Accounting and Reflection in the Company’s Reporting of Investments in the Development of the Territory of Its Presence

Abstract

The recent trend is to increase companies’ attention to the quality of life in their territory. The main reason for this is the need to attract and retain human resources. The territory of presence for companies is becoming an “asset” from investments in which a positive economic effect is expected. The purpose of the article is to show how the company’s investment in the development of its territory is reflected in accounting and reporting and to justify the use of each option. The study was conducted based on regulatory documents that govern accounting and reporting, including international financial reporting standards, and non-financial reporting standards. From the standpoint of dynamic balance theory, it is possible to classify investments in the development of a territory as expenses of future periods or as assets of a company. However, it is difficult to reliably assess these assets and the issue of asset management is controversial. The article shows the rationale for the importance of separately accounting for investments in the development of territories considering their future economic importance. We suggest evaluating the effectiveness of investments in the development of the territory by analyzing the achievement of the company’s most pressing goal — the retention and attraction of professional staff. In the accounting system of an enterprise, it is necessary to organize control over the effectiveness of investments in the development of the territory: to introduce an object of accounting supervision — “investments in the sustainable development of the territory” and to reflect this object as future expenses or as a noncurrent asset, depending on the expected period of benefits. Off-balance sheet accounting for the object is also possible. The reporting on geographical segments should reflect the costs of sustainable development of the territory of presence. The reporting on geographical segments should reflect the costs of sustainable development of the territory of presence. We propose to include information about business investments in sustainable development in comprehensive sources of information about the territory, as well as in the development of statistical accounting. On behalf of the territorial management authorities.