CC BY
15APPLICATION OF IFRS IN THE CONDITIONS OF DIGITAL
TECHNOLOGIES
Rano A. Mannapova
Tashkent Institute of Finance, "International School of Finance, Technology And Science"
Tashkent, Uzbekistan https://doi.org/10.5281/zenodo.10251448
Abstract. Nowadays the world is called a global village because of the forces of globalization, the most important thing is that developing economies are gradually integrating with developed economies through cross-border transactions for successful business, but understanding international financial information has become a very serious issue due to local accounting and reporting practices that create confusion in the minds of stakeholders. In this regard, it is important to have a universal set of standards to meet the needs of stakeholders. The International Accounting Standards Board (IASB) provided a permanent solution to this problem, earlier International Accounting Standards (IAS) were issued by the International Accounting Standards Committee (IASC), then they were changed in accordance with International Financial Reporting Standards, which attached greater importance to the clarity and comparability of financial accounting information to improve assessment and analysis of financial statements by users.
This article examines the evolution of IFRS in the context of digitalization of the Uzbekistan economy for its implementation in international economic processes. To expand the use of financial statements prepared in accordance with international financial reporting standards, it is necessary to digitize the financial and non-financial indicators contained in the statements. The study identified the advantages and disadvantages of using the XBRL standard when preparing financial statements under IFRS. The XBRL standard allows you to obtain financial and non-financial information about the reporting company in various sections. The preparation of financial statements presented in accordance with IFRS using the XBRL standard changes the transparency and openness of accounting data according to international financial reporting standards and brings them closer to global standards of digitalization language. The use of the XBRL standard significantly reduces the time it takes to prepare financial statements and eliminates the inconsistency of metadata, but in the near future it is not able to replace the professional judgment of a qualified accountant. The article proposes a unified digital data model, including the XBRL format, which allows for data taxonomy and standardization of financial indicators of different companies. To fully implement the XBRL format when preparing financial statements under IFRS, it is necessary to certify domestic software developers who are able to ensure a secure process for collecting, processing and transmitting company data through digital channels.
Keywords: Digital technologies, international financial reporting standards, digitalization, digital economy, XBRL.
Financial statements prepared in accordance with IFRS allow Uzbekistan companies to enter foreign capital markets and attract foreign investors (Akamah, Mason&Shafron, 2022). Consequently, companies that disclose financial statements according to IFRS standards are subject to the requirements of the information revolution (Yuryeva, Pudeyan, Medvedskaya,
Zaporozhtseva&Zemlyakova)/
The development of international financial reporting standards in the context of the introduction of digital technologies goes beyond the electronic interaction between users of the information contained in the statements and affects the issues of collecting, processing and analyzing data (Chernykh&Baybulatova, 2023).
Domestic and foreign scientists are engaged in research in the field of application of digital technologies in the financial sector, namely for collecting, processing and processing data for the preparation of financial statements in accordance with IFRS: Ergasheva S. T.(2020), Kaspin L.E., Bulyga R.P. (2020), Karpova TP. ., Kushnarenko T V. (2021), Rozhnova O.V. (2018), Fourny Ghislain (2020).
Almost all Uzbekistan experts in this field argue that the main subject of studying the application of IFRS in the context of digital technologies is the need to create a unified concept of digitalization and/or a unified standard for digital tools.
Materials and methods
The purpose of the scientific article is to analyze the prospects for digitalization of IFRS reporting through the introduction of the XBRL format, as well as the development of a unified digital data model that allows standardization and digitization of IFRS using XBRL. The object of scientific research is IFRS reporting, the subject is digital technologies in financial accounting. In preparing the theoretical section of the scientific research devoted to determining the development of IFRS in the context of digital technologies, general scientific methods were used: observation, analysis and synthesis, and the method of logical reasoning. For the practical part of the study, special methods were used: systematization, modeling and expert assessments.
Results
Standards XBRL (eXtensible Business Reporting Language) developed based on XML format. The XBRL language specification is developed and published by an independent international organization XBRL International Inc.
The XBRL language is intended for the exchange of electronic data of financial and management reporting, describing the provided reporting not in the language of forms, but in the language of basic indicators structured in a data model (XBRL financial statements).
The capabilities of XBRL reporting when preparing IFRS are presented in Figure 1.
The capabilities of XBRL make it possible to harmonize IFRS financial reporting forms (Official website of IFRS) and bring reports of different companies into single digital components, which allows investors and other interested parties to compare and analyze the financial performance of companies.
To compare the financial indicators of different companies, it is necessary to bring IFRS reporting in XBRL format into a single digital data model (Table 1).
Unified digital data model
Characteristics Description
Metadata A unified list of financial and non-financial indicators, catalogs, classifications of counterparties to unify digital channels for information exchange. This list includes explanations, a glossary and links to regulations.
Validation liWWWWWWWW Measurement control and digital data model management tools
Examination Issuance of information messages about identified technical, stylistic and mathematical errors
Documentation lAiVWAiWW^VVW^VWAWi Links to definitions of indicators contained m the reporting and reporting regulations
Digital channels ■■' ■■.■■vWWWW Relationship between financial indicators and their analytical features
Expenses vVvV^VvVvVvV'/v Software certification costs
Table 1 Built by the authors
The use of a unified digital data model will allow external and internal users of financial statements prepared in accordance with IFRS to conduct in-depth analytics.
The scheme for collecting and generating IFRS reporting in XBRL format using a unified digital data model is proposed to be drawn up as follows (Figure 2):
Schemefor collectingand generatingIFRS reportingin XBRL format usinga unified data model
Accounting »/wwwwwwww Unified digital VWVWWWv --' data model UWMWUWVWWW ) Convertersoftware ■AWvWAWvWv'- i^VWWWWW
XBRL Processor
1
Supervisory authorities, information disclosure IMMMAMÎWWWA liWWWWWVWW' liVWWWWWWWW liWWWWWWW
Figure2 Built by the authors The Converter software converts the reporting data received after aggregation into a single digital data model and validates it according to the XBRL taxonomy.
A unified digital data model in XBRL format will allow the financial reporting of different companies to be standardized according to a single data taxonomy.
Discussion
The direct benefits of using the XBRL format in a single digital data model when preparing IFRS reporting are to increase the structure and transparency, respectively, the accessibility of financial and non-financial indicators contained in financial statements prepared in accordance with IFRS, and the indirect benefits are to increase confidence in the enterprise - the compiler of such reporting and the growth of his business rating.
The disadvantages of using XBRL are the need to train the accountant preparing financial statements under IFRS to work in the XBRL format, certify the software used and monitor the information security of the data.
The advantage of using XBRL when presenting financial statements in IFRS format is that the reporting data is highly structured - the IFRS taxonomy occurs. The IFRS taxonomy should be understood as the arrangement of all reporting items under the required headings, which will fully meet the requirements of IFRS standards. In addition, clearly structured financial (accounting) reporting data will allow you to choose the most optimal accounting policy for the company and increase compliance control.
Drawing up IFRS reporting in XBRL format allows you to level out the discrepancies between different IFRS standards and compare the reports of different organizations. At the same time, the XBRL digital language does not completely eliminate the possibility of different interpretations, and, therefore, the need for professional judgment of the accounting service.
Currently, reporting in XBRL format in Russia must be submitted to the Bank of Russia only by professional participants in the securities market, collective investment entities and insurance entities. The use of the XBRL standard in the future by companies in the non-financial sector will make it possible to bring their financial statements presented under IFRS closer to the requirements imposed not only by Russian supervisory authorities, but also by international organizations (FRC publishes future of corporate reporting discussion paper).
To digitalize accounting, it is necessary to expand not only digital objects and digital accounting tools, but also to increase the composition of financial reporting indicators (for example, to include cryptography standards) (Ageeva, 2020).
To eliminate the digital divide in the presentation of financial statements in accordance with IFRS, it is necessary to increase the security of digital accounting data and introduce modern digital technologies. In the context of strict sanctions from the West, emphasis must be placed on the formation of our own digital infrastructure and information security means. Our own solutions that increase the security of digital systems will help accelerate the implementation of domestic digital technologies, including those with integrated information security mechanisms, which are in demand by the state and business in the development of electronic services for the preparation of financial statements in the IFRS format.
After the start of a special military operation in Russia, the Central Bank of the Russian Federation prohibited the publication of financial statements prepared in accordance with IFRS. In this regard, companies transmit financial reporting data only to the regulator. This measure was taken to hide financial indicators and non-financial information of Russian companies from external users located in unfriendly countries. Due to the fact that the XBRL standard belongs to Western developers, a problem has arisen regarding the security of data contained in IFRS reporting and generated in the XBRL format. For the same reason, it is not recommended to use cloud technologies when preparing IFRS reporting.
At the same time, Uzbek developers need to provide software for working with XBRL, which will increase the technological sovereignty of the Uzbekistan Republics, reduce the risk of cyber crimes and secure financial reporting data provided in accordance with IFRS in XBRL format.
The purchase and installation of software products that form the XBRL language, the development and modification of National Bank of Uzbekistan systems, testing and putting them into operation, the creation of a permanent XBRL jurisdiction in Russia will allow the safe integration of IFRS into the world taxonomy reporting language XBRL.
The use of these digital tools will improve accounting and reporting under IFRS and meet the requirements of IFRS participants for the digital transformation of the economy.
Conclusion
Financial statements prepared in accordance with international financial reporting standards are one of the main sources of information when analyzing the financial and economic activities of a company.
Companies presenting financial statements in accordance with IFRS must keep pace with the requirements for digitalization of the economy. In this regard, there is a continuous process of introducing digital tools and technologies into the collection, processing and preparation of financial reporting.
The XBRL standard is used to describe financial statement data in a structured manner. Currently, this language is required only for companies from the financial sector of the economy. At the same time, the capabilities of this standard can be used to exchange financial indicators and non-financial information by companies in the non-financial sector of the economy.
National companies that use a business language such as XBRL are more quickly integrated into the international business space, which is especially important when our country joins the Eurasian Economic Union (Druzhilovskaya T. Yu.&Druzhilovskaya E. S., 2019).
Many problems with inconsistencies in different reports compiled according to IFRS are solved by bringing them to a single digital data model compiled in XBRL format.
The use of digitalization technologies for financial reporting in accordance with IFRS has a positive effect on its openness and accessibility for investors. At the same time, new digital financial assets are emerging, and hence the need to introduce a method for accounting for them, as well as new requirements for the format of reporting under IFRS to regulatory authorities. All this forces businesses to modernize digital technologies used in enterprises.
Filing financial statements prepared in accordance with IFRS in XBRL format reduces the amount of duplicate information in the submitted statements, which reduces the burden of control by regulatory authorities. In addition, this digital language reduces the number of computational errors.
REFERENCES
1. Akhrieva, M. M. B. (2021). Analysis of the implementation of the state program "Digital Economy of the Russian Federation". Economics and business: theory and practice, Vol. 7(77). P. 15-17. https://doi.org/10.24412/2411-0450-2021-7-15-17.
2. Bulyga R. P., Safonova I. V. (2020). XBRL as a digital reporting format for economic entities: international experience and Russian practice. Accounting. Analysis. Audit., Vol. 3. P. 617. https://doi.org/10.26794/2408-9303-2020-7-3-6-17.
3. Turgunovna E. S. FINANCIAL REPORTING AS THE MOST IMPORTANT MARKETING FACTOR //INTERNATIONAL SCIENTIFIC CONFERENCES WITH HIGHER EDUCATIONAL INSTITUTIONS. - 2022. - Т. 1. - №. 25.10. - С. 211-217.
4. Эргашева, Ш. . (2022). ЯНГИ УЗБЕКИСТОНДА МОЛИЯВИЙ ^ИСОБОТНИНГ ХАЩАРО СТАНДАРТЛАРИНИНГ ИСТЩБОЛЛАРИ. Архив научных исследований, 2(1). извлечено от https://journal.tsue.uz/index.php/archive/article/view/1114
5. Другие форматы библиографических ссылок
6. Ergasheva S. T., Mannapova R. A., Yuldashev E. I. 18 Accounting-a System for Managing Economic Information in Agriculture //New Institutions for Socio-Economic Development: The Change of Paradigm from Rationality and Stability to Responsibility and Dynamism. - 2021. - Т. 5. - С. 173. Rozhnova O. V. (2018). Harmonization of accounting, audit and analysis in a digital economy. Accounting, analysis, audit. Vol.3, P. 16-23. https://doi .org/10.26794/2408-9303-2018-5-3-16-23
7. Herita Akamah, Stephani Mason, Emily Shafron. (2022). Disincentives to exchange customized local GAAP for IFRS, Journal of Accounting and Public Policy, Volume 41, Issue 6, 2022, 107002. https://doi.org/10.1016/j.jaccpubpol.2022.107002.
8. Ageeva, O. A. (2020). Transformation of accounting methods in the conditions of digital economy, Economics: yesterday, today, tomorrow. Vol. 2-1. P. 241-248. https://doi.org/10.34670/AR.2020.87.12.022.
9. Druzhilovskaya T. Yu., Druzhilovskaya E. S. (2019). Improving the financial reporting of organizations in the digital economy, Accounting. Analysis. Audit. Vol. 1. P. 50-61. https://doi.org/10.26794/2408-9303 -2019-6-1-50-61.
10. FRC publishes future of corporate reporting discussion paper (2023). URL: https://www.frc.org.uk/news/october-2020/frc-publishes-future-of-corporate-reporting-discus. (data accessed: 05.09.2023).
11. Official website of IFRS. (2023). URL: https://www.ifrs.org (data accessed:
05.09.2023).
12. XBRL financial statements. (2023). URL: https://ir.thomsonreuters.com/financial-information/sec-filings/xbrl-financial-statements (data accessed: 05.09.2023).
13. Fourny Ghislain. (2020). The XBRL Book: Simple, precise, technical. Independently published. p 564.
14. Chelnintseva E. V., Yarullin R. R. (2023). National digital economy project. International Journal of Humanities and Natural Sciences. Vol. 5-5(80). P. 120-125. https://doi.org/10.24412/2500-1000-2023-5-5-120-125.
