Abstract
The purpose of this study is to establish the ability to assess the quality of financial statements presented by organizations in a particular jurisdiction. The preparation of useful financial statements is possible based on the imperativeness of the concept of qualitative characteristics. An analysis of the composition and grouping of qualitative characteristics outlined in the Conceptual Framework for Financial Reporting, Directive 2013/34/EU and the Law of the Republic of Moldova (RM) “On Accounting and Financial Reporting” made it possible to choose a method for developing a unified methodology for assessing quality of financial reporting in relation to accounting systems, both Anglo-Saxon and continental, as well as individual jurisdictions. A statement of the leading role of reliability and relevance in determining the usefulness of information, while maintaining the value of qualitative characteristics that increase the usefulness of information (in particular, comparability and timeliness), provided the opportunity to build a rational methodology for measuring the quality of financial statements. The proposed methodology is considered as the basis for assessing the quality of reporting, in the framework of which the value of the indicator of useful information is postulated. Based on mathematical modeling, a formula has been developed for calculating the indicator of the usefulness of information, with perfectly prepared financial statements, the value of which is 1. The use of the method of abstraction and logical thinking allowed us to determine the value of each qualitative characteristic in the quality indicator. It has been established that deviations from this indicator can be the result of either non-compliance with the information quality requirements by the reporting compiler, or ignoring the conceptual platform for presenting useful financial statements. Countries associated with the EU, including the RM, are forced to use a mixed system of accounting and qualitative characteristics (according to International Financial Reporting Standards and Directive 2013/34/EU). The implementation of the recommended methodology for measuring the quality of reporting, using the qualitative characteristics provided for in the legislative framework of the RM, proves the inefficiency of convergence of the two accounting systems in the absence of a special methodology. In general, the study demonstrated that the effective use of the concept of qualitative characteristics: is aimed at promoting the harmonization of accounting systems; serves as a reliable basis for assessing the quality of financial statements; contributes to solving the problem of improving the quality of information in the future.
Highlights
Information, primarily financial, is the product of a particular accounting system, which is reflected in the financial statements and provides knowledge of the reality surrounding us
The authors were guided by the special methods: analysis, in which the features of each primary accounting system (Anglo-Saxon and Continental) were identified, including the qualitative characteristics inherent in each of them; synthesis, using which the conclusions on how qualitative characteristics affect the goals and content of each accounting method are formulated; modeling, with the help of which a methodology for measuring financial statements based on qualitative characteristics is proposed; the comparison method and content analysis applied primarily in terms of the information received from the financial statements, as well as the qualitative characteristics were used concerning accounting methods, based on a reliable representation and regulated accounting
The reliability of financial information is provided, first of all, by applying the IFRS Concept, which contains a description of the qualitative characteristics and their application
Summary
Information, primarily financial, is the product of a particular accounting system, which is reflected in the financial statements and provides knowledge of the reality surrounding us. Because the users of financial information, especially investors, must make sure that the performance indicators of an economic entity are reliably represented in the financial reports. To do this, they must know the methodology for measuring financial information. The documents governing accounting and economic literature are often limited to listing only the qualitative characteristics of financial information, description of their nature and significance. Various accounting systems prescribe an unequal list of qualitative characteristics. This factor will be taken into account by the authors in developing the measurement methodology
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