DISTINGUISHING BETWEEN THE PREREQUISITES AND CAUSES OF ENTERPRISE BANKRUPTCY: AN ACCOUNTING AND ANALYTICAL APPROACH

Abstract

Terminological uncertainty in the conceptual apparatus of bankruptcy leads to confusion between the stages of the process and the substitution of the categories of "prerequisite" and "cause", which complicates the development of methods for the early diagnosis of financial insolvency.

The aim of the study is to justify an accounting and analytical approach to distinguishing between preconditions and causes of enterprise bankruptcy by defining a system of accounting triggers that record the loss of the going concern assumption. Comparative analysis methods were used to distinguish between categories, logical modelling to form an approach to identifying accounting triggers, and typological analysis to adapt the classification of B. Richardson, S. Nwanwko and S. Richardson to the accounting and analytical dimension. It has been established that the bankruptcy process is the subject of economic analysis, while the bankruptcy procedure is the subject of accounting and auditing. The boundary between them is accounting and is determined by the moment of transformation of a prerequisite into a cause as a result of the activation of an accounting trigger, which may lead to a revision of the going concern assumption and a transition to an alternative basis of measurement. It has been proven that a premise acquires the status of a cause only at the moment of the occurrence of an accounting trigger. A differentiated approach to identifying primary and derivative triggers depending on the type of enterprise and the nature of financial degradation is proposed.

The scientific novelty lies in considering bankruptcy not as a consequence of causes in a general economic sense, but as a result of the transition of factors from the status of preconditions to the status of causes through accounting triggers. The practical significance of the research results lies in expanding the capabilities of the enterprise's accounting and analytical system for the differentiated identification of prerequisites and causes of bankruptcy, which contributes to increasing the reliability of analytical conclusions and the effectiveness of information support for financial stability management.