The accountancy firms Arthur Andersen, Deloitte Touche Tohmatsu, Ernst & Young International, KPMG, PricewaterhouseCoopers, BDO and Grant Thornton have jointly published GAAP 2000 – A Survey of National Accounting Rules in 53 countries (in English).
This publication summarises the main differences between national accounting rules in the 53 countries of Europe, America. Asia, Africa and Australia. The Russian Federation is one of these countries, whose national accounting rules are included in this survey. The countries taking part in the survey represent some 95% of the world’s GNP.
The national accounting rules that are mandatory as of December 2000 are compared with the provisions of the international Accounting standards. The focus of the survey is on consolidated financial statements of listed companies. The survey looks at 60 key accounting and disclosure issues. As a result of the survey some instances have been detected, where individual country’s rules would not allow or would not require the International Accounting Standards accounting treatment.
As it is known, over recent years there is a distinctive tendency towards harmonisation of national accounting rules all over the world. However, the survey has identified that national rules still vary substantially from country to country. Almost all-national systems allow certain differences from the International Accounting Standards. This survey demonstrates that significant work should be done before financial results can be directly compared between one country and another.
The survey and the publication is a very important step in the process of harmonisation of national accounting rules. On the basis of the survey further work on implementing national accounting systems, compliant with IAS can be organised including in the Russian Federation. If ICAR subscribers have any questions about the publication they should contact the following experts:
Gardner D., Arthur Andersen, Partner, tel. +7 (095) 755 9700,
Howell M., Deloitte Touche Tohmatsu, Partner, tel. +7 (095) 933 7300,
Ischuk S., Ernst & Young International, Partner, tel. +7 (095) 705 9292,
Munnings R., KPMG, Partner, tel. +7 (095) 937 4477,
Schneidman L., PricewaterhouseCoopers, Partner, Project co-ordinator for Russia, tel. +7 (095) 967 6000.
The Russian requirements for commercial non-banking companies are based on the Civil Code, Law on Accounting, some other laws, and incorporate accounting regulations and standards of the Ministry of Finance of the Russian Federation. Although Russian requirements are mandatory, the Law on Accounting allows departures from them when a fair presentation cannot be achieved through their application. In addition, whilst a number of requirements pronounced formally follow IAS, their application and interpretation may be different. These and other circumstances may result in departures from the Russian requirements and consequently further inconsistencies with IAS from those outlined below.
Russian accounting may differ from that required by IAS because of the absence of specific Russian rules in the following areas:
| the classification of business combinations between acquisitions and unitings of interest | IAS 22.8 |
| provisions in the context of business combinations accounted for as acquisitions | IAS 22.31 |
| the restatement of financial statements of a company reporting in the currency of a hyperinflationary economy in terms of the measuring unit current at the balance sheet date | IAS 29.8 |
| the translation of the financial statements of hyperinflationary subsidiaries | IAS 21.36 |
| impairment of assets | IAS 36 |
| the recognition of operating lease incentives | IAS 17.25; SIC 15 |
| accounting for defined benefit pension plans and some other types of employee benefits | IAS 19.52 |
| accounting for deferred tax | IAS 12 |
| accounting for an issuer's financial instruments | IAS 32.18/23 |
| the treatment of exchange differences resulting from severe devaluation or depreciation of a currency | IAS 21.21; SIC 11 |
| the notion and definition of cash equivalents IAS 7.6-9 and detailed guidance on the preparation of cash flow statements | IAS 7 |
| consolidation of special purpose entities | SIC 12 |
| recognition of a decline, other than temporary, in the carrying amount of long-term investments, other than marketable equity securities. | IAS 25.23 |
There are no specific rules requiring disclosures of:
| a primary statement of changes in equity | IAS 1.7 |
| a primary statement of cash flows | IAS 7 |
| the FIFO or current cost of inventories valued on the LIFO basis | IAS 2.36 |
| the fair value of financial assets and liabilities | IAS 32.77 |
| related parties information except by certain reporting companies with specific legal form (joint stock companies); fellow subsidiaries under common control do not qualify for consideration as related parties | IAS 24.1-4 |
| discontinuing operations | IAS 35 |
| certain segment information (e.g. a reconciliation between the information by reportable segment and the aggregated information in financial statements, significant non-cash expenses, other than depreciation and amortization, that were included in segment expense and, therefore, deducted in measuring segment result – for each reportable segment). | IAS 14.61/67 |
There are inconsistencies between Russian and IAS rules that could lead to differences for many enterprises in certain areas. Under Russian rules:
| research costs can be capitalized | IAS 38.42/51 |
| goodwill is calculated by reference to the book values of acquired net assets | IAS 22.40 |
| proportionate consolidation may be used for subsidiaries in which the parent has 50 per cent or less of the voting power | IAS 27.15 |
| revaluation of property, plant and equipment is allowed but gives different results than IAS and need not be kept up-to-date | IAS 16.29 |
| the period of depreciation of property, plant and equipment is in a number of cases prescribed by government and is longer than the period over which an asset is expected to be used | IAS 16.6/41 |
| finance leases are generally defined in legal terms and capitalization is allowed but not required | IAS 17.3/12.28 |
| lessors recognize finance lease income differently | IAS 17.30 |
| the completed contract method can be used for the recognition of revenues on construction contracts when the outcome of a construction contract can be estimated reliably | IAS 11.22 |
| provisions can be established more widely or less widely than under IAS, and there is no requirement for discounting | IAS 37.14/45 |
| own (treasury) shares are shown as assets | SIC 16 |
| classification of cash flows between investing and financing activities in the cash flow statement may be different from IAS | IAS 7.6/16/17 |
| cash flow statements reconcile to cash rather than to cash and cash equivalents | IAS 7.45 |
| the correction of fundamental errors is included in the determination of the net profit or loss for the reporting period, but separate disclosure and pro-forma restated comparative information are not required | IAS 8.34/38 |
| revenue recognition rules do not differentiate between exchanges of goods of similar nature and value and exchanges of dissimilar goods, and do not discuss adjustment for the amount of cash or cash equivalents transferred in exchanges for dissimilar goods | IAS 18.12; IAS 16.21/22 |
| the definition of extraordinary items is broader. | IAS 8.6/12 |
| In certain enterprises, these other issues could lead to differences from IAS: | |
| some parent companies do not prepare consolidated financial statements | IAS 27.7/11 |
| in the definition of control, the ability to govern decision-making is not required to be accompanied by the objective of obtaining benefits from the entity's activities | IAS 27.6 |
| investments in certain securities held for the short term are not required to be carried at the lower of cost and market value or at market value | IAS 25.19/23 |
| certain subsidiaries may be excluded from consolidation beyond those referred to in | IAS IAS 27.13 |
| a subsidiary that is a bank may be excluded from consolidation if it is dissimilar from the rest of the group | IAS 27.14 |
| certain set-up costs that have been paid by a company's founder can be capitalized | IAS 38.57 |
| the realizable value of inventories can be measured without deduction of costs. | IAS 2.6 |