Bragina Veronika Dmitrievna
Saint-Petersburg State University of Economics
Master student

The article is devoted to the process of compilation financial statements in Russia according to the International Financial Reporting Standards. The majority of large companies in the world represent holding companies which consist of a large number of separate legal entities, while IFRS is aimed for compilation its consolidated financial statements. Consolidated statements present the evaluation of the economic and financial capacity of the corporate group.

Keywords: assets, company, consolidation, expenses, financial statements, income, law

Article reference:
Compilation of financial statements in Russia with IFRS requirements // Economics and innovations management. 2015. № 9 [Electronic journal]. URL:

View this article in Russian

Generally accepted basis of the preparation of reliable and comparable financial statements leads to the International Financial Reporting Standards (IFRS). The active foreign economic activity of Russian companies and foreign investments are aiming to rapprochement of the Russian accounting system with international practice and experience.

In accordance with the Russian Federal Law “On Consolidated Financial Statements”, the consolidated financial statements have to be prepared with IFRS requirements [1, p.5]. The following standards form a base for the consolidated financial statements: IFRS 10 “Consolidated Financial Statements”; IAS 28 “Investments in Associates and Joint Ventures”; IFRS 3 “Business Combinations”; IFRS 12 “Disclosure of Interests in Other Entities”; IFRS 11 “Joint Arrangements”; IAS 27 “Separate Financial Statements”; IAS 36 “Impairment of Assets”.

Implementation of the International Financial Reporting Standards (IFRS) for companies in many countries is one of the most significant regulatory developments in the history of accounting [2, p.1086]. It is expected that the use of IFRS will enhance the comparability of financial reporting, enhance corporate transparency and improve the overall quality of financial reporting and thus bring benefits to investors.

Russia’s transition to IFRS is carried out since the nineties of the last century; however, in spite of such a long period of restructuring, there are still a lot of unresolved issues.

One of the main reasons for this situation is the imperfection of the legal framework of accounting. In recent years, many of the provisions on accounting (RAS) have been revised, however, the changes were ‘external” and did not change the essence of Russian accounting within.

In the process of preparation the consolidated financial statements for the organization it is necessary to classify the main directions of the analysis on the basis of IFRS and Russian regulations and acts, to understand its rationale, similarities and differences. Thus, it is possible to distinguish the following elements of analysis for the consolidation, which are common in the IFRS and the Russian legislative framework:

1) Elements that are directly related to the measurement of the financial condition in the company (assets, liabilities, equity);

2) Elements that are related to the evaluation of the results of the organization’s activities (income and expenses).

Approval of the holding structure has vital implications for the structure of the organization and management in the financial system, and therefore the direction of the research should focus on the benefits of such a system [3, p.4101].

The relationship between the parent company and subsidiaries in holding companies are built in the style of control. Control means the possibility of a parent organization indicate the financial and operating policies of affiliates. A function of controlling in the parent company has a significant influence in using IFRS. In other words, the presence of control of subsidiaries is considered to be essential for the consolidation. If an organization has a control over other companies, it is obliged to provide their information with its own in the consolidated reporting.

In IFRS and the Russian legal framework on the basis of data on revenues and expenditures of organizations the financial results of the company are presented and must be reflected in the statement of income. IFRS requires separation of profit and loss items for their disclosure statements in the 2 groups permitted by Financial Reporting Standards of the Russian legislation:

  • Profit (loss) from ordinary activities;
  • The results of activities in a situation of emergency.

The consolidated balance sheet is prepared on the basis of the recognition of the fact that the group of companies presents more or less operating and financial unit, but the financial relations existing between the holding company and its subsidiaries vary radically, depending on several factors such as the age of the holding company, the credit of certain subsidiaries and management policies [4, p.6]. The position of each system depends on its significance for the system as a whole system. This is true for both the holding and any other company. Holding system is very important when the system is operated and funded by the actions as a whole.

The activity of holdings contacts with the improvement of corporate ownership and gives the ability to produce functional interaction of capital based on the goals of the entire integrated group. Based on the system of control in holdings there is information obtained through the consolidation of the financial statements. Thus, the preparation methods of the consolidated financial statements with taking into account the diversity of economic spheres and the provisions of IFRS accepts one of the most important tasks of modern accounting.

Reporting, which is made according to the principles of IFRS, first of all is necessary for all for lenders and investors. They make an analysis of the financial position of the organization; evaluate the current market value, profitability, prospects and financial results of activity, etc. Thus, such statements focus on the capital market.

Observance of the fundamental principles of IFRS is only possible with highly qualified professionals who are able to work with the standards and knowledgeable industry-specific economic sector.

It is necessary to conduct comprehensive research on the reform of Russian accounting, involving all stakeholders: scientists, concerned departments and practitioners. The solution of legal, methodical and personnel issues in Russia will be able to approach as close as possible to the international experience in IFRS reporting.

  1. Gorshkova N. Historical development of consolidated accounting and reporting in the Russian Federation // Reforming statements. 2012. № 16 (214).
  2. Daske H., Hail L., Leuz C., Verdi R. Mandatory IFRS Reporting around the World: Early Evidence on the Economic Consequences // Journal of Accounting Research. 2008. Vol. 46. №5.
  3. Datar M.K. Whither Bank Holding Companies? // Economic and Political Weekly. 2007. Vol. 42. №41.
  4. Morrison P.L. Some Economic Aspects of Public Utility Holding Company Financial Statements: Consolidated Balance Sheets // The Journal of Land & Public Utility Economics. 1928. Vol. 4. №1.

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