Decree #107 of the Government of the Russian Federation from February 25, 2011 established a Recognition of IFRS and Explanations for Using IFRS in Russia.
The recognition extends to the following items as accepted by the International Accounting Standards Committee Foundation:
- international standards;
- interpretations of the international standards;
- amendments to international standards and their interpretations;
- other documents, defined by the Committee Foundation as an integral part of the international standards and their interpretations.
In March 2011, Minister of Finance Alexei Kudrin announced that, by 2012, accounting in accordance with IFRS may become mandatory for all Russian public companies. This news created stormy discussions. However, public companies already follow IFRS financial accounting now (in addition to Russian Accounting Standards). It is more significant that companies who now keep GAAP accounting will have to generate IFRS accounting also. However, a grace period has been instituted until 2015 for these companies, which will be able to prepare themselves gradually and systematically.
The IFRS requirements are not applicable to non-public commercial companies or to small and medium business. RAS accounting will remain the main type of financial accounting in Russia for the foreseeable future. In the framework of changing legislation it will be modified and, most likely, grow closer to IFRS. However, the complete convergence of the two in the near future should not be expected as IFRS are more flexible than RAS and it is unlikely that our legislation will be able to keep up with changes to IFRS.
It is obvious that the IT solutions market will experience a sharp increase in demand from large companies which will need to computerize their accounting and generate IFRS records. Today, in most cases this accounting is conducted with MS Excel. This will also lead to another level of competitive opposition between two ideological approaches such as “transformation of accounting” and “translation of accounting with partial parallel accounting.” In our opinion, the market for IT solutions will be lead by software systems which combine these methods for IFRS accounting and which will allow for their effective combination.