Transformation of Fundamental Accounting Principles in the Context of a Company Insolvency from the Perspective of the Digital Economy

Abstract

Bankruptcy is an integral part of a market economy, the main purpose which is the revival of the economy, business, production. The modern organization management mechanism is distinguished by a complex information system based on an abundance of external and internal information flows, as well as a variety of types of information circulating in the management system. With the growing role of information systems and digital technologies in society, the accounting information system and the professional activities of an accountant, a financial analyst and an auditor are of particular importance. The largest share in the total aggregate of economic information is information provided by accounting, which plays a dominant role in the management system as a whole. Crisis events in a company’ life stimulate the need for accounting information in order to recreate the model of the financial and economic activities of the organization in the pre-crisis period of its life cycle. Undoubtedly, the risk of termination of activity deforms the system of principles on which the organization’s activity is based under normal operating conditions, which inevitably leads to the transformation of accounting methods in bankrupt organizations. The paper examines the fundamental accounting principles in the context of a company’s insolvency and their impact on the transformation of the accounting and reporting system of bankrupt organizations.