Digest Finance

Identifying affiliation attributes of economic agents as part of controlling functions

Vol. 24, Iss. 3, SEPTEMBER 2019

PDF  Article PDF Version

Received: 15 August 2019

Received in revised form: 5 September 2019

Accepted: 12 September 2019

Available online: 30 September 2019


JEL Classification: F38, G12, H26, M41, M42

Pages: 305–319


Shchepot'ev A.V. Novaya Paradigma Consulting Group, Tula, Russian Federation


Subject The article analyzes and discusses affiliation indicia of economic agents from economic and legislative perspectives. The research also focuses on some aspects of accounting procedures which could reasonable be used to record transactions among affiliated parties so as to ensure more stringent control and make more effective managerial decisions.
Objectives The research aims to reinforce controlling tools of fiscal bodies with respect to groups of companies, improve accounting procedures applied to transactions between related parties, provide the rationale for separate recognition of assets, liabilities, income and expenses arising from such transactions.
Methods The research is based on methods of statutory regulation, analysis, generalization, synthesis and comparison. I performed a more profound analysis of transactions within a group of affiliated parties, especially analyzing and comparing financials of such entities.
Results I analyzed economic and legal indicia of affiliated parties. The article presents my motivated conclusion that it would be reasonable to envisage control over groups of affiliated parties not only legislatively, but also financially. I suggest improving accounting procedures applied to affiliated parties by recognizing assets, liabilities, income and expenses arising from such deals separately.
Conclusions and Relevance The article gives a more detailed view of economic and legislative indicia of affiliated economic agents and proves it is reasonable to separately recognize and disclose assets, liabilities, income and expenses arising from deals between affiliated parties in financial statements. The findings can be used by executive, court-appointed administrators, judges as part of analytical procedures concerning the financial standing of economic entities in court proceedings.

Keywords: financial reporting reliability, financial analysis, taxation, affiliated party, holding company


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Vol. 24, Iss. 3
September 2019