კონფერენცია

∘ Besik Bolkvadze ∘
THE ROLE OF CORPORATE REPORTING IN FORMATION AND DEVELOPMENT OF FINANCIAL BENCHMARKING SYSTEM

Summary

One of the most important requirements of Association Agreement with Europe Union is the arrangement of corporate management (including financial reporting) system and achievement of harmonization with the relevant Euro Directives for which some basic reforms were held, namely, the new law is adopted, the regulator entity is formed, normative acts were worked out, etc. The paper gives the scientific evidence of inevitability of elaboration such statistical-analytical tool as financial benchmarking based on proper analyses.

According the author the acting legislation about financial reporting is focused on the following approaches: 1. The differentiation of financial reporting in terms of categories of companies size; 2. Introducing of managerial reporting system; 3. Enhancement of control of audit quality; 4. Transparency of reporting system; 5. Accordance of financial reporting with standards.

The paper refers to the most important issues of the country’s corporate finance as follows: classification of enterprises for reporting goals, managerial reporting aspects, functions of regulator state organ, financial statements quality, companies’ accountability from auditing point of view, prerequisites of usage of International Financial Reporting Standards (IFRS), inevitability of formation of financial benchmark system.

It should be noted that the average sector benchmarks are not calculated in Georgian transitional economy that makes impossible for companies to compare their financial performance measures to the average sector/subsector financials. The consolidation and concentration process of financial and managerial reporting stimulates the utilization of analytical financial tools which increases the quality and access of relevant and reliable financial information flows. In it turns the implementation and development of benchmarking system supports the real business sector, entities of capital market and the state in adequate policy-making.

The article considers the most topical issues of the contemporary reporting policy, where the role of financial statement quality is underlined, mandatory audit cases are given, importance of enterprises categorization is considered, significance of inevitability of implementation of financial benchmarking system is discussed. Thus, the management of financial and managerial reporting system in transition economy of Georgia requires complex and systematic approach and timely responses by the regulator who is responsible for resolving core problematic issues which themselves are connected with implementation and upgrading of financial benchmarking mechanism in the nearest future.

Ivane Javakhishvili Tbilisi State University Paata Gugushvili Institute of Economics International Scientific C O N F E R E N C E S "ECONOMY – XXI CENTURY"

E ISSN 2587 - 4691	∘ Besik Bolkvadze ∘ THE ROLE OF CORPORATE REPORTING IN FORMATION AND DEVELOPMENT OF FINANCIAL BENCHMARKING SYSTEM Summary One of the most important requirements of Association Agreement with Europe Union is the arrangement of corporate management (including financial reporting) system and achievement of harmonization with the relevant Euro Directives for which some basic reforms were held, namely, the new law is adopted, the regulator entity is formed, normative acts were worked out, etc. The paper gives the scientific evidence of inevitability of elaboration such statistical-analytical tool as financial benchmarking based on proper analyses. According the author the acting legislation about financial reporting is focused on the following approaches: 1. The differentiation of financial reporting in terms of categories of companies size; 2. Introducing of managerial reporting system; 3. Enhancement of control of audit quality; 4. Transparency of reporting system; 5. Accordance of financial reporting with standards. The paper refers to the most important issues of the country’s corporate finance as follows: classification of enterprises for reporting goals, managerial reporting aspects, functions of regulator state organ, financial statements quality, companies’ accountability from auditing point of view, prerequisites of usage of International Financial Reporting Standards (IFRS), inevitability of formation of financial benchmark system. It should be noted that the average sector benchmarks are not calculated in Georgian transitional economy that makes impossible for companies to compare their financial performance measures to the average sector/subsector financials. The consolidation and concentration process of financial and managerial reporting stimulates the utilization of analytical financial tools which increases the quality and access of relevant and reliable financial information flows. In it turns the implementation and development of benchmarking system supports the real business sector, entities of capital market and the state in adequate policy-making. The article considers the most topical issues of the contemporary reporting policy, where the role of financial statement quality is underlined, mandatory audit cases are given, importance of enterprises categorization is considered, significance of inevitability of implementation of financial benchmarking system is discussed. Thus, the management of financial and managerial reporting system in transition economy of Georgia requires complex and systematic approach and timely responses by the regulator who is responsible for resolving core problematic issues which themselves are connected with implementation and upgrading of financial benchmarking mechanism in the nearest future.