Company management decision-making based on the analysis of events after the reporting period

  • Received November 2, 2023;
    Accepted December 20, 2023;
    Published December 27, 2023
  • Author(s)
  • DOI
  • Article Info
    Volume 21 2023, Issue #4, pp. 740-756
  • Cited by
    2 articles

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This work is licensed under a Creative Commons Attribution 4.0 International License

The study aims to discuss the impact of the analysis of events after the reporting date (subsequent events) on management decision-making. In the interval between the end of the reporting period and the publication of the annual financial report, company management may learn about events that either occurred during the reporting period but were previously unknown or occurred when the financial report was already prepared but not approved. The consequences of these events can be so serious that they require adjustments to the financial statements, changes in the company’s strategy and tactics, and radical management transformations. The paper structures such events depending on their impact on business performance and the procedure for reporting and identifies the determinants and mechanisms for their analysis and correct accounting. To assess the complex impact of events after the reporting period on the financial results of a company, an integral indicator is proposed, a set of management measures is defined in accordance with the values of this indicator, and the mechanism for its calculation and use is demonstrated on the example of a hypothetical scenario. The sensitivity analysis of this indicator to fluctuations in the weighting coefficients of its components was performed using the Monte Carlo method. In an environment where transparency, accountability, trust between key stakeholders, adaptability, and proactivity are crucial for effective management, this indicator can be used as an effective metric that is taken into account by auditors, regulators, clients, investors, company management, etc.

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    • Figure 1. Areas of methodologies for analyzing events after the reporting period
    • Figure 2. Steps of determining an integral indicator
    • Figure A1. The procedure for reflecting events after the reporting period
    • Table 1. Characteristics of the obtained values of the integral index of events after the reporting period
    • Table B1. Examples of favorable and unfavorable events after the reporting period
    • Table B2. Methods and approaches to assess events after the reporting period
    • Conceptualization
      Mehriban Aliyeva
    • Data curation
      Mehriban Aliyeva
    • Formal Analysis
      Mehriban Aliyeva
    • Funding acquisition
      Mehriban Aliyeva
    • Investigation
      Mehriban Aliyeva
    • Methodology
      Mehriban Aliyeva
    • Project administration
      Mehriban Aliyeva
    • Resources
      Mehriban Aliyeva
    • Software
      Mehriban Aliyeva
    • Supervision
      Mehriban Aliyeva
    • Validation
      Mehriban Aliyeva
    • Visualization
      Mehriban Aliyeva
    • Writing – original draft
      Mehriban Aliyeva
    • Writing – review & editing
      Mehriban Aliyeva