DISCLOSURE OF INFORMATION ON GEOPOLITICAL EVENTS AFTER THE REPORTING PERIOD IN ANNUAL REPORTS OF MULTINATIONAL CORPORATIONS

Abstract

A few days after Russia unleashed the unprovoked war on Ukraine in February 2022, a majority of multinational corporations made a decision to cease their activity in Russia as the aggressor state in order to deprive it from additional financial sources and, subsequently, to refrain from purchasing new weapons. As a result, a significant part of these corporations will incur losses in particular geographical segments in 2022. The article is dedicated to examining the manner of disclosure of information on the Russia-Ukraine War 2022 in Subsequent Event Notes to annual financial statements of multinational corporations. The authors have summarized provisions of IAS 10 Events After the Reporting Period concerned with disclosure of non-adjusting events. Authors have analysed recommendations of auditing and consulting firms regarding disclosure of events after the reporting period related to military actions in Ukraine. The article contains review of literature, which describe consequences of sanctions imposed on the Russian authorities, business entities, and individuals by the European Union, as well as implications of leaving the Russian market for multinational corporations. To do the research, authors have selected annual consolidated financial statements of multinational corporations according to three criteria: a corporation participates in applying sanctions against Russia (withdrawal / suspension / scaling back); the annual reporting period is from 1 January 2021 to 31 December 2021; a corporation has disclosed information on the Russia-Ukraine War and its implications for its business activity in a Subsequent Event Note. Following the indicated criteria, the authors have chosen annual reports of 14 corporations: BMW Group, British American Tobacco Group, Coca-Cola HBC AG, Dassault Aviation, Deutsche Bank, Geberit Group, Grupo Bimbo, LG Electronics, Mercedes-Benz Group, Pirelli Group, Prada Group, Scania, Volkswagen Group, and Volvo Group. The authors have determined peculiarities of the content of the notes to annual financial reports of multinational corporations and classified types of information on the researched geopolitical event disclosed in these notes.