COMPARATIVE ANALYSIS OF THE METHODS OF FINANCIAL AND ECONOMIC EXAMINATIONS TO DETERMINE INSOLVENCY


Keywords: insolvency, financial and economic examinations, expert method, validation.

Abstract

The article describes the methods of financial and economic examinations to determine the insolvency of a company in the Baltic countries, Republic of Armenia, Ukraine, Republic of Belarus, the Russian Federation and Republic of Kazakhstan. The signs of insolvency regulated in legislation of the countries, and international requirements for the validation of expert methods are presented in the article. The authors present the results of a comparative analysis of the considered methods for assessing insolvency and results of testing methods based on data of annual reports of focus group of five Latvian bankrupt companies.

The research has shown that the expert methods of all eight countries are based on a normative approach — comparing the calculated financial ratios with their normative value. In Ukraine, Republic of Belarus, the Russian Federation and Republic of Kazakhstan, the financial ratios and their normative values are approved in the legislation of the countries. In the Baltic countries and Republic of Armenia, these ratios and their values are developed in approved expert methodologies. The method of «net assets» is also used to assess the solvency of large companies.

The test results showed that the methods of the countries reviewed are applicable in practice and give a similar assessment of the solvency of companies as a whole. More similar results present the methods of the Baltic countries, Ukraine and Republic of Belarus. The results of the methods of Republic of Armenia, Kazakhstan and the Russian Federation are more similar to each other, but slightly differ from the previously listed group of countries.

The authors demonstrated the ability to validate the expert methods, which is necessary to use an expert conclusion on the assessment of insolvency as an evidence base in another country.

References

Altman, E. I. (1968). Financial ratios, discriminant analysis and the prediction of corporate bankruptcy: The Journal of Finance. 23 (4), 589-609.
Altman, E., Iwanicz-Drozdowska, M., Laitinen, E., Suvas, A. (2017). Distressed firm and bankruptcy prediction in an international context: a review and empirical analysis of Altman’s Z-score model: Journal of International Financial Management & Accounting. 28 (2), 131-171.
Business valuation: Statements on Management Accounting at 2009, № 7. Institute of Management Accountants, Available from: https://www.imanet.org/ search?ssopc=1#hawktabfield=it&it=content&contenttype=Statement %20on % 20Management % 20Accounting&pg=3 (date of access 20.06.2019).
Conformity assessment — requirement for the operation of various types of bodies performing inspection: ISO standard at 2012, Mart, № ISO/IEC 17020:2012, 2nd ed. ISO, 2012 (corrected version at 2013, April).
Davydova, G. V. Belikov, A. Yu. (1999). Metodika kolichestvennoy otsenki riska bankrotstva predpriyatiy: Upravleniye riskom. № 3, 13-20 [in Russian].
Demeshev, B. Tikhonova, F. (2014). Prognozirovaniye bankrotstva Rossiyskikh kompaniy: mezhotraslevoye sravneniye: Kolichestvennyy analiz v ekonomike. Moskva: Vysshaya shkola ekonomiki [in Russian].
ENFSI guideline for evaluative reporting forensic science: publication of ENFSI at 08.03.2015., version 3.0. ENFSI, 2015. URL: http://enfsi. eu/wp-content/uploads/2016/09/m1_guideline.pdf (date of access 19. 06. 2019).
Estonian Research Information System. URL: https://www.etis. ee/Portal/Projects/Display/3657971f-6e5f-4b59-aed8-953fc9205e73?-tabId=tab_Additional (date of access 19.06.2019) [in Estonian].
Fedotova, E. A. Timofeyev, Ya. V. (2015). Normativy finansovoy ustoychivosti Rossiyskikh predpriyatiy: otraslevyye osobennosti: Korporativnyye finansy. № 1 (33). 38-47 [in Russian].
Financial instruments: presentation: ISA standardat 1991, September, № 32. IFAC, 1991 (reissued at 2003).
General requirements for the competence of testing and calibration laboratories: ISO standardat 2017, November, № ISO/IEC 17025:2017, 3rd ed. ISO, 2017 (corrected version at 2018, April).
Grigaraviсius, S. (2003). Corporate Insolvency Diagnostics: Reliability and Practical Significance: Organization Management: Systematic Research. Kaunas: Vytautas Magnus University Press, 28, 29-42 [in Lithuanian].
Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements: IAASB handbook at 17.12.2018., in 3 volumes. IFAC, 2019. URL: http://www.ifac.org/publications-re-sources/2018-handbook-international-quality-control-auditing-review-other-assurance (date of access 19. 06. 2019).
Įmoniu bankroto įstatymo: Lietuvos Respulbikos įstatymo 20.03.2001., №. IX-216. Seimas, 2001 [in Lithuanian].
Karas, M., Režňáková, M. (2014). To what degree is the accuracy of a bankruptcy prediction model affected by the environment? The case of the Baltic States and the Czech Republic: in Procedia Social and Behavioural Sciences. Procedia Social and Behavioural Sciences. Elsevier, 564-568.
Komerclikums: Latvijas Republikas likums no 13.04.2000. Saeima, 2000 (ar izmainam uz 19.06.2019) [in Latvian].
Liodorova, J., Voronova, I. (2018). Use of models for forecasting fraudulent bankruptcy in forensic examination: myth or reality?: Istoriya i sovremennost sudebno-ekspertnogo obrazovaniya. materialy konferentsii. Minsk: Institut povysheniya kvalifikatsii i perepodgotovki kadrov Gosudarstvennogo komiteta sudebnykh ekspertiz Respubliki Belarus. 18-21 [in Russian].
Liodorova, Yu. Yansone, A. Zeltite, A. (2013). Bukhgalterskaya ekspertiza po opredeleniyu neplatezhesposobnosti; validatsiya protsedury i rezultaty: Eskpertinio tyrimo metodai. Vilniaus: Vilniaus panda, 134-157 [in Russian].
Maksatnespejas likums: Latvijas Republikas likums no 26.07.2010. Saeima, 2010 (ar izmainam uz 19.06.2019) [in Latvian].
Metodychni rekomendatsii shchodo vyiavlennia oznak neplatospromozhnosti pidpryiemstva i oznak dii z prykhovuvannia bankrutstva, fiktyvnoho bankrutstva abo dovedennia do bankrutstva: nakaz Ministerstva ekonomiky Ukrainy vid 19.01.2006, № 14 (stanom na 26.10.2010) [in Ukrainian].
Nalogovyy kodeks Respubliki Armeniya: Zakon Respubliki Armeniya ot 04.10.2016 (v redaktsii ot 04.10.2016) [in Russian].
O neplatezhespobnosti (bankrotstve): Zakon Respubliki Armeniya от 22.01.2007,
№ ЗР-51 [in Russian].
O nesostoyatelnosti (bankrotstve): Federalnyy zakon Rossiyskoy Federatsii ot 26.10.2002, № 127-FZ. Prinyat Gosudarstvennoy Dumoy. 2002 (s izmeneniyami na 29.05.2019) [in Russian].
O Poryadke rascheta stoimosti chistykh aktivov: Postanovleniye Ministerstva finansov Respubliki Belarus ot 11.06.2012, № 35 (v redaktsii ot 11.06.2012) [in Russian].
O reabilitatsii i bankrotstve: Zakon Respubliki Kazakhstan ot 07.03.2014,
№ 176-V (s izmeneniyami na 02.04.2019) [in Russian].
Ob ekonomicheskoy nesostoyatelnosti (bankrotstve): Zakon Respubliki Belarus ot 13.07.2012, № 415-3. Prinyat Palatoy predstaviteley. 2012 (s izmeneniyami na 15.11.2016) [in Russian].
Ob opredelenii kriteriyev otsenki platezhesposobnosti subyektov khozyaystvovaniya: Postanovleniye Soveta ministrov Respubliki Belarus ot 12.12.2011, № 1672 (s izmeneniyami na 22.01.2016) [in Russian].
Ob utverzhdenii Instruktsii o poryadke rascheta koeffitsiyentov platezhesposobnosti i provedeniya analiza finansovogo sostoyaniya i platezhesposobnosti subyektov khozyaystvovaniya: Postanovleniye Ministerstva finansov Respubliki Belarus ot 27.12.2011, № 140/206. (s izmeneniyami na 01.01.2014) [in Russian].
Ob utverzhdenii Poryadka opredeleniya stoimosti chistykh aktivov: рrikaz Minfina Rossii ot 28.08.2014, № 84-N (s izmeneniyami na 21.02.2018) [in Russian].
Ob utverzhdenii Pravil provedeniya arbitrazhnym upravlyayushchim finansovogo analiza: Postanovleniye Pravitelstva Rossiyskoy Federatsii ot 25.06.2003,
№ 367 (v redaktsyy ot 25.06.2003) [in Russian].
Ob utverzhdenii tipovoy formy zaklyucheniya vremennogo upravlyayushchego o finansovom polozhenii dolzhnika: prikaz Zamestitelya Premyer-Ministra Respubliki Kazakhstan ot 12.05.2014, № 218 (v redaktsii ot 12.05.2014) [in Russian].
Pankrotiseadus: Eesti Vabariigi seadus 22.01.2003. Riigikogu, 2003 (19.03.2019) [in Estonian].
Pro vidnovlennia platospromozhnosti borzhnyka abo vyznannia yoho bankrutom: Zakon ot 14.05.1992, № 2343-KhII (iz zminamy stanom na 04.04.2018) [in Ukrainian].
Prusak, B. (2018). Review of research into enterprise bankruptcy prediction in selected Central and Eastern European countries: International Journal of Financial Studies. 6 (60), 1-28.
Savitskaya, G. V. (2009). Analiz khozyaystvennoy deyatelnosti predpriyatiya. Moskva: Infra-M [in Russian].
Sorins, R., Voronova, I. (1998). Uznemuma maksatnespejas novertejums: Ekonomiskas problemas uznemejdarbiba. Riga: Rigas Tehniska universitate. 125 — 131 [in Latvian].
Spiečiutė, A., Barkauskas, M., Kuncevič, Jansone, A., Zeltite, A., Liodorova, J., Kangro, I., Liivamae, I.. (2013). The economic expertise best practice guide for investigation of the crimes related to bunkruptcy and for completion of the experimental insolvency research in the Baltic countries: Eskpertinio tyrimo metodai. Vilnius: Vilniaus panda, 62-122. Soglasno vnutrenney nepublikuyemoy metodiki [in Russian].
Süsi, V., Lukason, O. (2019). Corporate governance and failure risk: evidence from Estonian SME population: Management Research Review. 42 (6), 703-720.
Tereshchenko, O. O. (2000). Finansova sanatsiia ta bankrutstvo pidpryiemstv: navch. posibnyk. Kyiv: KNEU [in Ukrainian].

Abstract views: 41
PDF Downloads: 44
Published
2019-12-04
How to Cite
Liodorova, J., Mamikonyan, K., & Markina, O. (2019). COMPARATIVE ANALYSIS OF THE METHODS OF FINANCIAL AND ECONOMIC EXAMINATIONS TO DETERMINE INSOLVENCY. Theory and Practice of Forensic Science and Criminalistics, 20(2), 351-366. https://doi.org/10.32353/khrife.2.2019.27
Section
FORENSIC ENGINEERING AND TECHNICAL EXAMINATION