ACCOUNTING AND AUDITING ACCORDING TO INTERNATIONAL STANDARDS AS A MANAGMENT FUNCTION

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)).