Abstract
Abstract. The introduction of International Financial Reporting Standards (IFRS) has led to a fundamental change in financial reporting requirements. They aim to present the company’s opportunities and risks in such a way that the objectives of management can be assessed by third parties and other parties. This article discusses the basic requirements that management must meet in the context of accounting in accordance with IFRS. To obtain truthful information about the state of affairs in the company, management must receive and analyze management reports to make the right strategic decisions. IFRS 8 Operating Segments (IFRS 8) assists them in this. The main purpose of this standard is to disclose information by the company to users to assess the nature and financial impact of the activities implemented, as well as the types of economic conditions in which it operates. The article describes the implementation of IFRS 8 as a management function, as well as the impact on various other management functions. In accordance with IFRS 8, the application of the management approach should also be explained in the notes to the financial statements. However, this only applies to listed companies. At the same time, this approach also serves to implement a management approach for unlisted companies for the company’s own purposes. One of the enhanced management tools is also the audit of segment reporting. The audit helps to confirm the veracity of the data of such reporting. As part of the audit of the annual financial statements, it is necessary to check whether the acquired knowledge corresponds to the results of audit procedures for other categories of reports. The result of the audit of segment reporting should be recorded by auditors in working papers (audit documentation). Any inaccuracies in segment reporting should be reported in the audit report. This article describes in detail the audit procedures in accordance with International Standards on Auditing (ISA). Also, the requirements for the preparation of audit documentation for the audit of segment reporting in accordance with ISA and the standards of the Institut der Wirtschaftsprüfer, Germany (IDW Prüfungsstandards (IDW PS)). Keywords: IFRS, ISA, audit, managment, audit documentation, financial report, international standards. Formulas: 0; fig.: 2; tabl.: 0; bibl.: 11.
Highlights
In many countries, ISA, IFRS and the Audit Directive and were transformed into national law [2]
In addition to the main financial statements, there is segment reporting, which is compiled in accordance with IFRS 8
One should not forget about the audit of segment reporting, which will help to confirm the data displayed in it
Summary
ISA, IFRS and the Audit Directive and were transformed into national law (including Ukraine from 2012 year) [2]. As part of profit and liquidity planning, company-related budgeted income statements, budgeted balance sheets and financial plans must be prepared regularly and to the day in order to achieve the strategic goals and at the same time ensure the optimization of profits and liquidity at all times In this respect, accounting on the basis of IFRS represents the basis of every company’s planning and is an essential management task. According to IFRS 8.22, information must be presented to identify the reporting segments It must be shown whether the company is managed by product/service types, by region, by legal entity or by a combination of such factors. When checking the accuracy and valuation, the deviations and anomalies are to be analysed as part of the audit procedures and compared with the minutes to the board of directors or company management, determining whether the segment reports are consistent with the internal information. This could be the case, for example, if material mandatory disclosures are omitted [11]
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