Globalisation and using consolidated accounting in Hungarian food economy

Simon, Szilvia

Keywords: globalisation, food economy, holding, consolidated accounting, analysis

The global financial and economic crisis and the fact that it spread worldwide has various causes, with globalisation being a major one. The process of globalisation includes the concentration of capital, intellectual resources and material resources on a global scale. Globalisation also includes the tendency for independent legal entities in the fields of agriculture, food industry and food commerce to become part-owners and shareholders of one another. This restricts the competition between them. As a result, company-specific annual reports are not sufficient to present a fair picture of the assets, finances and revenues of the companies. The missing information can be made up by treating companies as groups of companies and applying the principles of consolidated accounting. When using consolidated accounting, one must look at how this affects the presentation of assets, finances and revenues of the parent company and the member companies. Model calculations and the results and findings from the questionnaire-based survey of food economy firms indicate that the individual annual reports of group members contain internal duplications to such an extent that business decisions based on the reports may be considered unfounded. Considering the economic situation emerging from the current financial and economic crisis, it is recommended that the management and shareholders of parent companies, and any market player base their decision not only on the annual reports of individual firms but also on the evaluation of the consolidated annual report of the group. Duplications represent assets and profits which cannot be considered truly existent and cannot be used as a source of financing.

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