TAXONOMY OF SIMPLIFIED FINANCIAL REPORTING AS AN ELEMENT OF DIGITALIZATION OF ACCOUNTING FOR SMALL ENTERPRISES IN UKRAINE

Abstract

The article examines the taxonomy of simplified financial reporting as an element of digitalizing accounting for small businesses in Ukraine. The authors describe global trends in the standardization of financial information, its automated processing, and cross-border exchange. They explain that XBRL is an international open standard for electronic business reporting. It enables companies from different jurisdictions to process, store, and transmit financial data in a universally understandable format using various software solutions. Financial reporting taxonomies written in the XBRL programming language ensure the accuracy, transparency, and global accessibility of financial reports.

It has been proven that the digitalization of accounting is an inevitable process, and for Ukrainian small businesses to integrate into the global financial system, their financial reporting procedures must be adapted. Since 2020, Ukraine has implemented UA XBRL IFRS for financial reporting by large and medium-sized enterprises. However, small businesses continue to use the traditional XML format due to the complexity of IFRS methodology and the high adaptation costs.

It was found that the voluntary nature of the transition of small businesses to the XBRL format does not ensure its widespread adoption. In Ukraine, the "IFRS for SMEs" standard has been legalized for small businesses, offering simplified requirements for recognition, analysis, and disclosure of information compared to full IFRS, meaning less detailed reporting. At the same time, small businesses use the same reporting forms but with simplified disclosures and accounting principles. The study clarifies that accounting for Ukrainian small enterprises under "IFRS for SMEs" is more complex than under Ukrainian National Accounting Standards (NP(S)BO).

The authors propose two possible strategies for the digitalization of small business financial reporting: (1) a mandatory transition to "IFRS for SMEs" or (2) the development of a national XBRL taxonomy based on Ukraine’s national accounting standards. The second option is preferable as it preserves the simplified approach to financial reporting while avoiding excessive burdens on small businesses.

This study's practical significance lies in substantiating an adaptive mechanism for implementing a financial reporting taxonomy for small enterprises. This will enhance financial transparency and facilitate the integration of Ukrainian businesses into the global economic space.