In October 2000 the EBRD published a large technical country analysis for Russia, setting out its plans and advice for future investment in Russia. In the report the EBRD stated that due to the lack of financial statements prepared to IAS, it is impossible to assess the performance of large enterprises in need of restructuring. This lack of transparency, in terms of financial reporting and management, is often at the expense of outside and minority shareholders.
The EBRD noted there have been positive steps in regulatory reform of banks in trying to move towards IAS based bank accounting. The EBRD sees the introduction of IAS financial statements in banks as one of the priority needs (but envisages that many more auditors will need to be trained in order for the reform to become effective). In its financing decisions for extra large companies, the EBRD will include special transaction structures which have a credible up front commitment to change in important aspects of company operations, with a focus on, inter alia, accounting standards and minority rights protection in company charters.
Among the EBRD’s concerns about SME sector development is the need for regulatory and tax reforms, with a view to reducing administrative obstacles and improving support networks. ICAR believes that the EU Fourth Directive on company accounts may be a useful tool to use in regard to SME.
The EBRD also highlighted barter as a potential obstacle to the restructuring of large enterprises. Market-based pricing, cost accounting and improved transparency and accountability in accounts and audits were suggested as areas where the EBRD could improve standards, but the EBRD acknowledged that even this would not be sufficient to address more widespread barter. The IASC Committee on Emerging Markets expects to address barter and has initiated a worldwide survey on the accounting needs of barter.
The European Bank for Reconstruction and Development (EBRD) is the biggest investor in Russia with an approved EUR 3.6 billion for 106 investments since operations began in 1991.
Copies of the report can be found at the EBRD web site at http://www.ebrd.org. Copies of the EU Fourth Directive in Russian can be found on the ICAR website at http://www.icar.ru.