The principles of preparation and preparation of financial statements are. Fundamental principles for the preparation and presentation of financial statements. Predominance of essence over form

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Principles for the preparation and presentation of financial statements

1. Purpose and scope of the principles

The Principles for the preparation and presentation of financial statements were approved and published in 1989. The Principles define the fundamental provisions for the preparation and presentation of financial statements for external users. They are designed to:

1) assist the IASB in the development of future and revision of existing IFRS, in promoting the harmonization of rules, accounting standards and procedures related to the presentation of financial statements, by providing a framework for reducing the number of alternative approaches to accounting interpretation;

2) assist national standardization bodies in the development of national standards;

3) assist preparers of financial statements in applying IFRS;

4) assist auditors in forming an opinion on the compliance or non-compliance of financial statements with IFRS;

5) assist users of financial statements prepared in accordance with IFRS in interpreting the information contained therein.

2. Users of financial statements and their information needs

General purpose financial statements are intended for a wide range of users. The Principles define groups of users of financial statements, as well as their information needs.

1. Investors venture capital investors and their advisors are concerned about the risk and return associated with investments. They need information to help them decide whether to buy, hold or sell securities. Shareholders are also interested in information that allows them to assess the company's ability to pay dividends. It is on the interests of this group that international reporting is oriented.

2. Employees and their representative groups are interested in information about the stability and profitability of their employers, as well as information that allows them to assess the ability of their company to provide wages, pensions, employment. Employees are not indifferent to information about the attitude of management to the participation of employees in decision-making, about working conditions in general, and career prospects.

3. Lenders are interested in information that allows them to determine whether the loan and the interest due will be paid on time.

4. Suppliers and other trade creditors are interested in information that enables them to determine whether the debt to them will be repaid on time. Trade lenders will be interested in companies for a shorter period of time than lenders, unless they depend on the continued operation of the company as a major buyer.

5. Buyers are interested in information about the stability of the company, especially when they have a long-term relationship with it or depend on it.

6. Governments and their bodies interested in the allocation of resources and thus in the activities of companies.

7. Public interested in information about trends and recent changes in the company's wealth and the range of its activities. At the local level, companies and society work together to address employment, environmental, health and safety issues. This category of users is interested in information that may be non-financial.

3. Underlying assumptions in the financial statements

The underlying assumptions in the financial statements are accrual accounting and going concern.

1. accrual accounting . In order to meet these objectives, financial statements are prepared on an accrual basis. Under this method, the results of transactions and other events are recognized as they occur (rather than when cash or cash equivalents are received or paid). They are reflected in the accounting records and included in the financial statements of the periods to which they relate. Accrual financial reporting informs users not only about past transactions related to the payment and receipt of cash, but also about obligations to pay money in the future, and about resources representing cash that will be received in the future. Thus, they provide information about past transactions and other events that will be important to users in making economic decisions.

2. Business continuity . The financial statements are usually prepared on the assumption that the company is and will continue to be in operation for the foreseeable future. Thus, it is assumed that the company is not going to liquidate, does not need liquidation or a significant reduction in the scale of its activities; if such an intention or need exists, the financial statements must be prepared on a different basis and the basis used must be disclosed.

4. Qualitative characteristics of financial reporting information

Qualitative characteristics are attributes that make the information presented in financial statements useful to users. The four main qualitative characteristics are understandability, relevance, reliability and comparability.

1. Clarity. The main quality of the information presented in the financial statements is its availability for understanding by the user. It is assumed that for this, users must have sufficient knowledge in the field of business and economic activity, accounting and a desire to study the information with due diligence. However, information about complex matters that must be reflected in the financial statements because of their importance to users in making economic decisions should not be excluded simply because they may be too difficult for certain users to understand. financial reporting informational monetary

2. Relevance. To be useful, information must be relevant to decision makers. Information is relevant when it influences the economic decisions of users by helping them evaluate past, present and future events, confirm or correct their past estimates. The relevance of information is greatly influenced by its nature and materiality. The modern definition of materiality is given in IAS 1 Presentation of Financial Statements.

3. Reliability. Information is reliable when it is free from material error and misstatement and when users can rely on it to faithfully represent what it is either supposed to represent or reasonably expected to represent.

4. Comparability. Users should be able to compare a company's financial statements for different periods in order to identify trends in its financial position and performance. Users should also be able to compare the financial statements of different companies in order to assess their relative financial position, performance and changes in financial position. Thus, the measurement and reflection of financial results from similar transactions and other events should be carried out according to a methodology that is uniform for the entire company and throughout its existence, as well as for different companies.

5. Elements of financial statements

Financial statements reflect the financial results of transactions and other events by grouping them into broad categories according to their economic characteristics. These broad categories are called financial report elements ness.

The elements directly related to the measurement of financial position in the balance sheet are assets, liabilities and equity.

Assets are resources controlled by the company as a result of past events from which the company expects economic benefits in the future.

Commitment is the company's current debt arising from past events, the settlement of which will result in an outflow from the company of resources embodying economic benefits.

Capital is the percentage of the company's assets remaining after deducting all liabilities.

The elements directly related to the performance measurements in the income statement are income and expenses.

Income - is an increase in economic benefits during the reporting period, occurring in the form of an inflow or increase in assets, or a decrease in liabilities, which is expressed in an increase in capital that is not associated with contributions from equity participants.

Expenses - is a decrease in economic benefits during the reporting period, occurring in the form of a disposal or decrease in assets or an increase in liabilities, leading to a decrease in capital, not related to its distribution among shareholders.

6. Rating eelementovfinancial reporting

Grade - this is the process of determining the monetary values in which the elements of the financial statements should be recognized and reflected in the balance sheet and income statement. This requires the selection of a particular evaluation method. A number of different methods are used in financial reporting to varying degrees and in various combinations, including those listed below.

1. Actual acquisition cost(it is historical or original). Assets are accounted for at the amount of cash or their equivalents paid for them or at the fair value of the consideration when they are acquired (in exchange transactions). Liabilities are measured at the amount of proceeds received in exchange for a debt obligation or, in some cases, such as income tax, at the amounts of cash or cash equivalents expected to be paid in the normal course of business.

2. Current (replacement) cost. Assets are carried at the amount of cash or cash equivalents that would have to be paid to acquire the same or similar assets on a current basis. Liabilities are carried at the undiscounted amount of cash or cash equivalents that would be required to settle the obligation at the present time.

3. Possible cost of sale (execution). Assets are carried at the amount of cash or cash equivalents that would currently be realized from the sale of the asset under normal circumstances. Liabilities are carried at settlement cost, which is the undiscounted amount of cash or cash equivalents that would be expected to be spent to settle the obligation in the normal course of business.

4. Discounted value. Assets are carried at the present value of the future net cash inflows that are expected to be generated by the asset in the normal course of business. Liabilities are carried at the present value of the future net outflow of cash that is expected to be required to settle the obligation in the normal course of business.

More often than not, companies use actual cost as the basis of measurement. It is usually used in combination with other assessment methods. For example, inventories are typically valued at the lower of cost and net realizable value, while pension liabilities are valued at their present value. Moreover, in order to account for the impact of price changes on non-monetary assets, companies often use the current (replacement) cost method of accounting.

Currently, the main trend in international accounting and financial reporting is the transition to measuring items at fair value. The concept of fair value is not considered in the Principles, the essence of this assessment is disclosed directly in separate standards (ISBU 16 “Fixed assets”, IAS 38 “Intangible assets”, IAS 40 “Investment property”, etc.). In Russian accounting, the concept of fair value is not yet used.

Fair value is the amount of money for which knowledgeable, willing, independent parties agree to exchange an asset.

In order to be able to determine fair value in practice, information about transactions with a similar asset is required, which would ensure that the following conditions are met:

The transaction is made between independent (unrelated) parties;

The parties are well aware of the terms of the transaction and the average market terms of transactions with similar assets;

The deal is not forced.

For transaction prices to be indicative of fair value, information about them must be available and public. All of the above conditions are met in the presence of an active market, transactions in which occur quite often, without coercion, and the parties involved are independent of each other. Market price is the best indicator of fair value. In a broader sense, fair value is market value, provided that a market is understood to mean not only an active, but also an inactive primary or secondary market, in which transactions are not carried out regularly, but at the same time the conditions for recognizing fair value are met.

Literature

1. Alexander D. International financial reporting standards: from theory to practice: Per. from English. / D. Alexander, A. Britton, E. Jorissen. - M. : Vershina, 2005. - 758 p.

2. Babaev Yu. A. International Financial Reporting Standards: textbook / Yu. A. Babaev, A. M. Petrov. - M. : TK Velby, Prospect, 2008. - 352

3. Vakhrushina M. A. International accounting and financial reporting standards: textbook. allowance / M. A. Vakhrushina, L. A. Melnikova, N. S. Plaskova; ed. M. A. Vakhrushina. - M.: Vuzovsky textbook, 2007. - 320

4. Vakhrushina M. A. International financial reporting standards: methods of transformation of Russian reporting: textbook / M. A. Vakhrushina, L. A. Melnikova. - M. : Omega-L, 2009. - 571 p.

5. Getman VG On the conceptual basis of international financial reporting standards / VG Getman // International accounting. - 2007. - No. 12. - S. 4 - 9.

6. Getman VG On the issue of international standardization of financial reporting of companies and audit / VG Getman // International accounting. - 2009. - No. 3. - S. 26 - 31.

7. Getman VG International standardization of accounting and financial reporting in small enterprises / VG Getman // International accounting. - 2009. - No. 5. - S. 2 - 10.

8. Grüning H. van. International Financial Reporting Standards: A Practical Guide / H. van Grüning. - M.: All world, 2006. - 344 p.

9. Dmitrieva O. G. International financial reporting standards in management / O. G. Dmitrieva, A. I. Leussky, T. N. Malkova. - M.: Higher education, 2007. - 277 p.

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International Financial Reporting Standards are based on such fundamental reporting principles as: 1)

information quality requirements; 2)

principles of information accounting (reflection of information in accounting); 3)

elements of financial reporting.

Requirements for the quality of information determine the characteristics that the information generated in the financial accounting system and presented in the financial statements should have.

These qualities are primarily due to the need to meet the needs of external users of financial statements.

The principles of information accounting determine the rules in accordance with which information should be reflected in the financial accounting system.

The elements of financial statements are the main parts of financial statements - classes of items that have the same economic characteristics and are grouped accordingly in the financial accounting system and in financial statements.

Information quality requirements can be classified as follows: 1)

utility; 2)

relevance (timeliness, materiality, value (for forecasting, for evaluating results)); 3)

reliability, reliability (truthfulness, the predominance of content over form, the possibility of verification, neutrality); 4)

understandability; 5)

comparability and stability.

The usefulness of information is the ability to use it to make informed economic decisions for users. For information to be useful, it must be relevant, reliable (reliable), understandable and comparable.

The relevance of information is its ability to influence the economic decisions of users, helping them evaluate the results obtained and predict future events. Information is considered relevant if it is timely, relevant, and valuable for forecasting and evaluating results. Timeliness of information means that all material information is included in the financial statements in a timely manner, without delay for clarification of non-material details, and such financial statements are presented on time. The materiality of the information is essential to ensure relevance. Material is considered information, the absence or incorrect assessment of which leads to other decisions of users. Materiality can be described both quantitatively and qualitatively. The value of information for users of financial statements is due to the possibility of using it to evaluate performance and predict future development trends of the enterprise.

The reliability of information is expressed in the absence of significant errors or biased estimates and truthfully reflecting economic activity. To do this, the information must have truthfulness, the predominance of economic content over the legal form, the possibility of verification and neutrality. Truthful information means that the financial statements truthfully reflect economic reality. The predominance of economic content over the legal form provides for the reflection of information in terms of the economic essence of the transaction, and not its legal form, which may suggest a different interpretation.

Long-term lease of property, plant and equipment under a financial lease, where the ownership of property, plant and equipment remains with the lessor (legal form) and the property, plant and equipment is recorded as an asset of the lessee (economic content), since all the benefits from their use are consumed by the lessor.

Auditability implies that the assessment of the information contained in the financial statements, carried out by different experts, should lead to the same results.

The neutrality of information means that it does not contain biased assessments, i.e. impartial in relation to different groups of users and is not aimed at obtaining a predetermined result.

The information should be understandable to different groups of users, have unambiguity, clarity and lack of excessive detail. This does not mean that complex information should not be disclosed in financial statements, but it does assume a certain level of knowledge among users of financial statements.

Comparability of information implies the possibility of comparing financial statements in time (for several periods) and in space (with the statements of other enterprises). Comparability of reporting over time is achieved by the stability of the accounting methods used, but this does not mean that the enterprise is obliged to constantly use the same methods. If the operating conditions change, the methods can be changed (otherwise the information will not have a reliability characteristic), however, when the methods change, it is necessary to reflect the causes and results of such changes in the reporting.

All qualitative characteristics of information determine its usefulness to users of financial statements. Their mutual combination determines the professionalism of an accountant, since situations arise when these characteristics contradict each other. Information is sometimes subject to a cost-benefit constraint, meaning that the benefits of certain information must be greater than the costs of obtaining it.

The principles of reflecting information in the financial accounting system can be grouped as follows: 1)

the principle of double entry; 2)

the principle of the unit of account; 3)

the principle of periodicity; 4)

the principle of continuing activity; 5)

the principle of monetary value; 6)

accrual principle (principle of income registration, compliance principle); 7)

the principle of discretion.

The principle of double entry suggests the use of double entry in accounting and financial reporting.

Accounting entries can be simple (one debit and one credit) or complex (multiple debits and multiple credits), but the total debit amount must be equal to the total credit amount. This method is the specifics of financial accounting.

The unit of account principle means that, for accounting purposes, an enterprise is separated from its owners (owners) and from other enterprises. It is also called the principle of economic or economic unit. The separation of the enterprise from the owners and from other enterprises allows you to correctly take into account the results of its activities.

For sole proprietorships, using this principle means separating the operations of the owner from those of the enterprise.

Withdrawal by the owner of funds from the cash desk is not an expense of the enterprise, but is a withdrawal of the owner. For corporations, the separation of owners from the activities of the enterprise is obvious: shareholders, financing the activity, do not have the opportunity to manage it. This situation leads to the fact that shareholders bear the greatest risks and are more interested than other users in the information reflected in the financial statements.

The principle of periodicity causes regular reporting. The economic activity of the enterprise is a continuous process, and in order to evaluate its results, it is necessary to artificially fix the moment in time (reporting date) when the financial condition of the enterprise will be recorded. For the period between two reporting dates (reporting period), you can determine the change in financial condition, having received the result of the enterprise's activities for the reporting period. The main reporting period is the year; The reporting date can be any calendar day of the year.

The going concern principle is that the financial statements are prepared on the assumption that the entity will continue in operation for the foreseeable future, i.e. it has neither the intention nor the need to stop its activities. Based on this principle, certain rules for evaluating reporting items and using historical cost are developed.

The principle of monetary valuation is that all information in the financial statements is valued in terms of money. Various estimates are used in international practice. The following options for such assessments can be distinguished: 1)

initial cost - the amount of money spent on the acquisition of an asset; 2)

replacement cost or current cost - the amount of cash that must be paid at the moment to acquire (replace) this asset; 3)

market value or realizable value - the amount of cash that can be received from the sale of an asset at the moment; 4)

net realizable value - the amount of cash that can be realistically received from the sale of an asset at the moment, less costs to sell; 5)

present value - the present value of future cash flows; 6)

Fair value is the price at which assets could be exchanged between two independent parties.

The accrual principle provides that income and expenses should be reflected in the reporting period when they arose, and not when money was paid or received. The need for this principle is due to the frequency of financial reporting. Sometimes this principle is divided into two components: the principle of income registration and the principle of compliance.

The principle of recording income implies that income is reflected in the reporting period when it is earned, i.e. the enterprise has completed all the actions necessary to obtain it, and implemented, i.e. received or clearly can be received, and not when the funds are received. The exceptions are the methods of stage-by-stage fulfillment of the contract and sale by installments.

The principle of compliance is to reflect in the reporting period only those expenses that led to the income of this period. In some cases, the relationship between income and expenses is obvious (for example, direct costs of materials), in other cases it is not, so certain rules are provided for them. Some costs are attributed to the reporting period, i.e. are expenses of a period because they are incurred in that period (recurring costs), although they cannot be directly linked to income in that period. Some costs are distributed over time, i.e. are attributed to the expenses of different reporting periods in parts, since they lead to income received in different reporting periods (for example, the distribution of the initial cost of fixed assets over time by depreciation).

The rule for reflecting costs in accounting can be formulated as follows: 1)

if the costs result in current benefits, they are recognized as expenses of the reporting period; 2)

if costs result in future benefits, they are recognized as assets and expensed in future reporting periods; 3)

if the costs do not lead to any benefits, they are recorded as losses in the reporting period.

The essence of the prudence principle is a greater willingness to take into account potential losses than potential profits, which is expressed in the assessment of assets at the lowest possible cost, and liabilities - at the highest.

The rule for estimating reserves is carried out at the lowest possible value - cost or market price. If the market value is less, this means a possible potential loss, so the cost of the inventory should be reduced to the market price and a loss recognized in the income statement.

This principle is valid only for a situation of uncertainty and does not mean the creation of hidden reserves or distortion of information.

There are five main elements of financial statements (described earlier): 1)

assets; 2)

obligations; 3)

equity; 4)

International Financial Reporting Standards are based on such fundamental reporting principles as:

information quality requirements;
principles of information accounting (reflection of information in accounting);
elements of financial reporting.

Requirements for the quality of information determine the characteristics that the information generated in the financial accounting system and presented in the financial statements should have. These qualities are primarily due to the need to meet the needs of external users of financial statements.

The principles of information accounting determine the rules in accordance with which information should be reflected in the financial accounting system.

Information quality requirements can be classified as follows:

utility;
relevance (timeliness, materiality, value (for forecasting, for evaluating results));
reliability, reliability (truthfulness, the predominance of content over form, the possibility of verification, neutrality);
understandability;
comparability and stability.

The usefulness of information is the ability to be used for making informed economic decisions by users. For information to be useful, it must be relevant, reliable (reliable), understandable and comparable.

Timeliness of information means that all material information is included in the financial statements in a timely manner, without delay for clarification of non-material details, and such financial statements are presented on time. The materiality of the information is essential to ensure relevance.

Material is considered information, the absence or incorrect assessment of which leads to other decisions of users. Materiality can be described both quantitatively and qualitatively. The value of information for users of financial statements is due to the possibility of using it to evaluate performance and predict future development trends of the enterprise.

Truthful information means that the financial statements truthfully reflect economic reality. The predominance of economic content over the legal form provides for the reflection of information in terms of the economic essence of the transaction, and not its legal form, which may suggest a different interpretation.

Example. Long-term lease of property, plant and equipment under a financial lease, where the ownership of property, plant and equipment remains with the lessor (legal form) and the property, plant and equipment is recorded as an asset of the lessee (economic substance) since all the benefits from their use are consumed by the lessee.

Auditability implies that the assessment of the information contained in the financial statements, carried out by different experts, should lead to the same results. The neutrality of information means that it does not contain biased assessments, i.e. impartial in relation to different groups of users and is not aimed at obtaining a predetermined result.

The principles of reflecting information in the financial accounting system can be grouped as follows:

the principle of double entry;
the principle of the unit of account;
the principle of periodicity;
the principle of continuing activity;
the principle of monetary value;
accrual principle (principle of income registration, compliance principle);
the principle of discretion.

The principle of double entry suggests the use of double entry in accounting and financial reporting.

For sole proprietorships, using this principle means separating the operations of the owner from those of the enterprise.

Example. Withdrawal by the owner of funds from the cash desk is not an expense of the enterprise, but is a withdrawal of the owner. For corporations, the separation of owners from the activities of the enterprise is obvious: shareholders, financing the activity, do not have the opportunity to manage it. This situation leads to the fact that shareholders bear the greatest risks and are more interested than other users in the information reflected in the financial statements.

initial cost - the amount of money spent on the acquisition of an asset;
replacement cost or current cost - the amount of cash that must be paid at the moment to acquire (replace) this asset;
market value or realizable value - the amount of cash that can be received from the sale of an asset at the moment;
net realizable value - the amount of cash that can be realistically received from the sale of an asset at the moment, less costs to sell;
present value — the present value of future cash flows;
Fair value is the price at which an asset could be exchanged between two independent parties.

The principle of recording income implies that income is reflected in the reporting period when it is earned, i.e. the enterprise has completed all the actions necessary to obtain it, and implemented, i.e. received or clearly can be received, and not when the funds are received. The exceptions are the methods of stage-by-stage fulfillment of the contract and sale by installments.
The principle of compliance is to reflect in the reporting period only those expenses that led to the income of this period. In some cases, the relationship between income and expenses is obvious (for example, direct costs of materials), in other cases it is not, so certain rules are provided for them.
Some costs are attributed to the reporting period, i.e. are expenses of a period because they are incurred in that period (recurring costs), although they cannot be directly linked to income in that period. Some costs are distributed over time, i.e. are attributed to the expenses of different reporting periods in parts, since they lead to income received in different reporting periods (for example, the distribution of the initial cost of fixed assets over time by depreciation).

The rule for recording costs in accounting can be formulated as follows:

if the costs result in current benefits, they are recognized as expenses of the reporting period;
if costs result in future benefits, they are recognized as assets and expensed in future reporting periods;
if the costs do not lead to any benefits, they are recorded as losses in the reporting period.

The essence of the prudence principle is a greater readiness to take into account potential losses than potential profits, which is expressed in valuing assets at the lowest possible cost, and liabilities at the highest.

Example. The rule for estimating reserves is carried out at the lowest possible value - cost or market price. If the market value is less, this means a possible potential loss, so the cost of the inventory should be reduced to the market price and a loss recognized in the income statement.

This principle is valid only for a situation of uncertainty and does not mean the creation of hidden reserves or distortion of information.

The concept document in the IFRS system is the Principles for the preparation and preparation of financial statements (Framework for the preparation and presentation of financial statements) (hereinafter - the Principles).

The principles were adopted by the IASB Board in 1989. They are not a standard and do not contain mandatory requirements and recommendations; in fact, this is the main philosophy of international accounting. All definitions given in the Principles are repeated in specific standards, but in a detailed form and in the context of the subject matter to which the corresponding standard is devoted. If the standard does not regulate any questions, then the Principles are used to answer these questions. However, if any provisions of the standards conflict with the Principles, the provisions of the standard shall apply.

Until 2015, the Principles were not part of the IFRS documents introduced in Russia. Since that year, the Principles have been used in Russia in the penultimate, currently valid version, which is set out below. At the end of the paragraph, a new discussed edition of the Principles is given and its differences from the current edition are disclosed.

The Principles formulate the purpose of financial reporting, consider the qualitative characteristics that determine the usefulness of financial reporting information, give definitions, recognition rules and methods for evaluating the elements that make up financial reporting, formulate the concepts of capital and capital maintenance.

The principles cover all financial statements, including consolidated ones. Reporting is provided at least annually and is oriented towards the needs of a wide range of users. Some users may receive additional information in addition to financial statements. The preparation of reporting forms is part of the process of preparing and presenting financial statements. A complete set of financial statements usually includes: balance sheet, income statement, statement of changes in equity and notes, as well as other statements, explanatory notes and materials that are an integral part of the financial statements. The principles apply to the financial statements of all commercial, industrial and trading companies in the public or private sector.

According to the Principles, the purpose of preparing financial statements is to provide users of statements with high-quality (relevant, reliable, understandable, comparable) information about the financial position, performance and changes in the financial position of the company. This information is needed by a wide range of users when making economic decisions.

There are two priority categories of users of financial statements:

1) investors investing capital and their advisors who are interested in the risk and return of investments. They need to know whether to buy, hold or sell investments, and they are also interested in the company's ability to pay dividends;
2) creditors who need to know whether the loans and interest they provide will be paid on time.

Also, users of financial statements are employees of the company and their representatives who are interested in the stability and profitability of the company. The primary responsibility for the presentation of the financial statements rests with the company's management.

International Standards are based on two main assumptions.

1. accrual method (accrual basis) means that business transactions are recorded as they occur, and not as cash and cash equivalents are received or paid. That is, transactions are accounted for in the reporting period in which they occurred. The accrual principle allows you to obtain objective information about future liabilities and future cash receipts, predict the expected financial results of the organization. Doubtful debts of debtors can be corrected by timely accrual of a reserve by reducing the financial results of the reporting period.
2. Business continuity (going concern) assumes that the entity will continue in operation for the foreseeable future. And if the enterprise has no intention to liquidate or significantly reduce the scale of activities, then its assets will be reflected at historical cost, excluding liquidation expenses. Assets are valued on a going concern basis that does not involve a forced sale that could result in a reduction in their selling price. Otherwise, the assets in the financial statements should be presented in a different, average market, and not liquidation valuation. The procedure for the formation of asset valuation should be disclosed in the explanatory note to the financial statements. At the same time, it is important to take into account that, in addition to the intention, the enterprise must have economic opportunities to continue its activities in the foreseeable future.

Compliance of information with the qualitative characteristics defined by the Principles makes the information presented in the reporting useful to users. Such compliance is an important condition for the use of financial reporting information at the international level.

The principles define four qualitative characteristics of information. Two of them (relevance and reliability) relate to the content of financial statements, the other two (understandability and comparability) - to its presentation.

Relevance or relevance information suggests that it is important for users to make economic decisions and influences these decisions. The relevance of information is determined by its nature and materiality, as well as the timeliness of its presentation. In some cases, the nature of the information is sufficient for its disclosure, regardless of materiality. In other cases, materiality is of great importance when the omission or misrepresentation of information can affect the economic decisions of users of the financial statements. The level of materiality (materiality) of the organization is determined in the internal documents regulating accounting and financial reporting.

Reliability or reliability information takes place if it represents the true (reliable) effect of the operation, does not contain significant errors and distortions, and is impartial.

According to the Principles, information is considered reliable if it:

1) is truthful representation), discloses business transactions in the financial statements without distortion;
2) reflects the economic essence of business operations, economic realities, and not their legal form (substance overfonn);
3) neutral( neutrality), those. unbiased, not aimed at the interests of certain user groups, nothing is specifically hidden or exposed in reporting;
4) is prudent (prudence)), those. shown in the financial statements with a certain degree of caution. A conservative estimate of assets and income is assumed. Assets and income should not be overstated, while liabilities and liabilities should not be understated. In other words, assets are recorded at the lowest possible valuation, and liabilities - at the highest, i.e. potential losses are taken into account, not potential profits;
5) is complete( completeness). This means that the reporting should reflect all the facts of economic activity that are significant from the point of view of users for the reporting period. Omission of some facts can make the information false and misleading. It must be borne in mind that the two requirements for the content of information - relevance and reliability - must be balanced. It is important to determine how much detail can be neglected when presenting information.

In practice, it is not always possible to compile reports that would meet the criteria of relevance and reliability at the same time. So, for example, for a travel company, information about the ongoing litigation of claims by tourists is certainly relevant for reporting, but is not always reliable, since it is not always possible to estimate the amount of costs in connection with the litigation.

The Principles set certain limits on the relevance and reliability of information, namely:

1) timeliness, which involves a proper balance between the reliability and relevance of the information. On the one hand, in order to meet the requirement of relevance, it is necessary to fully collect information on all available facts of economic activity. On the other hand, obtaining complete and reliable information may delay the presentation of financial statements and affect the relevance of the information. Therefore, it is recommended to find the optimal combination of these two requirements;
2) balance between benefits and costs- means that the benefits of information should not exceed the costs of obtaining it. However, it should be borne in mind that the process of balancing benefits and costs requires professional evaluation.

The ratio between the qualitative characteristics ( balance between qualitative characteristics") should be the subject of an accountant's professional judgment.

Now let's focus on two other qualitative characteristics - understandability and comparability.

Clarity (understandability ) information means that it is understandable to users who have sufficient knowledge in the field of accounting. However, it should be borne in mind that information about complex matters requiring disclosure in the financial statements should not be excluded just because it may not meet the requirement of understandability for some users.

Any most complex transaction can be described in simple words. A complex or confusing description may indicate that an entity is trying to hide something from users of financial statements.

Comparability or comparability (comparability) information involves ensuring the comparability of financial statements, both with previous periods and in relation to other companies.

Evaluating and demonstrating the financial consequences of similar transactions should be reported consistently across the company's activities and time periods, and consistently across companies. Comparability is ensured in particular by ensuring that users are informed of the accounting policies used in the preparation of the financial statements, of any changes to those policies, and of the impact of those changes.

Users need to be able to identify differences in accounting policies for similar transactions used by the same company at different times and by other companies. Compliance with IFRS guidance, including disclosure requirements, helps ensure comparability. Due to the fact that users want to compare information about financial position, results of operations and changes in financial position, it is important that financial statements contain relevant information for previous reporting periods. Entities should disclose all changes in accounting policies in a manner that comparability is met. Sometimes the availability of choice of accounting methods for organizations reduces the comparability of financial statements. Therefore, with further reform of IFRS, it is planned to move away from multivariance in solving certain issues.

As a result of consistent compliance with the qualitative characteristics of information and subject to compliance with all IFRS requirements, reliable and objective reporting is ensured.

The principles define five elements of financial reporting.

1) assets (assets);
2) obligations ( liability);
3) income (incomes);
4) expenses (expenses);
5) capital (equity).

All listed elements of financial statements must meet not only their definitions, but also the criteria for their recognition. The recognition itself is a verbal description of the element, its valuation and its inclusion in the financial statements.

The principles are as follows criteria for recognition of assets and liabilities.

1) it is probable that the future economic benefit associated with a particular reporting element will be received or lost;
2) the ability to reliably measure or value an element of the financial statements.

IFRS do not provide any quantitative criteria for assessing the likelihood, so you should be guided by the assessment of the essence of the phenomena. Frequently, the quantitative limits set can lead to subjective presentation of information in the financial statements.

Let us dwell on the data in the Principles definitions of the five main elements of financial statements.

Assets - These are resources controlled by the entity that have arisen as a result of past events from which the entity expects economic benefits in the future (an increase in revenue or a decrease in costs). Assets are included in the balance sheet provided that future economic benefits are probable and the value of the assets can be measured reliably.

Each phrase in this definition has an important meaning.

Thus, the concept of an asset as a resource displaces the identification of assets with property in IFRS. As a result, not all property of the enterprise is included in the assets, but only those that bring benefits in the future. When determining an asset, ownership of it is not essential, it is important to control the asset. Control refers to the ability of an enterprise to obtain benefits from the use of controlled resources or to restrict the rights of others to use these benefits. Someone else's property, for example rented, can generate income.

At the same time, a number of enterprise resources cannot be included in assets. For example, human capital, measured by the cost of training or by measuring the added value it brings. Human resources cannot be recognized as assets due to the fact that people are free, there is no control over these resources.

Liability - it is the debt existing at the reporting date arising from the events of past periods, the repayment of which will lead to an outflow of the organization's resources. Liabilities are recognized in the balance sheet only when it is probable that a future outflow of resources embodying economic benefits will result from the settlement of an existing liability, and the amount of such settlement can be measured reliably.

Obligations can be legal, arising from contracts or law, and constructive (corporate, traditional, actual), arising from certain actions of the enterprise. An example of a constructive commitment would be to declare a dividend or publicly promise to pay a bonus for a particular job. If it is expected that the promised will be fulfilled, then such obligations should be reflected in the balance sheet.

In IFRS, there is also the concept of contingent liabilities. Contingent liabilities are not recognized in the balance sheet because they relate to future events and future events cannot be adequately estimated. Information about contingent liabilities is disclosed in the explanatory note.

Income (income) - it is an increase in the economic benefits of the enterprise during the reporting period, which leads to an increase in capital that is not related to the contributions of the owners.

Economic benefits arise from the expansion of assets or the repayment of liabilities.

Income includes revenue received as a result of the main (statutory) and non-core activities of the enterprise. In other words, income is capital gain from one period to another.

Consumption (expenses ) is a reduction in economic benefits during the reporting period, leading to a decrease in capital and not associated with its distribution, withdrawal in favor of owners.

Since other concepts are defined through assets and liabilities in IFRS: capital, income, expense, we can conclude that the balance sheet has priority over the income statement. In addition, it is the balance sheet that can determine the growth of capital as a whole: due to the expansion of assets, an increase in capital and financial results.

Capital (equity ) is the percentage of the company's assets remaining after deducting all of its liabilities. In other words, capital is the difference between the assets and liabilities of an organization or net assets.

Capital as a calculated value is a balancing element. In general, assets are greater than liabilities, and equity is positive. But the situation can be reversed, then the capital becomes a negative value. Moreover, if the enterprise has a stable external source of financing, then it can continue its activities.

Capital may increase as a result of the issuance of new equity instruments, additional contributions from owners, reinvestment of net income, revaluation of long-term assets as a result of an increase in their fair value. Capital may decrease as a result of payments to owners, buybacks of own shares, net losses, revaluation of long-term assets as a result of a decrease in their fair value.

International standards suggest various options for assessing the assets and liabilities of an organization.

Grade (measurement, evaluation evaluation assessment) - is the process of determining the monetary value of an element of a financial statement when it is recognized and reported in the balance sheet or income statement.

For the purposes of valuation, various bases listed in the Principles are used: historical cost, current value, realized price, present value, etc.

historical value (actual acquisition cost , initial cost) (historical cost): for assets, it is the cost of acquiring them, and for liabilities, it is the amount received in exchange for the liability. The initial value is expressed in actual prices at the time of the transaction.

Current or replacement cost (current cost): for assets, this is the amount that must be paid by acquiring a similar asset at the moment; for liabilities, it is the amount that would be needed to pay off the obligation at the moment. This valuation is applied when purchasing in the absence of an active market for the goods and services being valued.

Possible selling price or Realizable or settlement value: for assets, this is the amount that would be received at the present time from the sale of the asset under normal conditions, and for liabilities, the cost of repaying them under the normal conditions of the enterprise. This valuation is applied when selling in the absence of an active market for the goods and services being valued.

Discounted or present value (present value), for assets, it is the present value of future net cash inflows in the normal course of business of the entity; for liabilities, it is the present value of future cash outflows when liabilities are settled in the normal course of business of the entity.

Current market value (market value) - is the amount of cash that could be received on sale or payable on purchase when acquired in an active market at the time of measurement. This valuation is applied when buying and selling in an active market for the goods and services being valued.

Fair or fair value - this is the amount of cash sufficient to acquire an asset or settle a liability in a transaction by well-informed, really willing to make such a transaction, parties independent of each other.

Almost all financial statements are initially recognized at their historical cost, and later, depending on the specific type of assets and liabilities, other types of estimates may be used. For subsequent valuations, the standards give enterprises the choice of valuation methods.

Currently, there is a trend in IFRS to replace historical cost with fair value measurements.

In 2013, a new IFRS standard dedicated to fair value measurement began to be applied in international practice - IFRS 13 Fair Value Measurement.

Let us briefly consider the evolution of the assessment of elements of financial statements from historical to fair value.

Accounting theorists have always recognized valuation as one of the most important accounting methods that affects the final results of an enterprise and therefore requires a serious scientific approach and comprehensive research. In particular, the French scientist Le Coutre noted: “Without exaggerating anything, we can safely say that for the first 40-50 years the literature on balance dealt exclusively with the issue of assessment, all other issues were left aside.”

The evolution of valuation issues indicates that during the development of accounting science, some scientists considered valuation to be the most important aspect of accounting, constituting both the subject, the goal, and the method of accounting.

Scholars' discussions around valuation have mainly focused on the choice between valuing assets at cost (aka historical or historic cost) and valuing them at market prices or at revalued values.

Luca Pacioli in the current accounting considered the valuation at cost to be more accurate, since, in his opinion, the use of valuation at the sale price led to a systematic overestimation of the amount of capital and a decrease in the amount of profit shown.

In turn, Di Pietro laid the foundation for the so-called opportunistic valuation at selling prices.

The majority of Russian scientists, relying on their substantiated conclusions, considered the cost estimate to be the most accurate. In particular, A.P. Rudanovsky believed that valuation is the identification of a financial result that can arise only in the process of implementation and should not be a means of arbitrary revaluations, since all values are shown at cost.

The Italian school supported the concept of valuation at sales prices, the French - the concept of valuation at cost. Representatives of the German school considered the choice between valuation at cost or at selling prices not fundamental. Scientists belonging to the Anglo-American school supported the free choice of assessment depending on the purpose of management, since it does not matter what follows from what.

On the example of assessment, it is well seen that behind each methodological device there are interests of certain groups. Demanding revaluation, personalists expressed the interests of suppliers, creditors, shareholders. They were worried not about how much the administration spends, but about how much the property of this enterprise actually costs today. They believed that the realism of accounting is achieved by a systematic revaluation of the assets of the enterprise, and only this allows you to avoid hidden reserves.

The institutionalists defended the interests of the administration, for which it was not the balance sheet that was important, but the real financial result of the activity. The representative of the institutionalists Iiksley argued that “the balance sheet serves the internal goals of enterprise management, its asset is represented by acquired funds, and the enterprise administration must know what these funds cost the enterprise and have a correctly defined, valid (backed by money) result of its economic activity - profit or loss » .

Of interest are the views of Hermann Röhm, who put the assessment in direct connection with its purpose. He believed that "it's one thing if you're going to sell the company, and quite another thing if you're going to expand it." In the first case, the assessment is based on turnover, in the second case, profit.

We also consider interesting the point of view of Professor V. Ya. Its essence boils down to the fact that if the cost of an object is higher than its selling price, i.e. in case of a potential loss, the object is shown in the reporting at the selling price. Thus, the resulting loss is reflected in the reporting period in which it was discovered, and the profit - when it was actually received.

Thus, each of the applied types of assessment had its own significant advantages and no less significant disadvantages. In this regard, scientists have not yet found a consensus on the choice of an adequate assessment method in some economic situations that arise in practice.

As noted above, there is currently a trend in IFRS to replace historical cost with fair value measurements. At the same time, there was no unambiguous interpretation of fair value by both foreign and Russian scientists before the entry into force in 2013 of the international standard IFRS 13 “Fair Value Measurements”.

At the same time, the use of fair value measurement was provided for by a number of IFRS standards. In particular in: IAS ( IAS ): 16 Fixed Assets, 17 Leases, 18 Revenues, 19 Employee Compensation, 20 Accounting for Government Grants and Public Assistance Disclosures, 21 Effects of Changes in Foreign Exchange Rates, 32 Financial Instruments: Disclosure and presentation of information”, 33 “Earnings per share”, 38 “Intangible assets”, 39 “Financial instruments: recognition and measurement”.

With the introduction of the standard IFRS 13 “Fair Value Measurements” the task of calculating fair value has not been simplified. In our opinion, this problem is currently an equation with many unknowns, the lack of information about which we replace with assumptions and assumptions. At the same time, the high professional level of financial analysts allows them to consistently put into practice the IFRS 13 algorithm for calculating the fair value of assets, liabilities, business value, other accounting items and get closer to the required valuation.

The essence of this algorithm is as follows:

identification of a specific asset or liability or other item of accounting that will be measured;
its characteristics are determined, if they are inherent in it;
the main (most favorable) market for the estimated object of accounting is determined;
an approach or several approaches are selected for calculating the valuation of an accounting object at fair value (market, income, cost);
within each approach, appropriate methods for calculating the estimate are selected;
the assumptions of market participants are formulated, and the initial information for applying the valuation methodology is established.

Market characteristics of the subject property include its location, restrictions on its sale or use (for a non-financial asset), unit of account, perhaps not one item, but a group of items that form a cash generating unit.

When determining the characteristics of the object of assessment in IFRS 13 Fair Value Measurements also specifically mentions two groups of costs:

1) transportation costs, which are included in a fair assessment, since they change the characteristics of the object of assessment (asset) - its location. The object of assessment is moved to the main market during transportation;
2) transaction costs are not included in the fair value measurement, as they are not related to the characteristics of the appraised object.

Further, information is analyzed that allows to conclude whether there is a main market for the property being valued. Under the main market in IFRS 13 “Fair value measurements” means the market with the highest volume and activity level of the property being valued. If there is such a market, it is determined whether the entity has access to the underlying market at the valuation date.

Market participants must be parties independent of each other who have knowledge of the fair value item or transactions with the item. Market participants must be able to make a trade and be willing to do so. Otherwise, market participants must have a motive for making that particular transaction, and the standard excludes coercion from outside to bring the transaction.

It is important to keep in mind that IFRS 13, when solving the problem of selecting data for evaluating the elements of financial statements, offers a three-level hierarchy of all existing sources of information. Level 1 inputs are observable data, more specifically quoted prices in active markets for identical assets or liabilities, that provide reliable evidence of fair value and should be given priority when available.

Level 2 inputs are directly or indirectly observable data, which are typically quoted prices for identical, similar assets or liabilities in inactive markets. These initial data are used in case of unavailability of the information of the first level of the hierarchy.

Level 3 inputs are unobservable data for the assets or liabilities being valued in the absence of a major market. In this case, assumptions and assumptions are used.

Thus, the modern assessment of the elements of financial statements at fair value is a complex creative process that requires the search and analysis of a large amount of information and highly qualified specialists who calculate such an assessment.

Comparison of the Principles and the relevant requirements of the Russian legislation are given in Table. 2.1.

Table 2.1

Comparative characteristics of the principles for preparing financial statements under IFRS and under the legislation of the Russian Federation

Name of the principle			Brief comment
	in Russian law		Brief comment
Assumption: accrual basis	Assumption: temporal certainty of the facts of economic activity		IFRS uses a different term, but the content of the concepts is the same
Assumption: continuity activities	Assumption: continuity activities organizations		Russian legislation does not provide for the need to use and disclose another basis for reporting if an organization does not meet the going concern requirement
	Assumption: sequence of application of accounting policies
	Assumption: property isolation of the organization	The concept of accounting in the market economy of Russia, PBU 1/2008, Accounting Law	This assumption is not included in IFRS.
Information content requirement: relevance (significance, materiality, materiality)	Information content requirement: materiality		There are no significant differences

Name of the principle			Brief comment
	in Russian law		Brief comment
Information content requirement: reliability, which includes: - truthful disclosure; - priority of content over form; - neutrality; - prudence; - completeness		The concept of accounting in the market economy of Russia, PBU 1/2008, PBU 4/99	In IFRS, this requirement is disclosed in more detail.
Presentation requirement: comprehensibility			There is no such requirement in Russian legislation.
Reporting requirement: comparability	Reporting requirement: comparability	The concept of accounting in the market economy of Russia, PBU 4/99	There are no significant differences
	Information submission requirement: consistency		IFRS does not provide for the requirement of consistency as the identity of analytical accounting data to turnovers and balances of synthetic accounting accounts on the last calendar day of each month
Relevance and Reliability Limitation of Information: Timeliness		The concept of accounting in the market economy of Russia, PBU 1/2008	In PBU 1/2008, this restriction is formulated as a requirement, and not as a limitation on the relevance and reliability of information.
Limiting the Relevance and Reliability of Information: Balancing Benefits and Costs		The concept of accounting in the market economy of Russia	In PBU 1/2008, this restriction is formulated as the requirement of rationality, however, this requirement is not disclosed in detail

From the information presented in table. 2.1, it follows that in Russian legislation there are two assumptions similar to those provided for in IFRS, and two more assumptions that are absent in IFRS: the sequence of presentation of accounting policies and the property isolation of the organization.

In Russian legislation, most of the requirements for the qualitative characteristics of information are disclosed in less detail than in IFRS.

In addition, not all requirements mentioned in Russian legislation are applied in practice. This is due to the lack of a mechanism for their application and the special mentality of Russian financial specialists, who are focused primarily on the presence or absence of primary documents and contracts confirming the facts of economic activity, and not on the economic content of the relevant transactions.

The structure of information quality requirements in Russian legislation does not comply with IFRS: information quality requirements are not divided into content requirements and presentation requirements.

In addition, there are some differences in the terminology used. The Russian legislative acts regulating accounting and reporting do not define the main elements of financial reporting: assets, liabilities, capital. Interpretations of the elements of financial statements are given in the Concept of Accounting in the Market Economy of Russia, approved by the Methodological Council for Accounting under the Ministry of Finance of the Russian Federation, the Presidential Council of the Institute of Professional Accountants on December 29, 1997. These interpretations are close to international standards, but they are not consistent with other regulations and, in addition, there is no mechanism for their implementation in practice.

According to the requirements of IFRS, financial statements are recognized when they meet not only their definition, but also two recognition criteria. That is, it is likely that any economic benefit associated with the item will be gained or lost by the company, and the item has a value or value that can be measured reliably. The Russian Concept of Accounting in a Market Economy also specifies the criteria for recognition of assets and liabilities. In general, these criteria are consistent with the requirements of IFRS. However, they remain declared, but are not applied in practice, since not a single normative act even contains the term “recognition of reporting elements”.

The reflection of the elements of financial statements in Russian reports, for example, in the balance sheet, is carried out on the basis of primary documents drawn up in accordance with unified forms approved by statistical authorities.

In Russian practice, there is also no possibility of using the professional judgments of accountants and auditors to determine the likelihood of receiving or losing economic benefits.

The list of possible valuation methods established by the Accounting Concept in the Market Economy of Russia basically coincides with the list in IFRS, with the exception of the present value, which is not defined in the Concept. However, the interpretation of methods for valuing the elements of financial statements is given only for assets. The Concept does not say about the extension of these methods to obligations.

Russian regulations contain various methods of valuation for specific balance sheet items, and not elements of the financial statements as a whole.

In IFRS, in many cases it is allowed to evaluate items of financial statements based on the professional judgment of an accountant, taking into account the characteristics of the company, the interests of users and the fundamental principles of IFRS.

In Russian practice, the assessment of any financial statement item is carried out strictly in accordance with the requirements of the Federal Law of December 6, 2011 No. 402-FZ (as amended on May 23, 2016) “On Accounting” and Russian standards - RAS.

In spite of everything, it should still be noted that at present many of the domestic requirements are much closer to the requirements of IFRS. However, there are still a number of significant differences, which we will consider further.

As noted above, at present, more precisely, since July 2013, a new edition of the Principles is being discussed in the IFRS system of documents.

According to the IASB, the previous version of the framework Framework - does not cover all issues arising in the application of IFRS, some definitions, data Framework , do not accurately convey the essence of the issue due to the inclusion of aspects of probability, expectation and uncertainty, this also applies to the criteria for recognizing elements of financial statements. Besides, Framework in some aspects is outdated and does not correspond to new trends in the development of accounting and reporting.

The changes being discussed relate to issues such as:

1) clarification of the definitions of two priority elements of financial statements: assets and liabilities;
2) clarification of the approach to the recognition of elements of financial statements and inclusion in Framework approach to derecognition;
3) clarification of the estimates used in the recognition of elements of financial statements;
4) making a distinction between two elements of financial reporting: equity and liabilities;
5) clarification of the concept of other comprehensive income,
6) inclusion in Framework reporting and disclosure requirements.

Below is a brief overview of the new IFRS framework currently under discussion.

In the new conceptual framework of IFRS, first of all, the definitions of the two priority elements of the financial statements of assets and liabilities have changed. Their comparison is presented in table. 2.2.

Comparative analysis of the definitions of assets and liabilities in the Framework and their updated definitions

reporting	Definition in Framework	Definition from the project in question
	A resource controlled by an entity as a result of past events from which the entity expects future inflows of economic benefits	An existing economic resource controlled by the entity as a result of past events
Commitment	A present obligation of an entity arising from past events that is expected to result in an outflow from the entity of resources embodying economic benefits	A present obligation of an entity to transfer an economic resource that arose as a result of past events
Economic resource	AT Framework has not been defined	A right or other source of value that is capable of generating economic benefits

Obviously, in the new definitions of the two priority elements of financial statements, there is no mention of the probability of movement (inflow-outflow) of economic benefits at all, and the concept of “economic resource” in relation to an asset and “obligation” in relation to a liability comes first.

At the same time, in the draft new conceptual framework under discussion, a new definition was introduced - “economic resource”, which covers the concept of economic benefit, and since, according to the proposed new definition of an asset, it is not just a resource, but an economic resource, it is assumed that an asset is a resource, which is capable of bringing economic benefits, in turn, an obligation is an obligation to transfer an economic resource, and therefore capable of leading to an outflow of economic benefits.

Thus, an inflow of economic benefit need not be certain for a resource to be recognized as an asset, and an outflow of economic benefit need not be certain for a liability to be recognized as a liability.

The change in the definition of an asset and a liability is due to the fact that methodologists from the IASB believe that in some situations the recognition of an asset or liability will provide users with useful information even if the inflow and outflow of economic resources is not probable.

Clarification of the approach to the recognition of elements of financial statements and inclusion in Framework approach to derecognition. The new IFRS framework under discussion stipulates that all assets and liabilities should be recognized until the following circumstances occur:

1) the assets or liabilities no longer provide useful information to users of financial statements or provide information that is not useful enough to justify the cost of obtaining it;
2) no valuation of the asset or liability results in a fair presentation of the assets or liabilities.

Recognition of an asset or liability will not provide useful information to users of financial statements when it is extremely difficult to identify the resource or liability, such as for an internally created brand. It also refers to the case where an asset or liability exists but is unlikely to result in an inflow or outflow of economic benefits, and therefore such information is unlikely to be useful to users of the financial statements. In some cases, the range of possible results from the recognition of elements of the financial statements may be significant and their assessment at recognition will be inaccurate, an example is the recognition of an estimated liability associated with a lawsuit. In this case, regardless of the recognition or non-recognition of such a liability, it is advisable to disclose such information in an explanatory note if it is material and the costs of obtaining it do not exceed the benefits for users of IFRS financial statements.

It should be borne in mind that the possibility of not recognizing assets or liabilities due to the absence of a recognition criterion or criteria does not mean that information on unrecognized assets and liabilities should not be provided. Disclosures should be made about unrecognized assets or liabilities, including factors which led to the conclusion that these assets or liabilities do not need to be recognized.

Note that in Framework two criteria for the recognition of assets and liabilities were previously defined, but the criteria for derecognition of their recognition were never defined, since they were contained in separate IFRS standards. At the same time, the criteria for derecognition of assets and liabilities in different standards often did not correspond to each other, i.e. Until now, there has been no unity in approaches to the derecognition of individual assets and liabilities.

In this regard, the IASB methodologists have included a unified approach to the derecognition of assets and liabilities in the draft new IFRS framework under discussion. Under this approach, an asset (part of an asset) or a liability (part of a liability) should be derecognised when it no longer meets the recognition criteria.

If the entity retains part of the asset or liability, it must present changes to the assets and liabilities in accordance with the requirements of the individual IFRSs that the IASB is currently reviewing. Such requirements may include:

1) extended disclosure of information;
2) presentation of any retained rights or obligations as a new unit of account, different from the original one, in order to show a greater degree of risk;
3) continuing to recognize the original asset or liability and accounting for the consideration received or paid as a loan received or originated.

Refinement of estimates used in the recognition of elements of financial statements. In Framework definitions of the main estimates of elements of financial statements used in IFRS were given, however, an exhaustive list of cases of the appropriateness of applying certain estimates was not given.

The discussed draft of the new IFRS framework provides for a limitation on the number of possible estimates in order to increase the clarity and comparability of financial statements. However, this approach does not mean that the new conceptual framework provides for a single valuation basis for all assets and liabilities. Methodologists from the IFRS Council note that a unified approach to assessing the elements of financial statements is not appropriate, since it will also not allow providing users of financial statements with comprehensive useful information.

The draft new IFRS Framework under discussion defines the factors that should be considered when choosing one or another measurement basis for an individual asset or liability. These factors include the following:

1) it is necessary to consider how the asset is able to generate future cash flows or how the company plans to settle the liability;
2) it is important to keep in mind what information will be presented in the statement of financial position and statement of comprehensive income as a result of applying this assessment.

Distinguishing between two elements of financial statements: equity and liabilities. On the one hand, such an element of financial reporting as capital is the balancing value or the difference between all assets and liabilities. And the draft new IFRS framework under discussion does not change the existing definition of the capital element of financial statements.

However, in some modern situations, it becomes necessary to consider the difference between capital and liabilities. For example, this would be the case for distinguishing between a liability and equity instruments. In order to make decisions in such situations, the draft under discussion clarifies that the obligation to issue an equity instrument is not an obligation, nor is it an obligation that arises in the event of liquidation of the reporting company. In order to distinguish between equity instruments and liabilities, consideration should be given to whether the entity has an obligation to transfer an economic resource. If there is, then such a duty should be recognized as a liability.

Clarification of the concept of other comprehensive income. Currently, among financial analysts and other professionals preparing financial statements in accordance with IFRS, there is no correct understanding of the category "other comprehensive income". In this regard, the definition of the composition of the indicators "profit (loss)" and "other comprehensive income", as well as a meaningful approach to the reclassification of individual items from one category to another, have become essential.

Methodologists from the IASB believe that a precise definition of the composition of a financial statement measure is useful if it is known that one or another element should be reflected in its composition. Where an element may or may not be included in the indicator, it is better to develop general guidance.

It is not possible to create a single set of items that will be recognized in profit or loss and a set of items that will be recognized in other comprehensive income. Therefore, the draft new IFRS framework under discussion does not provide a definition that would make it possible to distinguish between income and expenses recognized in other comprehensive income and income and expenses recognized in profit and loss. Methodologists from the IASB plan to add general guidance to this task in the project.

In accordance with the draft new IFRS framework under discussion, income and expenses are recognized in profit (loss), except for the results of revaluation of assets and liabilities, which are included in other comprehensive income.

Incorporating Presentation and Disclosure Requirements into the Framework

Since the requirements for disclosure of information in IFRS financial statements are increasing in modern conditions, another chapter has been included in the draft of the new IFRS framework under discussion, which contains uniform requirements for information disclosure. Note that in Framework there was no such chapter.

This chapter clarifies the purpose of the financial statements under IFRS and notes to it, and also reveals their relationship. It is noted that the purpose of reflecting information in financial statements is to provide summary information about recognized assets, liabilities, capital, income, expenses, changes in equity and cash flows, classified and grouped in such a way as to be useful. In turn, the purpose of disclosure in the notes to the financial statements is to supplement the financial statements by providing useful information about the recognized elements of the financial statements, as well as unrecognized assets and liabilities.

Fundamentals of preparation and preparation of financial statements

Users and their information needs

Users of financial statements include existing and potential investors, employees, lenders, suppliers and other trade creditors, customers, governments and their agencies, and the public They use financial statements to meet their various information needs

The management of the enterprise has the main responsibility for the preparation and representatives of the financial statements of the enterprise. Management is also interested in the information contained in the financial statements, even though it has access to additional management and financial information that helps it fulfill its planning, decision-making and control responsibilities. Management has the ability to determine the form and content of such additional information. so that it meets his needs.

Purpose of financial reporting

The purpose of financial reporting is to provide information about the financial position, results of operations, and changes in the financial position of an entity. This information is needed by a wide range of users when making economic decisions.

Financial reporting, compiled for this purpose, satisfies the general needs of most users. However, financial statements do not provide all the information that users may need to make economic decisions because they primarily reflect financial results, past events, and do not necessarily contain non-financial information.

Financial statements also show the performance of an entity's management or management's responsibility for entrusted resources. Users who wish to assess management's performance or responsibility do so in order to make economic decisions. the sale of an investment in an enterprise, or a decision to reappoint or remove management

Financial position. Results of operations and changes in financial position

Economic decisions taken by users of financial statements require an assessment of the ability of an enterprise to create (generate) cash and cash equivalents, as well as the timeliness and stability of their creation. This ability ultimately determines, for example, the ability of an enterprise to pay its employees, suppliers, secure interest payments, repay loans, and distribute among its owners. Users can better assess this ability of an entity to generate cash and cash equivalents if they have information that focuses on the entity's financial position, performance and changes in the entity's financial position.

Information about the financial position, mainly in the balance sheet (balance sheet). Information about the results of the company's activities is provided mainly in the income statement. Information about changes in financial position is shown in the financial statements using a separate reporting form (changes in equity).

The constituent parts of financial statements are interrelated because they reflect different aspects of the same transactions or other events. Although each reporting form presents information that is different from the others, none of them is limited to one subject and does not provide all the information necessary for the specific needs of users. For example, an income statement does not provide a complete picture of a business's performance unless used in conjunction with a balance sheet and a statement of changes in financial position.

Notes and Additional Materials

Financial statements also contain notes (explanatory notes), additional materials and other information. For example, they may contain additional information about balance sheet and income statement items that is important to meet the needs of users. It may disclose the risks and uncertainties affecting the entity and any resources and liabilities not shown on the balance sheet (such as mineral reserves). Information about geographic and industrial segments and the impact on the business of price fluctuations may also be provided as additional information.

Fundamental Assumptions. accrual accounting

To meet these objectives, financial statements are prepared on an accrual basis Under this method, the results of transactions and other events are recognized as they occur (rather than when cash or cash equivalents are received or paid) They are recognized in the accounts and included in the financial statements of the periods to which they relate. Accrual financial reporting informs users not only of past transactions related to the payment and receipt of cash, but also of obligations to pay cash and cash equivalents in the future, and resources representing cash to be received in the future. . Thus, they provide information about past transactions and other events that is extremely important to users in making economic decisions.

Financial statements are usually prepared on the assumption that the entity is and will continue to be in operation for the foreseeable future. Therefore, it is assumed that the entity is not going to and does not need liquidation or significant reduction in the scale of its activities; if such an intention or need exists, the financial statements should be prepared on a different basis and, if so, the basis used should be disclosed.

Qualitative characteristics of financial statements

Qualitative characteristics make the information presented in financial statements useful to users. The four main quality characteristics are understandability, relevance, reliability and comparability.

The main quality of the information presented in the financial statements is its availability for users to understand. It is assumed that for this purpose, users must have sufficient knowledge in the field of economic and economic activities, accounting and a desire to study the information with due diligence. However, information about complex matters that should be included in the financial statements because of its relevance to users of economic decisions should not be excluded merely because it may be too difficult for certain users to understand.

To be useful, information must be relevant to user decision makers Information is relevant when it influences users' economic decisions by helping them evaluate past, present, and future events and confirm or correct their past estimates.

The relevance of information is greatly influenced by its nature and materiality. In some cases, the nature of the information alone is sufficient to determine its relevance. For example, the announcement of a new segment may affect the evaluation of the risks and opportunities available to the enterprise, regardless of the materiality of the results achieved by the new segment in the reporting period. In other cases, both nature and materiality are important, for example, the size of the main types of reserves held, corresponding to this type of activity.

Information is considered material if its omission or misstatement could influence the economic decisions of users taken on the basis of the financial statements. Materiality depends on the size of the item or error assessed under the specific conditions of omission or misstatement. Thus, essentially, rather, indicates a threshold or starting point, and is not the main qualitative characteristic that information must have in order to be useful.

To be useful, information must also be reliable. Information is reliable when it is free from material error and bias and misrepresentation, and when users can rely on it to represent truthfully what it is either supposed to represent or is reasonably expected to represent.

Information may be relevant but so unreliable in nature or presentation as to be potentially misleading to acknowledge.

To be reliable, information must faithfully represent the transactions and other events that it is either expected to represent or reasonably expected to represent. Thus, for example, the balance sheet should faithfully reflect the transactions and other events that have resulted in assets, liabilities and equity of the entity that meet the recognition criteria at the reporting date.

If information is to faithfully represent transactions and other events, then it is essential that they be accounted for and presented according to their substance and economic reality, and not just their legal form. The essence of transactions and other events does not always correspond to what follows from their legal or established form.

To be reliable, the information contained in the financial statements must be neutral, that is, it must be unforeseen. Financial statements will not be neutral if, by their very selection or presentation of information, they influence a decision or judgment in order to achieve a planned result or outcome.

Prudence is the introduction of a certain degree of care into the process of forming the judgments necessary in making the calculations required under conditions of uncertainty so that assets or incomes are not overstated and liabilities or expenses are understated.