THE PROBLEM OF DISCOUNTING IN THE UKRAINIAN PRACTICE OF PREPARING AND PRESENTING FINANCIAL STATEMENTS IN THE CONTEXT OF TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS

Abstract

The article considers the instrument of discounting and the concept of present value of money as one of the basic theories of finances. The mechanism of discounting as an integral element of qualitative financial information according to the requirements of IFRS is considered in the article. Qualitative financial information is required by all stakeholders of business in order to make effective economic decisions. Talking about stakeholders, IFRS usually means those economic agents that make decisions about funding the business. Therefore, qualitative financial information, presented in financial reports, is able to affect efficiency of any business. In the end, economic efficiency of every separate business is going to be realized in the overall economic growth of a country. Discounting has been traditionally avoided by the national finance professionals. They have considered this practice as over complicated and unnecessary. They have been using any possible loopholes to manipulate with discounting for the purpose of presenting the most suitable for them financial information. The research proves that discounting is an easy and valuable instrument to prepare faithful and reliable financial information for its final users. This creates benefits for every stakeholder in the context of effective usage of its resources. It creates benefits for every business in the context of more efficient management, based on qualitative financial information. It creates benefits for governments in the context of better financial information for the purpose of taxation. In the end, it leads to more effective financial markets, which, in turn, are realized in the long term economic growth of the country. This was the main goal why Ukraine implemented IFRS in its internal business practices. The country desired to become a part of international financial environment. It could be done via application of common accounting and reporting policies. If a company itself wants to be successful in international terms, it also has to apply these unified standards. Discounting is an integral part of these standards and must be used consistently.