Modern Management Review (Dec 2016)
THE ROLE OF FINANCIAL STATEMENT IN PERFORMANCE MANAGEMENT
Abstract
The essence of financial statements has been used as a background to present the elements of performance management, providing the required characteristics of balance, profit and loss account, additional information, cash flow statement, statement of changes in equity and the business activity report as a supplementary statement of the financial statement of selected entities. The article focuses particularly on the possibilities of using financial statements as a final product of financial accounting, used as a source of data supporting the process of performance management. The paper contains considerations concerning traditional methods of application of financial statement in performance management. It also indicates directions for improvements in the structure and principles of preparing financial statements in order to increase the usefulness of the provided data in performance management. The conducted analysis leads to the conclusion that particular elements of financial statements may be very useful in assessing performance in selected areas of performance management. It particularly concerns the multidimensional measurement of property resources, results of activity, cash flows (financial measures), as well as various assessments and judgements, including the evaluation of effects, determination of risk factors and specification of threats (non-financial measures). Legally formalised by the accounting act, Polish financial statements provide limited capabilities of using in performance management. The entities that prepare financial statements according to the International Accounting Standards/International Financial Reporting Standards have considerably better capabilities in that field. The analysis has been prepared using the methods of review and analysis of literature and legal acts, while conclusions have been based on the methods of induction, deduction and analogical reasoning.
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