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:
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.
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.
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.
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.
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.
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.
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:
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.