ECONOMIC SECURITY OF ENTERPRISES: FINANCIAL ANALYSIS APPROACH AND IFRS IMPLEMENTATION ECONOMIC SECURITY OF ENTERPRISES: FINANCIAL ANALYSIS APPROACH AND IFRS IMPLEMENTATION

Аннотация

В докладе рассматриваются современные научные точки зрения на экономическую безопасность предприятия. Подробно изложен подход к данной проблеме со стороны финансового анализа. Исследованы различные инструменты контроля и оценен положительный эффект от внедрения МСФО

The importance of economic security is constantly increasing on macro and micro levels specifically during the transition period and in times of global financial and economic crises. Such importance was stated in the Presidential Decree UP-4947 “About Strategic Actions for the Further Development of the Republic of Uzbekistan” dated February 7th, 2017 [1]. Nowadays, more and more researchers point out the necessity of the economic security monitoring and control system starting from micro level and all the way to macro level. Indeed, the economic security of enterprises (small, medium and large ones) will lead to economic security of the country as these enterprises will pay taxes (thus increasing government revenues), will export goods (thus increasing currency reserves and improving the trade balance of the country), will create new jobs (thus improving welfare of the population), etc.
Burkaltseva has developed a dynamic model of system management through the mechanism of state regulation [2], where all factors influencing economic security of the enterprise are divided into two categories: exogenous (general economic, market, political, demographic, etc.) and endogenous (operational, investment and financial). While exogenous factors should be monitored and regulated by the government, enterprise should implement a thorough control system that allows to identify issues related to endogenous factors and react immediately.
Delas et al discuss economic security of the enterprise through the financial security approach [3]. In order to quantify the assessment of enterprise financial security a system application is required. Such system should include analysis of economic standing, operational analysis, cash flow and risks analysis. Different financial ratios and cost management techniques can be applied depending on enterprise goals and needs. Furthermore, financial security management system should implement a specifically designed estimation algorithms that would allow the
management of enterprise properly evaluate the economic security and identify the current state of the development process.
While analyzing economic security of the enterprise the most popular approach indicates the detailed review of the cash flow statement. Obviously, the ability of the company to pay its obligations on time is one of the most important indicators of the overall health of the organization. In many companies nowadays the statement of cash flow is informative only for accountants and finance specialists. Therefore, in order to monitor and control the financial security of the company (especially payables and receivables) specific reports should be created that would allow the management to properly understand the current situation and take necessary actions. Such reports should include sub-accounts or analytical accounts and classification methods of different types of cash flows [4].
Another approach to ensuring economic security of the enterprise is implementation of the best global practices in this field. One of such instruments is International financial reporting standards. IFRS provides an objective overview of the company financial standings and any relevant changes in key indicators. This overview is crucial in the management decision-making process. Furthermore, IFRS takes into consideration time and risk factors through estimation at present value and formation of reserves [5].
It is difficult to overestimate the importance of economic security of enterprise and the country. Many approaches have been researched and discussed among scholars. Financial analysis plays a pivotal role in understanding the current and future security of the company. Among other tools IFRS currently is one of the best and one of the few that provides a systematic financial overview of the enterprise.
Uzbekistan government clearly understands the importance of IFRS implementation and has developed a road map for a transition from national accounting standards. Many state-owned enterprises have adopted IFRS at least in external audit procedures. This already improves the quality of data and assists management in decision-making process. Another important aspect of IFRS implementation is the increase of investment attractiveness of local companies for foreign investors as such reporting is familiar and transparent to them that, in its turn, decreases the cost of capital for enterprises.
References
1. Decree of the President of the Republic of Uzbekistan UP-4947 dated Feb. 7th, 2017.
2. Diana Dmitrievna Burkaltseva et al (2017). “Financial and economic security of business as a primary element in the economic system”. Revista ESPACIOS, Vol. 38 (Nº 33) 2017.
3. Vitalina Delas, Euvgenia Nosova, Olena Yafinovych (2015). “Financial Security of Enterprises”. Procedia Economics and Finance, 27 (2015) 248 – 266
4. Astrakhantseva, E.A., Aletkin, P.A., Fakhretdinova, E.N. (2016). “Statement of cash flows as information base for analysis of company’s economic security”. Social Sciences and Interdisciplinary Behavior –
Proceedings of the 4th International Congress on Interdisciplinary Behavior and Social Science, ICIBSOS 2015, 269-272
5. Kaspina R.G., Molotov L.A., Kaspin L.E., (2016). “The IFRS impact on effectiveness of a company’s economic security system”. Social Sciences and Interdisciplinary Behavior – Proceedings of the 4th International Congress on Interdisciplinary Behavior and Social Science, ICIBSOS 2016, pp. 65-70.