METHODS OF ACCOUNTING FOR AND MONITORING OF THE FIXED ASSETS RENEWAL PROCESS OF ENTERPRISES OF SPACE INDUSTRY

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Introduction. Space equipment manufacturing enterprises are classified as the most high-technology sphere of the national economy. In the concept of Russia long-term social-economic development space industry is regarded as one of the primary areas that provide national defense capability and economic security of the country. Innovative character of the manufactured products, the necessity to strictly follow the specified criteria of space technology determines available capacity, conforming to the up-to-date requirements as well as capable of performing tasks set. All the matters that are mentioned above are obtained through the constant renewal of enterprises fixed assets, up-grade of the qualitative characteristics of material and technical resources as well as equipment available. For the significance of the tasks that are solved by the space industry enterprises the quantity of the equipment that must be renewed is as a rule large. Rationale for the necessity of the accounting and monitoring of the space industry enterprises fixed assets renewal. The above mentioned extensive renewal of fixed assets leads to the problem when the enterprises find it difficult to regularly monitor all the changes that occur in financial state and performance of an enterprise on the whole in the course of the renewal. The fact that there exists the lack of possibility to acquire concrete update information shows that it doesn’t allow to justify managerial decision making in terms of fixed assets renewal and to monitor their impact on the process development. All this can lead to the substantial financial losses, enterprise’s solvency and other detrimental effects. To turn the situation around the enterprise must have specialized accounting and analytical system that allows taking proper account of set up parameters of fixed assets renewal and timely monitor those set up parameters of fixed assets renewal as reported in previous publications of the authors of this paper [1; 2]. Despite the fact that the solving of the methodological, theoretical and applied matters of the enterprises’ fixed assets reprocessing is taken considerable attention to in a wealth of research studies [3-8], the development of accounting and analytical tools necessary during the process of the renewal has received almost no attention. The review of the papers that were written by the authors mentioned in the paragraphs written above shows that there is the lack of detailed description of events management that occur during the process of fixed assets renewal and the impact they have on the enterprise’s financial soundness. An additional point is that the detailed techniques aimed at the management of the most needed enterprise-wide fixed assets renewal are lacking; accounting and monitoring of fixed assets is based on standard approach. Besides, the monitoring generalized system and the rates of efficiency assessment of conducted measures are not, as a rule, applied. All the points that are shown above prove the rationale for the research being conducted and the necessity to meet the challenge at a whole new level with due consideration of theoretical and practical approaches having been worked out. Essential component of any accounting and analytical system is the organization of the accounting and monitoring of given parameters in the form of selected methodology along with the list of factors being monitored. The methodology is regarded as accounting and monitoring sequence of actions of preset in the form of a specific algorithm rates. When investigating the relevance of the current methodology to monitor the situation in the process of space industry enterprises current assets renewal, the diversity of forms available capacity technical characteristics and the sources of their funding improvement was taken into consideration. The methodology algorithm. Types of monitored parameters (financial, indicative and operating) [1; 2], that are recommended to be used in the proposed methodology, were defined and specified on the basis of requirements for the accounting and analytical system taking into account the most significant factors that have an effect on enterprise financial soundness in the process of fixed assets renewal. The implementation of given parameters recording and monitoring methodology is functionally related to the certain stages of space industry enterprises’ fixed assets renewal described by the authors of the article in previously published papers [1; 2]. Table Methodology of recording and monitoring of renewal parameters of space industry enterprise’s fixed assets Fixed assets reproduction stages Stages of the proposed accounting and monitoring methodology of the fixed assets renewal process 1. Available assets diagnostics Monitoring of available assets engineering data (evaluation of state, supportability and efficiency of the equipment utilization) 2. Formation and approval of the technical re-equipment plan: 2.1. Choice of the reproduction form of fixed assets 2.2. Approval of the list and priority of the renewal of fixed assets 2.3. Approval of the plan of technical re-equipment 1. Options of fixed assets reproduction analysis 2. Compiling the informational database to make management decisions on the fixed assets reproduction form 3. Compiling the list of factors that have an effect on enterprise financial soundness in the process of fixed assets renewal 4. Evaluation of factors 5. Ranking of factors End of table Fixed assets reproduction stages Stages of the proposed accounting and monitoring methodology of the fixed assets renewal process 3. Choice of financing sources 1. Compiling the list of financing sources 2. Evaluation of financing sources effectiveness 3. Structure of financing sources definition 4. Specification of factors list adjusted the financing source choice 5. Extra factors analysis and factors ranking 6. Rate system formation: - choice of managed rates; - definition of rates permissible value range 7. Decomposition of the rates into financial, indicative and operating ones 8. Dividing the rates into accounting and non-accounting ones 9. Analytics of monitoring accounts expansion to get accounting data 10. Collection of non-accounting data regulation 4. The renewal of fixed assets: 4.1. Acquisition/ maintenance / upgrading of fixed assets 4.2. Monitoring of the technical re-equipment plan accomplishment 4.3. Analysis of the identified technical re-equipment plan deviations 4.4. Technical re-equipment plan adjustment (if needed) 1. The rates accounting and monitoring: - finance rates monitoring; - indicative rates discrete monitoring; - operating rates monitoring 2. Inadmissible deviations disclosure 3. Identified deviations analysis 4. Information data base to manage decision making compiling 5. Analysis of fixed assets reproduction results Monitoring of the available equipment technical parameters Principle stages of accounting and monitoring parameters of fixed assets renewal methodology are shown in table. Suggested accounting and monitoring methodology is a cyclical implementation of the following procedures: organization of a accounting process and accumulation and processing the information concerning the inadmissible from the planned fixed assets renewal parameters deviations. At the first stage of the methodology the enterprise production capacity performance is monitored as well as the results of the evaluation of state, supportability and efficiency of the equipment utilization are analyzed. One of the major tasks at this stage is to define the rates and rating rationale of the fixed assets utilization effectiveness. The analysis makes it possible to identify the “areas of concern” of the enterprise equipment available that require monitoringled influence in a part of their renewal. At the second stage of the methodology the analysis of the fixed assets reproductive alternatives is carried out. Depending on the final result fixed assets reproduction can be constricted, on a simple scale and on a progressively increasing scale. The way of selected fixed assets reproduction must realize the enterprise development strategy. Further comes the analysis of the effectiveness of the fixed assets productivity depending on the options of the course of events and probability of occurrence of set parameters deviations. Any situations that can lead to inadmissible deviations must be considered. All the above give the permits to develop information database dealing with enterprise performance pre- and post- fixed assets reproduction in order to prepare managerial decisions. An additional point is that it helps to gather the information dealing with the factors that have an impact on the given process. Specific features of the measures intended to the fixed assets renewal demand to analyze the factors that determine the development of the described process and the formation of their ranked list (the ledger) to single out the factors that are at this stage the most important ones for the fixed assets renewal. In the consequence of the marked factors analysis the list of potential problems that may hamper the enterprise sound financial standing or technical renewal accomplishment is drawn up. This will allow foreseeing some concrete measures to timely regulate fixed assets renewal process. Technical renewal plan approval can be instrumental in specification of fixed assets renewal planned parameters as well as internal and outside funds investment pattern. The third stage of the methodology starts with the funding resources list. The funds that are invested into fixed assets must ensure the development and timely funding of the fixed assets process renewal. In relation to the borrowed funds their application is subject to the variety of reasons and all of them are individual for each enterprise. The next step is to make an assessment of the efficiency of the should cost and the way of funds investing that is more relevant to the enterprise in a given economic situation. The key aspects that have an effect on the financing source are the cost and availability. It is obvious to clearly understand the cost of the financing source as well as its availability. Therefore, when having defined the necessary financing amount and the aims for its use it is required to set out the terms of the loan - a long term loans or a short term loan. Yet, the use of any financial instruments brings with it occurrence of additional unfavorable factors having an effect on financial soundness, interest, investment and inflation risks. Specification and analysis of the factors will allow not only minimizing the emerging risks but disposing the financing source. Then, the ranking of the supplemented ledger must be repeated. The system of monitored figures is developed with the consideration of the results obtained during the repeated ranking. The next step is to conduct a two-way decomposition of the monitored figures. They are: by the way of monitoring (financial, indicative, operating) and by the possibility of their use to obtain accounting standards data (accounting, non-accounting). Decomposition makes it possible to specify the list of figures the value of which can not be obtained by the use of accounting standards and consequently specific procedure of data collecting must be applied to these figures. An additional point is that the necessity of itemization extension is specified. After the system of the monitored figures has been developed the acceptable region of the monitored figures is determined. Frequency of the indicative rates monitoring is determined at this point as well. The following items are recommended to use as the finance rates: financial stability index and debt ratios; turnover rates of payables; working capital turnover; Equity to Total Assets; working capital financed by equity to total assets ratio [2]. Profitability ratios of the operating activities; current assets to equity ratio and current assets coverage ratio; capitalization rate and coverage ratio can also be chosen. As the given ratios are the most available instruments to carry out the monitoring the recommendations how to use these ratios are found in papers of many economists [9-12]. To identify the more acceptable indicative [13; 14] and operating [15-18] rates a great deal of various researches has been carried out. According to the point of view of the authors the more useful to monitoring the renewal process are the following: historical cost and depreciated book value of the equipment; equipment-structures ratio; productive capacities; fixed assets renewal ratio; fixed assets depreciation reserve ratio; capital-labour ratio; return on assets ratio; return on assets; labour intensity of the production plan; equipment deterioration; equipment progressivity; the density of innovative production in its total volume; average time spent to master new production; emission taxation; loss density [2]. Stage four of the methodology performs accounting and monitoring of the rates that are selected at the previous stage of the methodology offered. The monitoring of the rates that form the monitoring rates system of the fixed assets renewal process is carried at intervals set by: the management (in a ten-day period, every month, quarterly) and the level of detail. It is done with the aim of managing the fixed assets renewal process in accordance with personified order necessary for the production shop or the whole enterprise. The more detailed and frequently indicative rates monitoring is conducted and the more extensive the list of financial and operating rates will be the more reliable the results of the analysis and more accurate the evaluation of the situation will be. Thus, the forecast of precision of worked out measures implementation on fixed assets renewal will be more reliable as well. Then, the analytical data are collected and the set parameters deviations are found out. The deviations that are found out show the troubles and errors that occur during the fixed assets renewal and demand, therefore, the working out of the managerial measures aimed at the elimination of these troubles and errors. Thus, the information database to select and justify managerial decisions on the fixed assets renewal is systematically formed at the enterprise. Given system will be effective for both large-scale and operating managerial decisions. Stage five of the methodology is the final one. It is characterized by the summarizing the following: the fixed assets renewal having been done and monitoring of the technical parameters of the equipment available in the form of the continuous control of their return on assets ratio, capital-labor ratio and other rates of the current state of the fixed assets that are significant to the enterprise. Consequently, as the methodology suggested is aimed at the managerial decisions realization to the extent concerning the space industry enterprises fixed assets renewal, the management of this enterprise, when using the methodology, gets the opportunity: to measure the enterprise fixed assets development based on the accounting and analytical information available, set realistic goals in the area of modernization, analyze and compare controlled parameters at each stage of the enterprise fixed assets renewal.

About the authors

G. I. Zolotareva

Reshetnev Siberian State Aerospace University

Email: astra07@inbox.ru
31, Krasnoyarsky Rabochy Av., Krasnoyarsk, 660037, Russian Federation

N. V. Bahmareva

Reshetnev Siberian State Aerospace University

31, Krasnoyarsky Rabochy Av., Krasnoyarsk, 660037, Russian Federation

E. V. Astapenko

Reshetnev Siberian State Aerospace University

31, Krasnoyarsky Rabochy Av., Krasnoyarsk, 660037, Russian Federation

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