AUDIT OF INTEGRATED REPORTS: AUDIT OF FINANCIAL STATEMENTS IS SUPPLEMENTED BY AN AUDIT OF REPORT ABOUT MANAGEMENT
Companies of public interest and large enterprises in Ukraine from 2019 should pass audit of integrated reporting. The financial statements are supplemented by the Report about Management. There are a lot of messages about these regulatory requirements. However, there is hardly any clarification on how to draw up a Report about Management and, moreover, to verify its certainty.
Specialists from the International Institute of Audit DFK are preparing popular scientific and methodological clarifications and recommendations for this.
We inform our clients about the draft methodological recommendations of the Ministry of Finance of Ukraine regarding the drawing up of the Report about Management. In general, the Ministry of Finance chooses not a standardized, but arbitrary form of the Report.
It is recommended to list the Information of non-financial nature in tables, infographics, charts, drawings, etc. Rather, entities will have to generate this report based on their own preferred approaches and indicators. In this case, for most of them it will be a problem.
We recommend clients two ways for solving this problem.
First, use the services of audit firms, many of which have developed their own methods of forming Report about Managements. Like our company.
Second: rely on own specialists. Thus, there are a number of the main factors:
1) professional. If workers does have experience and qualifications for doing such work;
2) target. If the management does have targeted expectations for the effectiveness of a new public presentation of its enterprise. The Report about Management should improve the image of your enterprise as a borrower, an investment attractive entity, a socially responsible enterprise that adheres to environmental standards. This is especially important for your potential partners from developed countries;
3) organizational. If it is possible for your enterprise to provide an effective horizontal organizational association of specialists from different services to the team for the constant representation of your business in the new socio-ecological and economic realities.
These three factors are not far-fetched. Moreover, independent preparation of effective integrated reporting was complete reality for enterprises in the soviet period. An interesting fact: almost until the 2000s the annual reporting of Ukrainian enterprises was integrated. For example, the annual report of an agricultural enterprise included 3 forms of financial reporting, 3 forms (as it is now called) on social responsibility (wages, utility services, incentive funds and social assignments), 1 form that can now be identified as compliance with environmental standards and 7 forms on equity financing, capital investment and other, now called reporting on development prospects, productivity and innovation. Like this!
Probably at your enterprises there are specialists who still remember about this.
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