Problems of application international financial reporting standards in Russia

Accounting, regulating the information environment of economic entities, provides management at the micro- and macroeconomic level. The importance of accounting data stimulates the national system of its regulatory and legal regulation. However, current trends indicate the orientation of many countries to the International Financial Reporting Standards (IRFS), along with the development of national accounting systems, as is typical for economically developed countries.

According to the Federal Law № 208-FZ of the Russian Federation of 27 July 2008 «About consolidated financial reporting», IAS should be applied by companies, whose securities are listed on stock exchanges. This approach deprives many Russian companies from legal framework of generation accounting information, leads to its creation in each company, reducing profitability and increasing risks of wrong decisions [4].

Accounting (financial) reporting is basic document, which characterize activity of the company generally and its financial indicators. In international practice for the financial reporting are used International Financial Reporting Standards (IFRS). It includes set of documents (standards and interpretations), which regulate rules of drafting financial reporting, which is necessary for external users to make better economic decision in relation to the enterprise.

It is necessary to consider, that IFRS are not strictly regulated by set of accounting rules, but only are the main base for drafting financial reporting.

Documents of International Financial Reporting Standards (IFRS) are consisting of:

• -    International Financial Reporting Standards (IFRS);

• -    International Accounting Standards (IAS);

• -    Explanations, prepared by International Financial Reporting Interpretations Committee (IFRIC) ore worked before Standing Committee on Explanations (SCE) [7].

IFRS put in place for use in Russian Federation by:

• 1)    order of Russian Ministry of Finance from 28.12.2015 № 217н (in redaction from 11.07.2016) «About introduction of International Accounting Standards and Explanations of IAS on territory of Russian Federation and about the recognition of the expiration of certain orders (separate provisions of orders) of the Ministry of Finance of the Russian Federation»;

• 2)    order of Russian Ministry of Finance from 27.06.2016 № 98n «About introduction of documents of International Accounting Standards on territory of Russian Federation and about recognition of the expiration of certain orders of the Ministry of Finance of the Russian Federation»;

• 3)    order of Russian Ministry of Finance from 11.07.2016 № 111n «On the implementation and termination of the International Accounting Standards on the territory of Russian Federation»;

• 4)    order of Russian Ministry of Finance from 14.09.2016 № 156n «On the introduction of the document of International Financial Reporting Standards into effect on the territory of Russian Federation»;

• 5)    order of Russian Ministry of Finance from 23.11.2016 № 215n " » On the introduction of the document of International Financial Reporting Standards into effect on the territory of Russian Federation»;

• 6)    order of Russian Ministry of Finance from 20.07.2017 № 117n «On the introduction of the International Financial Reporting Standards into effect on the territory of Russian Federation» [8].

Legalization of IFRS in Russian Federation was a big step forward on a way of reforming accounting in our country. But practical using of international standards is still complicated by problems. They are indicated in «Concepts of accounting and reporting development in Russian Federation for the medium term» from 01.07.2004 № 180.

In Russia IAS received official status in February 2011. In the 25-th of February 2011 Government of Russian Federation adopted decree №107 «About statement of position about Recognition of International Financial Reporting Standards and Interpretations of International Financial Reporting Standards for the application of on the territory of Russian Federation». Since November 2011 on the territory of the Russian Federation, separate standards are gradually introduced.

About half of big companies in Russia drafting financial reporting by IRFS or planning to begin it in the coming years. However, almost the same number of companies that do not plan to transition to IFRS, and therefore the number of organizations that compose accounting (financial) reporting under international standards for several years is still insignificant. This involves with the number of problems, which arrives in the transition to IRFS.

There are a lot of problems, which impede to widely disseminating of IAS in Russia.

• 1.    The problem of managing, which is implied with wide spreading of tax legislation’s norms on the rules for the formation of an accounting (financial) reporting and violation of the requirement of consistency in documents of various levels of legal and regulatory of accounting and etc. [3].

• 2.    Problem of technical base of inventory and qualification of accounting staff.

• 3.    Problem of organizing trainings and retrainings of accounting personnel.

• 4.    A problem, which anxieties at inherent difference of accounting system: differences in accounting policies; lack of a clear division of accounting on financial, management and tax accounting; differences in approaches in the reflection of certain types of assets and liabilities in accounting and reporting.

• 5.    Problems related to international standards: generic nature of IAS; inadequate acceptance of IFRS on global capital markets; continuous updating of IAS [1]. In a generalized form, these problems can be formulated as:

• -    unreasonably high costs of economic entities for the preparation of consolidated financial statements under IFRS by transforming the accounting (financial) statements prepared under Russian rules;

• -    most of accountants and auditors has low level of professional preparation and lack of skills of using information, prepared by IAS.

However, Russia's transition to IFRS entails both positive and negative consequences. A lack of skilled staff is the main problem. For many companies, moving to international standards means significant costs. Specificity of Russian legislation are conditioned by significant differences between the requirements of RAL and IFRS. It should be noted, that the reporting, compiled in accordance with IFRS, reflects the real picture of what is happening, while the Russian reporting of organizations is aimed, first of all, at minimizing taxes. Along with the difficulties of preparing financial statements in accordance with the requirements of IFRS in the Russian market, there are undeniable priorities.

First, it is much easier for enterprises to attract foreign capital. Investors are interested in minimizing risks to themselves; they are inclined to work with companies that compose reports in accordance with IFRS, as it increases its transparency. Otherwise, from the point of view of the Western investor, the company is not regarded as competitive and does not deserve trust. In turn, attracting foreign investment is beneficial for the state, because in this case the amount of revenues to budgets of various levels is increasing.

Secondly, the preparation of accounting (financial) reporting in accordance with the requirements of IFRS enables the business owner to objectively assess the financial position of the organization.

Thirdly, international standards allow using the information received for management purposes. Therefore, some companies maintain accounting under RAS and IFRS simultaneously. On the one hand, this simplifies the transition process, because with the passage of time, the statements will have to be transformed in accordance with IFRS. But on the other hand, this work is very labor-intensive and is beyond the power of some organizations [2].

In conclusion we note that currently, the issue related to the transition from national accounting (financial) reporting standards remains open and unresolved due to the circumstances described in this article.