Management Report as a Component of Nonfinancial Reporting in Ukraine: Theory and Practice of Drafting

Olena  Petryk; Alla Basok; Tetiana  Marenych; Natalia  Yatsenko; Sergіy  Kalinichenko

doi:10.14807/ijmp.v12i3.1523

PDF HTML

Published: May 1, 2021

DOI: https://doi.org/10.14807/ijmp.v12i3.1523

Keywords:

Management report Nonfinancial reporting Corporate social responsibility Disclosure of nonfinancial information

Olena Petryk

Kyiv National Economic University named after Vadim Hetman

Alla Basok

Kyiv National Economic University named after Vadim Hetman

Tetiana Marenych

Kharkiv Petro Vasylenko National Technical University of Agriculture

http://orcid.org/0000-0002-8502-1884

Natalia Yatsenko

Kremenchuk National Mykhaylo Ostrogradskiy University

http://orcid.org/0000-0001-7795-7300

Sergіy Kalinichenko

Kharkiv Petro Vasilenko National Technical University of Agriculture

https://orcid.org/0000-0003-3958-4763

Abstract

The article covers the issue of compiling the Management Report. The need to implement a management report in Ukraine is caused by the processes of implementation of the European Union legislation on accounting in the national regulatory framework. The purpose of this report is to complement the annual financial statements with the necessary information, which should contain a reliable overview of development, activities and condition, as well as a description of the main risks and uncertainties in the work of an enterprise. This paper reviews the legislative framework for the preparation and publication of the Management Report and analyzes the Management Reports of domestic enterprises for compliance with regulatory requirements and the quality of these indicators. It has been defined that the lack of common normatively approved qualitative issues of the report and requirements for it are the significant problems. The format, scope, structure and accuracy of the information are determined at the discretion of an enterprise. The contained performance measures of enterprises significantly differ from each other and are not always given in comparison with the similar measures for the previous periods. Such presentation of data causes poor and uninformative reports. The results of the study prove that the Management Report should be based on the following principles: reliability and completeness, materiality, conciseness, integrity and comprehensibility; comparability of indicators. It is necessary to apply a risk-oriented approach and adhere the logic of presenting information with the elements of its visualization for its preparation. The study is based on the requirements of Directives 2013/34 / EU and 2014/95 / EU, the Law of Ukraine On Accounting and Financial Reporting in Ukraine, Methodological recommendations for the preparation of a management report, as well as empirical data obtained in the analysis of reports on management of Ukrainian enterprises.

Downloads

Download data is not yet available.

Issue

Vol. 12 No. 3 (2021): Independent Journal of Management & Production (Special Edition ISE, S&P)

Section

Integration System of Education, Science and Production

This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

1. Proposal of Policy for Free Access Periodics

Authors whom publish in this magazine should agree to the following terms:

a. Authors should keep the copyrights and grant to the magazine the right of the first publication, with the work simultaneously permitted under the Creative Commons Attribution-NonCommercial-ShareAlike 4.0 that allows the sharing of the work with recognition of the authorship of the work and initial publication in this magazine.

b. Authors should have authorization for assuming additional contracts separately, for non-exclusive distribution of the version of the work published in this magazine (e.g.: to publish in an institutional repository or as book chapter), with recognition of authorship and initial publication in this magazine.

c. Authors should have permission and should be stimulated to publish and to distribute its work online (e.g.: in institutional repositories or its personal page) to any point before or during the publishing process, since this can generate productive alterations, as well as increasing the impact and the citation of the published work (See The Effect of Free Access).

Proposal of Policy for Periodic that offer Postponed Free Access

Authors whom publish in this magazine should agree to the following terms:

a. Authors should keep the copyrights and grant to the magazine the right of the first publication, with the work simultaneously permitted under the Creative Commons Attribution-NonCommercial-ShareAlike 4.0 [SPECIFY TIME HERE] after the publication, allowing the sharing of the work with recognition of the authorship of the work and initial publication in this magazine.

b. Authors should have authorization for assuming additional contracts separately, for non-exclusive distribution of the version of the work published in this magazine (e.g.: to publish in institutional repository or as book chapter), with recognition of authorship and initial publication in this magazine.

c. Authors should have permission and should be stimulated to publish and to distribute its work online (e.g.: in institutional repositories or its personal page) to any point before or during the publishing process, since this can generate productive alterations, as well as increasing the impact and the citation of the published work (See The Effect of Free Access).

d. They allow some kind of open dissemination. Authors can disseminate their articles in open access, but with specific conditions imposed by the editor that are related to:
   Version of the article that can be deposited in the repository:
   Pre-print: before being reviewed by pairs.
   Post-print: once reviewed by pairs, which can be:
The version of the author that has been accepted for publication.
The editor's version, that is, the article published in the magazine.
   At which point the article can be made accessible in an open manner: before it is published in the magazine, immediately afterwards or if a period of seizure is required, which can range from six months to several years.
Where to leave open: on the author's personal web page, only departmental websites, the repository of the institution, the file of the research funding agency, among others.

Author Biographies

Olena Petryk, Kyiv National Economic University named after Vadim Hetman

Doctor of Economics, Professor, Head of the Audit Department. She is the certified auditor of Ukraine, the member of the editorial board of several professional editions, the expert of the higher accreditation commission of the Ministry of education and science of Ukraine, specializing in accounting and taxation, the academician of the Academy of economic sciences of Ukraine, specializing in Accounting and Auditing. She cooperates with professional organizations of accountants and auditors, is a participant of the World bank STAREP project. Scientific interests: Theory, Organization and Methodology Independent, Internal and State Audit.

Alla Basok , Kyiv National Economic University named after Vadim Hetman

Ph.D. Student at the Audit Department. She has two higher educations: - graduated from Kyiv National University of Trade and Economics and obtained a master degree in accounting and audit in the entrepreneurship; - graduated from Kyiv National Economic University and obtained a master degree from personnel management and labor economics. She has a practical experience: worked as an accountant for 6 years at PJSC «Scientific and technical enterprise «Electronprylad». Since 2020 she has been working as an administrative specialist at Danfoss LLC. Scientific interests: non-financial reporting, organization and accounting of wages.

Tetiana Marenych, Kharkiv Petro Vasylenko National Technical University of Agriculture

Doctor of Economic Sciences (2007), Professor of Accounting and Audit (2008), Head of the Department of Accounting and Audit Kharkiv Petro Vasylenko National Technical University of Agriculture.

He teaches disciplines taught: accounting (general theory), financial accounting, accounting and reporting according to international standards, professional ethics of accountants and auditors.

Scientific interests: Mechanisms of economic regulation of agricultural producers in the conditions of formation of innovative model of agrarian and industrial complex; Organization and methods of accounting in agricultural enterprises of various organizational and legal forms. Author of more than 400 scientific works.

Natalia Yatsenko, Kremenchuk National Mykhaylo Ostrogradskiy University

Ph.D. in Economics, Associate Professor Department of Accounting and Finance. She teaches disciplines taught: Accounting, Organization and methods of audit, Accounting, management and financial reporting, Accounting in enterprise management, Enterprise reporting. Scientific interests: management reporting of enterprises, features of accounting in online commerce, cryptocurrency accounting

Sergіy Kalinichenko, Kharkiv Petro Vasilenko National Technical University of Agriculture

Ph.D. in Economics, Associate Professor, Deputy Director of the Educational and Scientific Institute of Business and Management, the Assistant professor of the Department of Production, Business and Management of the Petro Vasilenko National Technical University of Agriculture. He teaches disciplines taught: organization of production; planning and control at the enterprise; organization and management of business activities; business planning methodology.

Scientific interests: The mechanism of increasing Competitiveness; Development of Economic and Production-Technological Potential of Subjects of Agro-Industrial Production. Author of more than 100 scientific works. Scopus AuthorID: 57213620238 http://www.scopus.com/inward/authorDetails.url?authorID=57213620238&partnerID=MN8TOARS

References

Aluchna, M., Hussain, N., & Roszkowska-Menkes, M. (2019). Integrated Reporting Narratives: The Case of an Industry Leader. Sustainability, 11(4),976. DOI: 10.3390/su11040976.

Aureli, S., Salvatori, F., & Magnaghi, E. (2020). A Country-Comparative Analysis of the Transposition of the EU Non-Financial Directive: An Institutional Approach. Accounting, Economics, and Law: A Convivium. Available: https://www.degruyter.com/view/journals/ael/10/2/article-20180047.xml. Access: 8th October, 2020.

Bezverkhyj, K. V., & Pantelejev, V. P. (2018). Konsolidovanyj zvit pro upravlinnja. Novaciji upravlinsjkoji praktyky zvituvannja. [Consolidated management report. Innovations in management reporting practices]. Scientific Bulletin of the National Academy of Statistics, Accounting and Auditing, (1-2), 37-46.

Bondar, T. A. (2017). Zvit pro upravlinnia: etapy skladannia. Suchasni tendentsii rozvytku obliku, opodatkuvannia, analizu i audytu [Management report: stages of compilation. Current trends in accounting, taxation, analysis and audit]. Kyiv: KNEU, 115-117.

Caputo, F., Leopizzi, R., Pizzi, S., & Milone, V. (2019). The Non-Financial Reporting Harmonization in Europe: Evolutionary Pathways Related to the Transposition of the Directive 95/2014/EU within the Italian Context. MDPI and ACS Style, 12, 92. Available: https://www.mdpi.com/2071-1050/12/1/92/htm.

Carini, C., Rocca, L., Veneziani, M., & Teodori, C. (2018). Impact Assessment of Sustainability Information–The Directive 2014/95. MDPI and ACS Style, 10, 560. Available: https://www.mdpi.com/2071-1050/10/2/560/.

Diadiun, O., Petryk, O., Semenyshena, N., Khorunzhak, N., & Kalinichenko, S. (2020). Integrated Reporting in the Conditions of Sustainable Development: Institutionalization Through Standardization. Intellectual Economics, 14(2), 67-86. DOI: 10.13165/IE-20-14-2-05.

Directive 2013/34/Eu Of The European Parliament And Of The Council of 26 June 2013. Available: https://eur-lex.europa. eu /legal-content /EN/TXT/HTML/?uri= CELEX:32013 L0034&from=EN. Access: 5th October, 2020.

Directive 2014/95/Eu Of The European Parliament And Of The Council of 22 October 2014 of 22 October 2014. Available: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32014 L0095& from=EN. Access: 6th October, 2020.

Dyduch, J., & Krasodomska, J. (2017). Determinants of Corporate Social Responsibility Disclosure: An Empirical Study of Polish Listed Companies. MDPI and ACS Style, 9, 1934. Available: https://www.mdpi.com/2071-1050/9/11/1934. Access: 10th October, 2020.

Instruktsiia Pro Poriadok Skladannia Ta Opryliudnennia Finansovoi Zvitnosti Bankiv Ukrainy (2019). Instruction on the procedure for compiling and publishing of financial statements of Ukrainian banks. Approved by the National Bank of Ukraine Resolution of 24.10.2011 №373. In the edition of 01.01.2019]. Available: https://zakon.rada.go,ua/laws/show/z1288-11#Text. Access: 16th October, 2020.

García‐Sánchez, I.-M., & Araújo‐Bernardo, C.-A. (2019). What colour is the corporate social responsibility report? Structural visual rhetoric, impression management strategies, and stakeholder engagement. Corporate Social Responsibility and Management, 27(2), 1117-1142. DOI: 10.1002/csr.1869.

Krištofík, P., Lament, M., & Musa, H. (2016). The reporting of non-financial information and the rationale for its standardisation. Ekonomika a management, 2, XIX. Available: https://dspace.tul.cz/bitstream/handle/ 15240/16437/EM_2_2016_11.pdf?sequence=2. Access: 5th October, 2020.

Lovinska L. H., Oliinyk Ya. V., & Bondar, T. A. (2018). Normatyvno-pravove zabezpechennia zvitu pro upravlinnia pidpryiemstv v Ukraini [Regulatory and legal support of the report on enterprise management in Ukraine]. Finansy Ukrainy (electronic journal). (6), 19-44 Retrieved from: http://finukr.org.ua/docs/FU_18_06_019_uk.pdf. Access: 1th October, 2020.

Management Report of Prat Fitofarm (2019). Приватне Акціонерне Товариство "Фітофарм". Retrieved from: https://fitofarm.ua/wp-content/uploads/2020/05/%D0%A4%D0%86%D0%A2%D0%9E%D0%A4%D0%90%D0%A0%D0%9C_12-%D0%BC%D1%96%D1%81-2019.-%D0%97%D0%B2%D1%96%D1%82-%D0%BF%D1%80%D0%BE-%D1%83%D0%BF%D1%80%D0%B0%D0%B2%D0%BB%D1%96%D0%BD%D0%BD%D1%8F.pdf.

Management Report of at «Halychfarm» (2018). 3bit цpo yцpabлiннЯ ат «ГaлнЧФapм». Available: http://www.galychpharm.com/files/%D0%97%D0%B2%D1%96%D1%82%20%D0%BF%D1%80%D0%BE%20%D1%83%D0%BF%D1%80%D0%B0%D0%B2%D0%BB%D1%96%D0%BD%D0%BD%D1%8F%20%D0%B7%D0%B0%202018%D1%80.pdf. Access: 1th October, 2020.

Management Report Of Pat «Kyivmedpreparat» (2018). Публічного Акціонерного товариства «Київмедпрепарат». Available: http://www.kievmedpreparat.com/files/%D0%97%D0%B2%D1%96%D1%82%20%D0%BF%D1%80%D0%BE%20%20%20%D1%83%D0%BF%D1%80%D0%B0%D0%B2%D0%BB%D1%96%D0%BD%D0%BD%D1%8F%20%D0%B7%D0%B0%202018%D1%80..pdf. Access: 1th October, 2020.

Management Report Of Prat «Fitofarm» (2019). Приватне Акціонерне Товариство "Фітофарм". Available: https://fitofarm.ua/wp-content/uploads/2020/05/%D0%A4%D0%86%D0%A2%D0%9E%D0%A4%D0%90%D0%A0%D0%9C_12-%D0%BC%D1%96%D1%81-2019.-%D0%97%D0%B2%D1%96%D1%82-%D0%BF%D1%80%D0%BE-%D1%83%D0%BF%D1%80%D0%B0%D0%B2%D0%BB%D1%96%D0%BD%D0%BD%D1%8F.pdf. Access: 1th October, 2020.

Manes-Rossi, F., Tiron-Tudor, A., Nicolò, G., & Zanellato, G. (2018). Ensuring More Sustainable Reporting in Europe Using Non-Financial Disclosure—De Facto and De Jure Evidence. MDPI and ACS Style, 10, 1162. Available: https://www.mdpi.com/2071-1050/10/4/1162/htm#B6-sustainability-10-01162. Access: 2th October, 2020.

Matuszak, Ł., & Różańska, E. (2017). CSR Disclosure in Polish-Listed Companies in the Light of Directive 2014/95/EU Requirements: Empirical Evidence. MDPI and ACS Style, 9, 2304. Available: https://www.mdpi.com/2071-1050/9/12/2304. Access: 3th October, 2020.

Metodychni Rekomendatsii Z Pidhotovky Zvitu Pro Upravlinnia (2018). KRESTON GCG [Guidelines for the preparation of the Management Report (2018). Kreston GCG]. Available: https://kreston-gcg.com/wp-content/uploads/2018/11/15-11-2018_report_cover_fin-pdf-pdf.pdf. Access; 4th October, 2020.

Michelon, G., Pilonato, S., & Ricceri, F. (2015). CSR reporting practices and the quality of disclosure: An empirical analysis. Critical Perspectives on Accounting, 33, 59-78. Available: https://www.sciencedirect.com/science/article/abs/pii/ S1045235414001 051?via%3Dihub. Access 6th October, 2020.

Ministry Of Finance (2019). Methodical recommendations for compiling a management report, approved by the order of the Ministry of Finance dated 07.12.2018 № 982. As amended on 18.01.2019. Retrieved from: https://zakon.rada.go,ua/rada/show/v0982201-18#Text . Access 1th October, 2020.

National Bank Of Ukraine (2011). Instruction on the procedure for compiling and publishing of financial statements of Ukrainian banks. Approved by the National Bank of Ukraine Resolution of 24.10.2011 №373. In the edition of 01.01.2019. Retrieved from: https://zakon.rada.go,ua/laws/show/z1288-11#Text . Access 1th October, 2020.

Official Journal Of The European Union (2013). Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013. Available: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32013L0034 Access 1th October, 2020.

Official Journal Of The European Union (2014). Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014. Available: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32014L0095. Access: 1th October, 2020.

Onyshchenko, V. (2018). Porivniannia natsionalnykh ta mizhnarodnykh vymoh do skladannia zvitu pro upravlinnia [Comparison of national and international management reporting requirements]. Problems and prospects of economics and management, 16(4), 230-238.

Ozeran, A. V. (2017). Zvit kerivnytstva VS zvit pro upravlinnia: problemy vidpovidnosti zakonu pro bukhhalterskyi oblik ta svitovoi praktyky [Management Report Vs Management report: problems of compliance with accounting law and world practice]. Bukhhalterskyi oblik i audyt, (10-11), 2-12.

Patten, D. M., & Zhao, N. (2014). Standalone CSR reporting by U.S. retail companies. Accounting Forum, 38(2), 132-144, DOI: 10.1016/j.accfor.2014.01.002.

Popescu, C. R. G. (2019). Corporate Social Responsibility, Corporate Governance and Business Performance: Limits and Challenges Imposed by the Implementation of Directive 2013/34/EU in Romania. MDPI and ACS Style, 11, 5146. Available: https://www.mdpi.com/2071-1050/11/19/5146/htm. Access: 3th October, 2020.

Semenyshena, N., Khorunzhak, N., & Zadorozhnyi, Z.-M. (2020). The Institutionalization of Accounting: the Impact of National Standards on the Development of Economies. Independent Journal of Management & Production, 11(8), 695-711. DOI: 10.14807/ijmp.v11i8.1228.

Semenyshena, N., Sysiuk, S., Shevchuk, K., Petruk, I., & Benko, I. (2020). Institutionalism in Accounting: a Requirement of the Times or a Mechanism of Social Pressure? Independent Journal of Management & Production, 11(9), 2516-2541. DOI: 10.14807/ijmp.v11i9.1440.

Sonnerfeldt, A., Ling, Li., & Pontoppidan, C. A. (2020). The Challenges of Assurance on Non-financial Reporting. Accounting, Economics, and Law: a Convivium,10(2).

Stittle, J. (2002). UK Corporate Ethical Reporting—A Failure to Inform: Some Evidence from Company Annual Reports, Business and Society review, 107(3). DOI: 10.1111/1467-8594.00140.

Stolowy, H., & Paugam, L. (2018). The expansion of non-financial reporting: an exploratory study. Accounting and Business Research, 48(5), 525-548. DOI: 10.1080/00014788.2018.1470141.

Tarquinio, L., & Posadas, S. C. (2020). Exploring the term “non-financial information”: an academics’ view. Meditari Accountancy Research, 28(5), 727-749. DOI: 10.1108/MEDAR-11-2019-0602.

Torre, M., Sabelfeld, S., Blomkvist, M., Tarquinio, L., & Dumay, J. (2018)., Harmonising non-financial reporting regulation in Europe: Practical forces and projections for future research. Meditari Accountancy Research, 26(4), 598-621. DOI: 10.1108/MEDAR-02-2018-0290.

Truant, E., Corazza, L., & Scagnelli, S. D. (2017). Sustainability and Risk Disclosure: An Exploratory Study on Sustainability Reports. MDPI and ACS Style, 9, 636. Available: https://www.mdpi.com/2071-1050/9/4/636. Access: 1th October, 2020.

Tsagas, G., & Villiers, Ch. (2020). Why “Less is More” in Non-Financial Reporting Initiatives: Concrete Steps Towards Supporting Sustainability. Accounting, Economics, and Law: a Convivium, 10(2). Available: https://www.degruyter.com/view/journals/ael/ahead-of-print/article-10.1515-ael-2018-0045/article-10.1515-ael-2018-0045.xml. Access: 7th October, 2020.

Venturelli, A., Caputo, F., Cosma, S., Leopizzi, R., & Pizzi, S. (2017). Directive 2014/95/EU: Are Italian Companies Already Compliant? MDPI and ACS Style, 9, 1385. Available: https://www.mdpi.com/2071-1050/9/8/1385. Access: 1th October, 2020.

Venturelli, A., Caputo, F., Leopizzi, R., & Pizzi, S. (2019). The state of art of corporate social disclosure before the introduction of non-financial reporting directive: a cross country analysis, Social Responsibility Journal, , 15(4), 409-423. DOI: 10.1108/SRJ-12-2017-0275

Article Sidebar

Main Article Content