The Quality of Financial Statements During the Crisis Period

Abstract

The aim of this paper is to investigate the quality of financial statements during the period of crisis. The crisis has a negative effect on the business performance of a company. It is necessary to measure and analyze various aspects of performance and take timely corrective actions in order to achieve business stability. Quality of financial statements can be expressed as one of the business performances. High-quality financial statements are created in an accurate, timely and reliable manner in accordance with all requirements of regulation. Professional accounting regulation determines a large number of obligatory disclosures which have a direct impact on the quality of financial statements. This paper will analyze the quality of financial statements from the aspect of disclosures according to the International Accounting Standard 2 – Inventory (IAS 2). Inventory represents significant assets for production and trade companies. Therefore, the quality of disclosures according to IAS 2 can be significant for adequate business decisions. The research is based on a sample of agricultural and manufacturing companies registered in the AP Vojvodina during the period 2020-2021. The research is based on a descriptive analysis of the quality of disclosures according to the IAS 2 and financial reporting quality index. The results indicate that 41% of the obligatory disclosures are presented in companies reports. Accounting policy for inventories and carrying amount according to inventory classification are identified as disclosures of high quality. On the other hand, disclosure of the write-down of inventories, recognized as an expense for the period is identified at the lower quality level. The research can be of interest for managers, owners, and creators of financial statements in order to improve the quality of financial reporting as a result of disruption during the period of crisis.