AN AUTHOR’S APPROACH TO THE CLASSIFICATION OF FINANCIAL INVESTMENTS BY MEASUREMENT BASIS FOR ACCOUNTING AND AUDITING PURPOSES
DOI:
https://doi.org/10.5281/zenodo.21537740Abstract
This article examines the economic substance and classification of financial investments from the perspective
of accounting and auditing. It is demonstrated that, in national accounting practice, financial investments are classified mainly
by maturity (long-term and short-term) and form, which may result in their recognition in a manner that is not fully aligned
with the requirements of International Financial Reporting Standard 9, Financial Instruments (IFRS 9). Based on the findings of
the study, an author’s approach is proposed for classifying financial investments by measurement method, taking into account
the entity’s business model and the SPPI criterion. Under this approach, financial investments are classified into three groups:
those measured at amortised cost, at fair value through other comprehensive income, and at fair value through profit or loss.
The proposed classification may be used in developing the accounting policies of business entities and in designing specialised
audit procedures.
Keywords
financial investments, IFRS 9, amortised cost, fair value, business model, SPPI criterion, classification, accounting, audit, accounting policy.References
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