IFRS in Russia today

The process of adopting the International Financial Reporting Standards (IFRS) in Russia has now been finalised.

On 5 December 2011 Minfin signed the order No. 160н “On Implementation of the IFRS and Interpretations of the IFRS in Russia” dated 25 November 2011 and it was registered by Ministry of Justice.
On 9 December 2011 it was published in Rossiyskaya gazeta and Accounting magazine. And thus it comes into force

IFRS standards have been adopted in full.

By 2012, under Federal law No. 208-FZ “On Consolidated Financial Statements” the following companies will need to be issuing a full set of IFRS consolidated financial statements:

  • Credit institutions
  • Insurance companies
  • Listed companies

For those companies not already reporting under IFRS, the official date of transition to IFRS is 1 January 2011. 

IFRS consolidated financial statements need to be audited and filed by 30 April 2013 and published by 31 May 2013.

Exceptions are made for listed companies that are currently reporting under other internationally recognised rules. These companies will need to prepare their first IFRS consolidated financial statements for 2015.

What are the new laws on the IFRS transition?

  • Minfin order No. 160н “On Implementation of the IFRS and Interpretations of the IFRS in Russia” by Minfin dated 25 November 2011 and registered as at 5 December 2011 by Ministry of Justice
  • Federal law No. 208-FZ “On Consolidated Financial Statements” of  27 July 2010 
  • Government decree No. 107 “On Endorsement of the IFRS and Interpretations of the IFRS in Russia” of 25 February 2011 (requiring certain entities to produce consolidated financial statements in accordance with IFRS)
  • Program for further development of accounting and reporting in RF based on IFRS (2011-2015); approved by MinFin Order No. 440 of 30

Who are the regulators?

  • The Federal Financial Markets Service
  • Central Bank for financial institutions
  • Ministry of Finance for corporate entities
  • NOFA has been charged with the responsibility of reviewing the IFRS for adoption in Russia and issuing a recommendation to the MinFin and the Central Bank on whether to fully adopt, adopt with exceptions or not adopt each individual IFRS.

Which listed companies fall under the scope of the new legislation?

All entities whose securities are cleared for trading on the Russian stock market need to be preparing full consolidated financial statements for 2012. The term “cleared for trading” means listed and/or traded.

It is possible that all issuers who are required to present their prospectus and quarterly reports will also be required to present IFRS financial statements. The regulators are currently considering this issue, and we expect further communication soon.

Does the company need to present its IFRS financial statement if its securities are cleared for trading, but it does not have subsidiaries?

The wording of the law is not clear whether companies without subsidiaries still need to provide IFRS financial statements. Besides, the definition of a subsidiary is different in the Russian law and in IFRS. There could be situations when the Russian law considers a company not to have subsidiaries, but IFRS would have a different result.

The regulators have not yet stated a position on this, but we expect further communication soon.

If a company is listed and is not an IFRS preparer but it is part of a group that reports under IFRS, is it exempt?

Yes, the company needs to present its own IFRS financial statements. Investors are interested in the financials of the issuing company, not the holding company further up in a group.

What are the “internationally recognised rules” allowing companies to postpone IFRS adoption?


Do organisations need to prepare consolidated financial statements under Russian statutory accounting rules according to MinFin Order No. 34-n?

No, the requirement to prepare consolidated financial statements according to MinFin Order No. 34-n will be abolished after the IFRS are adopted in Russia.

How will adoption of the IFRS in Russia affect auditors?

The auditors of IFRS consolidated financial statements need to be approved by an organisation’s general shareholders’ meeting. Russian law does not stipulate any restrictions: there could be one single auditor for IFRS and RAR purposes, or two different auditors, one for each.

For state-controlled entities, the auditor of IFRS consolidated financial statements needs to be selected in an open tender.

We expect that mandatory audits of IFRS financial statements in Russia will be performed in accordance with the Russian standards on audit. Implications for our internal policies and procedures will be considered and communicated separately.

What issues will you face?

In preparing for the IFRS transition, you will be confronted with a number of questions and problems, which will need to be resolved in the early stages of the project. These may include:

  • Have we assembled the right team to carry out this project?
  • Are we managing our IFRS transition project properly?
  • What new requirements for data and systems are there under IFRS?
  • How should we go about updating our processes for preparing financial statements under IFRS? And how do we set up the necessary controls?
  • Who within our company, as well as outside it should be our IFRS specialist? How do we provide these people with the proper training? And how do we ensure that their knowledge is up-to-date?

We will help you find the best solutions.

PwC has unparalleled experience cooperating with many large international companies in their transition to IFRS. We help bring to life IFRS transition projects both in Russia and around the world for a wide range of companies in a variety of industries. Our experience, including working on government IFRS transition programmes in Germany, Canada, Brazil and the US and with over 12,000 companies that have already transitioned to IFRS, has given us invaluable know-how that will help us assist Russian companies in dealing with the complexities of this important transition.

Preparing for the IFRS transition

  • Conducting comprehensive diagnostics to measure your company's readiness for auditing and preparing financial statements under IFRS, including key issues involved in the transition and recommendations on how to resolve the identified problem areas
  • Developing a detailed plan for your company's transition to IFRS
  • Restructuring groups in preparation for IFRS reporting
  • Analysing Russian accounting systems and bringing these accounting principles in line with IFRS
  • Setting up accounting management functions based on IFRS principles, preparing recommendations on how to continue with the IFRS transition
  • Training specialists in IFRS theory and practice

Transiting to IFRS

  • Developing a methodological platform (tools, including electronic instruments) for preparing financial statements under IFRS
  • Organising the financial statement preparation process in accordance with IFRS, including collecting data; adjusting data that is in RAS format into IFRS; consolidating subsidiary, joint and dependent companies; preparing the disclosure of necessary information in the format and quantity required by IFRS
  • Preparing financial statements under IFRS
  • Perfecting your company's controls, which are necessary for a successful transition to IFRS
  • Creating processes and solution systems for implementing IFRS
  •  Supporting your company to begin independently preparing financial statements under IFRS
  • Training company specialists using actual data

Improving the efficiency of IFRS financial statement preparation

  • Formulating recommendations regarding complex methodological IFRS issues
  • Consulting on applying the new standards and changes required under IFRS
  • Consulting and assisting in planning and accounting for acquisitions, developing IFRS-consistent methodology for automating (adjusting, consolidating, accounting hedging transactions, accounting with breakdown by transaction, and preparing the chart of accounts under IFRS), including the system's functional requirements
  • Performing quality reviews of the integrator's implementation of the methodology
  • Developing procedural regulations for financial statement preparation under IFRS
  • Preparing recommendations to speed up preparation of financial statements under IFRS (SmartClose)
  • Training specialists in complex IFRS issues (including the latest IFRS updates)