Accounting and Auditing

If you’re worried about your accounting and auditing compliance in Russia, then Enterslice is here to assist with that. We will take care of all your accounting and financial needs. Package inclusions: Bookkeeping and Accounts preparation services Financial Statements preparation Financial..

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An Overview of Accounting and Auditing in Russia

Russia’s financial reporting framework has been determined and regulated by the State instead of professional bodies. The primary user of the Russian statutory financial statements based on the Russian accounting standard (RAS) is the tax and other state authorities instead of management or third parties. The International Financial Reporting Standard (IFRS) is gaining importance in terms of influencing the development of RAS and the compulsory standards for certain types of Russian entities.

Accounting Environment in Russia

The IFRS was adopted in Russia in 2012. IFRS is required for consolidated financial statements of all entities whose securities are listed on stock exchanges, banks or credit institutions, insurance companies other than those with activities limited to obligatory medical insurance, non-governmental pension funds, clearing houses, and management companies of investment and pension funds. RAS should be used for preparing financial statements of all entities having separate legal entities however, IFRS should be filed for consolidated financial statements. As per Federal Law 208-FZ ‘on Consolidated Financial Statements’ standards and interpretations issued by IASB are endorsed for adoption in Russia by the Russian Government in consultation with the Central bank. There is a formal process of endorsement of new or amended IFRSs. The newly issued standards go through technical expertise by the National Accounting Standard Board (NSFO). NSFO is an independent organization designated by the Ministry of Finance. The Ministry issues endorsement decisions on the basis of the results of the expertise.

Financial Statement under the Russian Accounting Standard

Every legal entity registered in Russia should prepare a financial statement for each calendar year ending 31st December. The Ministry of Finance regulates the format and contents of the financial statements and provides the chart of accounts along with the recommended accounting entries for typical transactions. The financial statements include balance sheets, statements of profit and loss, changes in equity and cash flows, and explanatory notes. Accounting records and financial statements of branches and representative offices of foreign legal entities must be prepared as per RAS provided that they try to maintain tax records as per the Russian tax legislation. Financial statements prepared as per RAS must be filed with the tax authorities and the state statistical register within three months from the end of the calendar year.

Audit Requirements

Audit of an annual statutory financial statement is mandatory for:

  1. Joint Stock Companies;
  2. Entities with securities listed on stock exchanges;
  3. Banks and other credit institutions, pension and investment funds and management companies, insurance companies credit bureaus, stock exchanges, registrars, clearing houses, depositaries, stock brokers and dealers;
  4. Other entities with annual revenue for the preceding financial year exceeding RUB 400 million;
  5. Other entities with total assets as of the preceding 31st December exceeding RUB 60 million.

The following are to be audited by an audit firm and not by an individual auditor:

  1. Publicly listed entities;
  2. Banks and other credit institutions;
  3. Insurance companies;
  4. Non-governmental pension funds; and
  5. State corporations and companies owned more than 25% by the government

Frequently Asked Questions

Russia follows the Russian Accounting Standard (RAS) and also International Financial Reporting Standard (IFRS).

No, Russia does not use GAAP.

Yes, Russia uses IFRS for filing consolidated financial statements.

Yes, Russia has adopted IFRS.

An audit is mandatory for the following companies in Russia:

  • Joint Stock Companies;
  • Entities with securities listed on stock exchanges;
  • Banks and other credit institutions, pension and investment fundsand management companies, insurance companies credit bureaus, stock exchanges, registrars, clearing houses, depositaries, stock brokers and dealers;
  • Other entities with annual revenue for the preceding financial year exceeding RUB 400 million;
  • Other entities with total assets as of the preceding 31st December exceeding RUB 60 million.

The major difference between IFRS and GAAP is that GAAP is a framework base on legal authority whereas IFRS is based on a principles-based approach.

GAAP is used in the United States whereas IFRS is used in more than 110 countries across the world including EU and many Asian and South American Companies.

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