Thoughts of financial analysis

        Some people consider that financial statements needn’t if their contents weren’t matched to needs & desired purposes of financial statement analysis, namely forecasting, rational investing, monitoring & avoiding financial troubles etc. Besides researchers express their opinion about that contents of financial statements & their indicators mainly render opportunities to do ratio analysis, but which isn’t predict upcoming recession & insolvency, & also couldn’t guide outlook. It is good that cost & managerial accounting leaned on free thinking & hasn’t strangled by abstract declarations of international financial reporting standards (IFRS), which allows favorable opening for looking forward innovation, improving & developing by integrating with other branches of science learning or its diversifying. The cognition is having no limit, everything varies, changes, renews, rises, converts & promotes into advanced level of developments. For example impossible to diagnose return on investment & its forecasting by using only Du-Pont model, which could lead to isolated temporary conclusion of the rate of return on equity. Indeed solvency & contingency bankruptcy subject to many functional & also random dimensions owing to  generate necessity of approaches to multiple discriminant score analysis for considering company’s financial statement analysis in all its bearings. Besides rises question to suit others’ intellectual experiences into specific social-economical conditions of given countries, which have differences in human development index, GNI per capita & external debt indicators etc. Indicators & their calculation sum express in the balance sheet with historic cost value, therefore appears considerable requirement to convert cost value into market evaluation as for corresponding indicators in order to diagnose solvency for corporation by means of Altman’s Z index. Hence contents of financial statements are introducing administratively from above regardless of particular countries’ specific condition sometimes obfuscates financial troubles with extraneous information & misleads accountant-analysts into confusion. Obviously business entities of European countries, which has faced debt crisis, maybe they have complied with both of IFRS & audit standard, & also followed internally one’s domestic tax laws. In other hand CPAs couldn’t cope with their professional one’s own duties, review shows as in Mongolia above cited difficulty mainly connects with poor level of stepwise training courses aimed to grant a license for CPA. Title & of license for CPA render many socially security privilege for accountants to find profitable & promotable job for them at state owned entities, which raises unnatural demand for licenses of CPA. We think of that domestic specific of ongoing human development policy of each country more or less reflects on national tax policy, therefore happen temporary differences between financial statement income & taxable income. In connection with above mentioned decision makers realize progressive income tax & subject to personal income tax on savings aimed to declining differences between social groups on income distribution & support households with medium livelihood & earned income. Would be expedient, if could be inform relative data of calculating Jinni index for public issue as for Mongolia. News paper media informs that Jinni index equal to 0.36, but other sources advocate own data basis which is different on this rate of index. Actually that is unconvincing argument because of by 40% of population live at poverty & inequality distribution of social wealth has become quite plain. But it can’t demonstrate geographic, infrastructural, traditional specifics while conduct social-economical diagnosis suited to dwellers with different livelihood. Current period Mongolia classifies as lower middle income country with a GNI per capita of US $1,890 & ranked 110 out of 187 countries in terms of Human Development with a HDI of 0.647 in 2010. Also official source shows more than 30% of the population lives on less than US $1.25 a day. Hence recommendable to compute Theil’s T index inequality, which respects to territorial area & provincial towns with different livelihood & income sources. Continuous increase of inequality distribution on social wealth directly has connected with that Mongolian tax laws have protected one’s own interests of oligarchic groupings contrary to poverty reduction goals so far. Not only the rich but also the poor stand in a queue to get monthly 21,000MNT or by US $16 from Human Development Fund without distinction, & also personal income tax imposes on a par with 10% to their wage. Our tax authorities used to prefer copying foreign tax regulations without their proper harmonize to specific conditions of Mongolia & manage official activities in accordance with instructions of oversea tax consultants from highly developed countries. They consider copying information from internet links & conveying adviser’s recommendations as their suggested & introduced new ideas & innovations on tax. But however Mongolia has only 21 year’s experience of market-oriented economy, & impossible to past any oversea financial instruments to which automatically. Financial statements can’t allow conducting comprehensive analysis which always requires tremendous additional data from outside courses. Majority of international financial, banking, accounting & auditing projects & programs are introducing so far, which wasn’t achieved promised results as: poverty reduction, declining differences between social groups on income distribution, increase of work places, fighting against corruption, providing rational infrastructure over the country, but however debt burden rises year on year, as they have suggested mainly by means foreign partners’ pressure & respected their economical interests. Mongolian companies would fail at any time on account of they don’t conduct themselves financial statement analysis. There weren’t CPA who able to self-conduct chartered financial analysis & make proper diagnosis on solvency & bankruptcy for corresponding company. Accountants prepare both different copies of financial statements in order to evade taxes. I’m as ordinary accountant-researcher think of that should be generated chartered financial analysts (CFA) from composition of the CPAs. Mongolia has more than 3 thousand CPAs prepared via specialized Institutes of CPA, unfortunately who has poor prestige & his/ her professional license just likes as award at all. One-sided attitude of these institutions to raise income of training courses & increase the number of possessors of CPA’ license at any possible way reflects on knowledge & skills for CPAs properly. No changeable & congealed properties of financial statements sometimes form unmotivated temperament to CPAs. Obviously financial statements are flexible & manageable instrument, which should be innovated & renewed in accordance with social-economical reform & its continuous development. Therefore possible to adopt & enforce temporary methodology of financial analysis & also form & indicators of financial statements appropriated to enterprises, which engages business activities in case of incoming contingency crisis. Also should be include into contents of financial statements feasible physical indicators in addition to established money terms, which would be caused no difficulties to compute some useful indicators for conducting cost & management accounting relied on applied mathematics, trend analysis with statistical properties & econometrics reviews etc. By the way possible to rectify some troubles by means of taking corrective measures on restrictive information capacity of financial statements & extending the assortment & number of financial statements’ indicators. Preferable develop accounting renewal rather faster than its subject matter.