Makarenko T. V.

Rostov State University of Economics (RINH), Russia


One of the main tendencies of the development of a modern society is globalization. In the 21st century the world is gradually moving towards a single economy. In all countries of the world the complexity of economic activity is growing. As trade and investment flows expand, there appear favorable conditions for moulding an open global economy. More intensive cooperation and economic connections between different countries give enterprises a wide spectrum of opportunities for mobilization of foreign investment. In order to decide how best to allocate available resources, foreign investors require economic information about business. And the primary means of communicating such an information to them are financial statements.

However, among different countries exist distinctions in the basic economic factors affecting financial reporting. There are also differences in the laws regulating businesses, differences in the requirements of governments and other bodies. These distinctions between national accounting systems and principles of preparation of financial statements considerably complicate the process of informing foreign investors. Naturally there appears a necessity of application of «an instrument of unification of the financial statement», which what IFRS is.

IRFS are a system of accepted in the interests of society regulations concerning an order of preparation and presentation of financial statement. IFRS are recognized as necessary all over the world for harmonization of the rules of preparation and presentation of financial statements.

Harmonising accounting standards internationally improves the comparability of accounting information throughout the world and leads to a greater international understanding of accounting practices. In turn, more comparability improves the analysis of financial statement.

Accounting in accordance with IFRS is aimed at disclosure of the real state of a business. This fact makes it especially attractive for foreign partners. If company wants to increase its investment attractiveness for obtaining loans from overseas banks, enter the international market and secure quotations of its shares at western exchanges, receiving of financial statements complying with IFRS becomes a necessity.

According to accounting experts, rules being applied at present in Russia do not able outside users of financial statements to make timely and adequate decisions on the financial status of a business and its performance. This fact creates additional risks and reduces investment attractiveness of the Russian economy. That is why Russia’s accounting system nowadays is being changed on the IFRS basis in order to make it more comparable, transparent and more compatible with that of western counties. Legislative regulation of accounting in Russia develops holding an orientation on IFRS to an increasing degree.

By the Ministry of Finance of the Russian Federation Decree of 30 November 2011 № 440 the Plan of the Ministry of Finance of Russian Federation for 2012–2015 Years was approved concerning development of accounting on the basis of IFRS. It comprises four sections:

– enhancement of a quality and accessibility of an information being moulded by accounting and financial statement;

– improvement of the system of accounting regulation and the control of a quality of financial statement;

– development of the occupation;

– international cooperation.

By 2012 was exercised an official translation of IFRS into Russian. 37 standards and 26 interpretations were placed for free access on the official site of the Ministry of Finance ofRussian Federation. After having been published in the «Accounting» journal, IFRS have acquired an official status in conformity with the Ministry of Finance of the Russian Federation Decree of 25 November 2011 № 160n.

As logical consequence of acquiring an official status by IFRS there appears a necessity of preparation of a financial statement in compliance with these standards in Russian accounting system as an official complement. Banks, insurance companies and companies which issue grain long papers are assigned to it from 2012. From 2015 application of IFRS will become compulsory for companies which issue debt securities.

Requirement concerning necessity of preparation of a financial statement in compliance with Russian accounting standards holds valid. Thereby, there will be two sets of standards in the Russian Decree to apply until 2015. By 2015 a maximal harmonization between Russian accounting standards and IFRS must come to an end. Some international standards, analogues of which lack in Russian standards, will be entirely taken from IFRS.

For companies which operate in the sphere of a small business, application of IFRS is not obligatory due to the fact that these companies are not public organizations. There is no common opinion among foreign countries concerning the question whether to recognize an obligatory standard, engineered by International Accounting Standards Board especially for nonpublic companies of all countries and issued 7 July 2009 or not. It should be noted that under modern conditions acquaintance with IFRS and its practical usage acquire ever growing importance for companies which are aimed at the increasing of effectiveness of their performance regardless of their publicity and size.

Official entry of IFRS into force in Russia automatically activates requirements of the law concerning consolidated financial statement (N 208 Federal Law of 27 July 2010) in accordance with which companies prepare, present and publish consolidated financial statement in compliance with IFRS beginning from the 2012. Consolidated financial statement must be prepared in full compliance with IFRS, i.e. the standards must be applied directly in all aspects of financial statement, including choice and application of accounting policy, setting of a group structure, methods of consolidation, rules of recognition, classification and assessment of balance sheet items, observance of structure of presentation and requirements concerning disclosure of information.

There are grounds to believe that the creation of IFRS based system of financial reporting will increase investment attractiveness of Russia’s economy, expanding the range of potential investors. As a result of this, more intensive flows of investment resources into the economy of Russia will be also facilitated, and all Russian businesses will benefit from the reform irrespectively of their size and ownership structure. Preparation of financial statements will be cheaper and quicker, as existing nowadays national accounting rules are believed to create difficulties and costs for economic entities because they have to restate their accounts into international standards when they raise foreign investments or a loan. A single set of accounting standards will save corporations’ time and money since they will no longer have to prepare multiple sets of financial statements. In a word, moulding accounting system on the basis of international standards, accepted in many counties, is believed to raise the quality of accounting in Russia because it will enable Russian businesses to obtain better access to funds and lower cost capital and make better investment decisions based on economic reality.