The paper provides results of a comparative analysis of the level of innovation activity in European countries based on official statistics. A cluster analysis of R&D expenditure share in GDP allowed the authors to identify five groups of countries with very high (Denmark, Finland, Germany), high (Belgium, France, Slovenia), middle (the United Kingdom, Ireland, Estonia), low (Portugal, Spain, Bulgaria) and very low (Malta, Serbia, Ukraine) level of innovation activity. The paper grounds cluster borders, discusses common features of the countries within each cluster and their changes for past decade and proves the need for borrowing the best practices of the EU member countries to increase efficiency of innovation management for countries with low and very low level of innovation activity. The authors have made the proposals related to the ways of enhancing innovation management. The paper grounds the proposed approaches to the identification and accurate assessment of companies\' expenses and intangible assets arising from commercialization of innovative implementations. The paper discloses the authors\' position upon recognition of cost and expenses in financial accounting and management system, grounds benefits and suggests justified solutions for different cases depending on the nature of innovation process and requirements of the standards of accounting and financial statements.