Gumilyov Eurasian National University, Astana, Kazakhstan
Reforming of accounting in the financial system made it possible to provide transparency,
accuracy and completeness of analyzed information in financial statements which is effectively applied to
get maximum economic benefit. Besides, current developments in accounting increased transparency of
economy significantly which had already become the demand of the times. Now, transparency of
economy is judged not only by a share of exports in gross national product and other statistical factors but
also by the availability of data on the economy to everyone who needs it, and data transparency and
reliability. Presentation of financial statements subject to the IFRS requirements allows Kazakhstan’s
Public Interest Entities competing within international economy. It should be mentioned that forming a
quality accounting system that meets international standards depends both from government regulation
and organizations.
Progressive managers shall be interested in education and advanced training of its employees,
preparation of accounting policies that conform to international standards, and assuring compliance of
prepared financial statements to IFRS. Successful solution of the points in question will have a
straightforward effect on index of competitiveness of companies and our economy on the whole, and will
consequently lead to its overall development.
Today financial sector in the state achieved tremendous success in implementation of IFRS of
which unqualified opinion of IFRS-compliant statements by Big Four audit companies are indicative;
however, successful completion of reforming in accounting is feasible only when each accountant
professionally learns conceptual framework for IFRS, and managers are definitely interested in delivery
of unbiased and true information.
Active incorporation of our country into international community means that efforts to accounting
globalization are rising sharply throughout the world and in this country in particular. From the beginning
of the 21st century, harmonization of national accounting systems is being interchanged by convergence
which can be understood as a codevelopment of international and national standards by the countries that
harmonized their accounting systems based upon unified principles.
It is known that a number of critical comments were addressed to accounting. Totally, their
essence can be formulated as follows:
- unsuitability of accounting information for managerial decision making; - annual financial
reporting is drawn behind the schedule for several months from the date to which its data is presented;
- information specifying financial and operating activities of an enterprise in virtue of their
inevitable conditionality (depreciation, reservation, diffuseness of capitalization principles) falsify
financial statements;
- application of various methodologic methods results in correlation impossibility of accounting
data with accountancy data of other enterprises; this makes accounting data unsuitable for
macroeconomic calculations;
- all financial results obtained under an existing accounting methodology have a conditional
character to a great extent. This is due to the fact that the choice of methodology defined by accounting
policy of administration predetermines the amount of gain/loss of an enterprise; and as accounting
philosophy affects financial results, upon analysis a method of calculation is quite important, not the
value of indicated profit;
- accountants’ blind following of corporate and personal interests leads to their suppression of a
lot of important facts;
- commercial activities are often followed by corruption which leads frequently to
misrepresentation of financial reporting and makes its data unreliable. Across the globe claims against
accountants, who are accused of direct corruption or its non-disclosure, are brought with increasing
frequency.
Understanding this criticism ultimately influences development of bookkeeping science,
bookkeeping practice, the profession and people in it.
Single accounting has split into financial and managerial accounting. Therefrom accounting for
small enterprises was singled out and tax accounting was formally declared. Financial analysis was
formed into a separate concept, separate discipline markedly earlier. More and more recent trends of
accounting thought that form various types occurred in financial accounting. The role of external, internal
and government auditing is rising.
One of the reasons for occurrence of so many types of accounting and audit is the fact that a lot of
traditional accounting users appeared under a free market economy; and different users need different
information for different purposes.
At present, social role of people in accounting profession is quite high. The role was gained by
good performance of thousands of professionals, both scholars and practisers. But this would not have
given the results if accountants and auditors had not united into professional organizations. The purpose
of these organizations is discussion of the latest conceptual and practical challenges in accounting,
auditing and analysis, and determining prospects for the development in the age of economic
globalization and deepening of integration processes in the Eurasian Region and amid the global financial
crisis.
Active incorporation of our country into international community means that efforts to accounting
globalization are rising sharply throughout the world and in this country in particular.
Accounting policy as consistent with international standards means specific principles,
fundamentals, conditions, practices and procedures adopted by a company for preparation and
presentation of financial statements.
Their objective advantages are as follows:
- crisp economic logic;
- generalization of the best up-to-date world practice in accounting;
- overall simplicity for users of financial information around the world.
At this, international standards allow reducing company expenses on preparation of the
statements especially in the context of consolidation of financial statements of enterprises operating from
different countries; and reduce capital raising costs. Set of various advantages in many ways ensure the
urge of different countries to use IFRS in national accounting practice.
Overall, international financial reporting standards are generalization of best practices of
maintenance and preparation of accounting records. In Kazakhstan, international standards are a
milestone for transformation of the existing bookkeeping and accounting. Let us consider fundamental
provisions contained in international financial reporting standards.
The system of international financial reporting standards (IFRS) was created for unifying
accounting principles and methods used by companies in multiple countries for financial reporting. Since
the statements are prepared and presented to external users, there are differences in various countries in
contents, forming and presentation of indices that define operating results. The reason for this is special
conditions of ‘environment’ among which there are social, economic, political and legal conditions [1].
International Financial Reporting Standards were created and are being advanced to draw up
statements that could be perceived and understood adequately by users from multiple countries. They
should bring together the formation rules, preparation procedure and representation of information about
any company activity.
In fact, IFRS is the most effective way of increasing information transparency and
comprehensibility that companies disclose about their activity, creation of reliable basis for recognition of
income and expenses, valuation of assets and liabilities; it makes an opportunity for disclosure of existing
financial risks in the reporting enterprise, comparison of their performance results in order to provide
adequate valuation of available potential and appropriate managerial decision making. In addition, IFRS
fundamentally promotes the opportunities for management in corporate governance and provides
significant benefits before competitors. Companies that comply with IFRS have considerably more
chances to attract additional capital sources and partners who might help provide their economic growth
and prosperity. In turn, companies that apply IFRS gain access to information on financial condition of
their potential partners, and additional tooling that allow advancing the choice occurs [1].
As regards practical realization of IFRS implementation provisions in Kazakhstan, it should be
mentioned that in the last decade significant work had been done under these provisions.
Reforming of accounting in the financial system made it possible to provide transparency,
accuracy and completeness of analyzed information in financial statements which is effectively applied to
get maximum economic benefit. Besides, current developments in accounting increased transparency of
economy significantly which had already become the demand of the times. Now, transparency of
economy is judged not only by a share of exports in gross national product and other statistical factors but
also by the availability of data on the economy to everyone who needs it, and data transparency and
reliability.
Thus, accountants themselves are interested in International Financial Reporting Standards most
of all; and they should spare no pains to study and perfect their skills in IFRS. It is them who are in a
measure responsible for our integration into a world community.
REFERENCES
1. David Alexander, Anne Britton, Ann Jorissen. International Financial Reporting and Analysis. From
Theory to Practice. Moscow: Vershina; 2011;
2. A. Gershun. Trends in International Financial Reporting Standards. Financial Press. Regional Issue 2013.
No. 35.