Baltic Journal of Economic Studies (Mar 2021)
ACCOUNTING COMPLIANCE: AN INSTITUTIONAL APPROACH TO ENSURE THE QUALITY OF ACCOUNTING INFORMATION OF THE ENTERPRISE
Abstract
The subject of the study is theoretical, methodological and practical aspects of the formation, development and functioning of the accounting compliance system as an appropriate institution for ensuring the quality of enterprise accounting information. Methodology. The methodological basis of the study is general scientific and special methods of cognition. In the course of the study, the following methods were used: abstract-logical method was used for the cognition of the essence, approaches, clarification of the concept of “compliance”, “accounting compliance”; bibliographic method was used for the study and development of scientific works devoted to the definition of the essence of the term “compliance”; graphic method was used for the design of the described processes using logical block diagrams; system-structural analysis was used to improve the mechanism for the formation and implementation of the accounting compliance system as an institution for ensuring the quality of accounting information. The objective of the study is to consider the essence of the concept of “compliance”, “accounting compliance”, to establish and define the role of accounting compliance in ensuring the quality of accounting information, to substantiate methodological approaches and practical recommendations for its formation and implementation at the enterprise. Results. The study has established that the definition of “compliance” should include an institutional approach, i.e. “compliance” should be understood as an institution of the internal control and corporate ideology system, which, using a system of regulations and a set of control mechanisms, forms the company’s ability to comply with established norms, standards, rules and procedures; a means of propaganda aimed at promoting the requirements for compliance with internal regulatory documents and generally accepted social values of the enterprise; a set of measures aimed at identifying risks accompanying the activities of the enterprise and eliminating their adverse consequences. “Accounting Compliance” is an institution of the internal control and corporate ideology system of the enterprise, which with the help of a system of measures and a set of control mechanisms provides the ability to track, monitor, evaluate and comply with the requirements of regulatory documents, regulations, instructions in the accounting system. It must be necessarily aimed at identifying, reducing and eliminating the risks of distortion, misrepresentation and falsification of accounting information. It has been substantiated that the accounting compliance system, as an appropriate institution, should be formed in stages, based on a set of specially developed internal methods, rules and procedures. It has been proved that most of the actions of the compliance system are aimed at identifying, analysing and assessing risks in the accounting system, and a significant number of documents defining its normative content are closely related to the implementation of the risk management function. Practical implications. In order to ensure the identification of compliance risks in the company’s accounting system and determine their impact on the formation and quality of accounting information, the grouping of risks by type is presented. To implement the functions of accounting compliance, it was proposed to develop and approve a number of internal standards and regulations, which will guide the employees of the Compliance Department in their work. In order to ensure the quality of accounting information to users necessary for making effective management decisions, the organizational and economic mechanism of the accounting compliance system has been developed. Conclusion of the study. Thus, accounting compliance, as an institution for ensuring the quality of accounting information at an enterprise, should be focused on finding, identifying, assessing, analysing and taking measures to minimize compliance risks in the accounting system arising from non-compliance with established rules, standards and procedures for organization and maintenance of accounting. Substantiated methodological foundations and recommendations for the formation and implementation of accounting compliance will not only ensure the quality of accounting information, but also guarantee business purity, a high level of corporate culture. The latter will contribute to improving the efficiency of economic activities and sustainable development of the enterprise.
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