Sirotchenko A. A., Mudrenko A. A., Pikiner V. V.

Oles Honchar Dnipropetrovsk National University

UKRAINE ADOPTS INTERNATIONAL FINANCIAL REPORTING STANDARTS

On 12 May, 2011 the Supreme Soviet of Ukraine amended the Law of Ukraine «Accounting and Financial Reporting in Ukraine», which raised the issue of Ukrainian companies transition to the international financial reporting standards (IFRS).

Since 2012, public joint stock companies, banking institutions, insurance companies, and companies that are engaged in activities approved by the Cabinet of Ministers of Ukraine, have been required to prepare and publish financial statements and consolidated financial statements according to the international standards. Companies that are not included in the above list, make independent decisions about using the IFRS for reporting.

The main stages of transition to the IFRS are:

1. Introductory stage: drawing up a working team, the objective of which is to examine the existing international financial reporting standards.

2. Methodological stage: development of the corporate accounting policy which will correspond to all requirements of the IFRS.

3. Technical stage: preparation of financial reporting or consolidated financial statements in compliance with the IFRS. Today, there are three options of the financial statements in accordance with the IFRS:

– transformation of the Ukrainian financial reporting – a way based on the reduction of the financial statements, prepared in accordance with the national standards, to the IFRS with adjustments;

– parallel accounting – involves conducting two simultaneous counts: the national accounting standards and the IFRS accounting;

– a complete transition to the IFRS – the most crucial way, which is based on a complete transition to the IFRS accounting.

4. Partner search stage (accounting firms, appraisers, consulting companies,  IT-partners).

5. Stage of active implementation: the process of creation procedures for each section of the reporting, the development of internal control procedures, the automation of financial reporting or accounting under the IFRS, an active personnel training.

6. Testing stage: identification of mistakes and inaccuracies in the accounting system while constructing financial reporting under the IFRS. Carrying out all necessary procedures to construct financial reporting in accordance with the IFRS (including audit reports) will be effective for a company.

Adoption of international standards, first of all, is a change in the accounting system and like any innovation is a complex stage in operations of any company with its «pros» and «cons».

Like a medal that has two sides, adoption of the IFRS is fraught with difficulties. Companies often underestimate the complexity of the IFRS implementation and forget to use new and revised standards and interpretations in the management of daily accounting operations. Also, not all of them positively evaluate prospects for increased business transparency with the transition to the IFRS.

Many companies that previously had not dealt with the IFRS, cautiously met changes in the legislation of Ukraine. Although, if you compare it with usual national standards, accounting requirements are quite similar and many are the same. Companies that do not comply with the requirements of the Regulations (Standards) of accounting, and prefer to conduct the tax accounting, may face difficulties. Such difficulties can be easily eliminated in the following way:

– personnel training;

– creation of full accounting policies that will improve employees` discipline in the process of accounting introduction;

– the differentiation between tax accounting and bookkeeping.

The positive economic effect from the transition to the IFRS is unequivocal, because reporting under the IFRS provides truthful information about business and its condition. If the company needs external funding, the availability of the IFRS will determine the best conditions for investment.