Doing Business in Russia

44 Doing Business in Russia Financial Reporting Nizhny Novgorod Russian Accounting Principles Russian accounting is regulated by a system of legal acts consisting of four different levels. The first level consists of laws regulating the way accounting is established and maintained by companies, including: - - - The Federal Law on Accounting, which contains basic accounting and reporting requirements. The Civil Code of the Russian Federation, which consolidates many accounting issues. The Civil Code of the Russian Federation defines a legal entity as having its own balance sheet, establishes the requirement that annual financial statements are approved annually, and provides definitions of subsidiary and associated companies, as well as determining the procedures for reorganising and liquidating different kinds of legal entities. The Federal Law on Governmental Support for Small Businesses in the Russian Federation provides a simplified procedure covering accounting and reporting compilation. The Federal Laws On Joint Stock Companies and On Limited Liability Companies, which establish information disclosure and presentation requirements, stipulate that data contained in the annual financial statements must be confirmed by the internal auditor, and determines the procedure by which the annual financial statements are approved as well as the situations in which an external audit opinion is required. The second level consists of accounting regulations (standards), which regulate accounting policies, the compilation and presentation of financial statements, and accounting for fixed and intangible assets, inventory, loans, income, expenses, financial investments, profits tax, etc. Many of these regulations are in essence close to International Financial Reporting Standards (IFRS). Bringing the national accounting system into line with IFRS has been part of the accounting reforms that began in 1998. It is intended that new accounting regulations shall be issued in the future. The topics covered will be in accordance with the current list of IFRS standards. For instance, Russian accounting regulations currently have no standards on the leasing or impairment of assets. Additionally, the existing accounting regulations are revised on a regular basis to enhance their compliance with IFRS. The third level comprises methodological instructions on accounting, including recommendations in which specific procedures for applying accounting principles and regulations are set out for particular types of activities. One of the most important documents at this level is the Chart of Accounts and related instructions. The fourth level includes documents issued by the company itself, which determine its accounting policies in all systematic, technical and organisational aspects and are approved by an internal decision taken by the company on its accounting policies. If there are any specific accounting methods that are not specified in the relevant accounting KPMG © 2016 KPMG. All rights reserved.

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