International Financial Reporting Standards establish a unified plan. Differences between IFRS and RAS for dummies. For the goal to be achieved, it is worth

Updated 05/28/2019 at 15:02 64,552 views

International Financial Reporting Standards (IFRS) are a set of international accounting standards that specify how specific types of transactions and other events should be reported in financial statements. IFRS is published by the International Accounting Standards Board, and it specifies exactly how accountants should maintain and present accounts. IFRS was created to provide a “common language” for accounting because business and accounting standards can vary from company to company and from country to country.

The purpose of IFRS is to maintain stability and transparency in the financial world. This allows businesses and individual investors to make educated financial decisions as they can see exactly what is happening with the company they want to invest in.

IFRS is standard in many parts of the world, including the European Union and many countries in Asia and South America, but not in the United States. The Securities and Exchange Commission (SEC) is in the process of deciding whether to adopt the standards in America. The countries that benefit most from standards are those that conduct and invest in international business. Experts suggest that global adoption of IFRS will save money on comparative opportunity costs, as well as allow information to flow more freely.

In countries that have adopted IFRS, both companies and investors benefit from using the system because investors are more likely to invest in a company if the company's business practices are transparent. In addition, the cost of investment is usually lower. Companies that conduct international business benefit the most from IFRS.

IFRS standards

Below is a list of current IFRS standards:

	Conceptual Framework of Financial Reporting
IFRS/IAS 1	Presentation of financial statements
IFRS/IAS 2	Reserves
IFRS/IAS 7
IFRS/IAS 8	Accounting policies, changes in accounting estimates and errors
IFRS/IAS 10	Events after the end of the reporting period
IFRS/IAS 12	Income taxes
IFRS/IAS 16	Fixed assets
IFRS/IAS 17	Rent
IFRS/IAS 19	Employee benefits
IFRS/IAS 20	Accounting for government subsidies, disclosure of information on government assistance
IFRS/IAS 21	Impact of changes in currency exchange rates
IFRS/IAS 23	Borrowing costs
IFRS/IAS 24	Related Party Disclosure
IFRS/IAS 26	Accounting and reporting on pension plans
IFRS/IAS 27	Separate financial statements
IFRS/IAS 28	Investments in associates and joint ventures
IFRS/IAS 29	Financial reporting in a hyperinflationary economy
IFRS/IAS 32	Financial instruments: presentation of information
IFRS/IAS 33	Earnings per share
IFRS/IAS 34	Interim financial statements
IFRS/IAS 36	Impairment of assets
IFRS/IAS 37	Provisions, contingent liabilities and contingent assets
IFRS/IAS 38	Intangible assets
IFRS/IAS 40	Investment property
IFRS/IAS 41	Agriculture
IFRS/IFRS 1	First application of IFRS
IFRS/IFRS 2	Share based payment
IFRS/IFRS 3	Business combinations
IFRS/IFRS 4	Insurance contracts
IFRS/IFRS 5	Non-current assets held for sale and discontinued operations
IFRS/IFRS 6	Exploration and evaluation of mineral reserves
IFRS/IFRS 7	Financial instruments: information disclosure
IFRS/IFRS 8	Operating segments
IFRS/IFRS 9	Financial instruments
IFRS/IFRS 10	Consolidated financial statements
IFRS/IFRS 11	Cooperative activity
IFRS/IFRS 12	Disclosure of participation in other enterprises
IFRS/IFRS 13	Fair value measurement
IFRS/IFRS 14	Tariff deferral accounts
IFRS/IFRS 15	Revenue from contracts with customers
SICs/IFRICs	Regulations on the interpretation of standards
	IFRS for small and medium-sized enterprises

Presentation of financial statements in accordance with IFRS

IFRS covers a wide range of accounting transactions. There are certain aspects of business practice for which IFRS provides mandatory rules. IFRS fundamentals are the elements of financial statements, IFRS principles and types of basic reports.

Elements of financial statements in accordance with IFRS: assets, liabilities, capital, income and expenses.

IFRS principles

Fundamental Principles of IFRS:

accrual principle. According to this principle, events are recorded in the period in which they occur, regardless of cash flows.
going concern principle, which implies that the company will continue to operate in the near future and management has no plans or need to wind down its operations.

Reporting in accordance with IFRS must contain 4 reports:

Statement of financial position: It is also called balance. IFRS influence how the components of the balance sheet are interconnected.

Statement of comprehensive income: This may be one form, or it may be divided into an IFRS income statement and a statement of other income, including property and equipment.

Statement of changes in equity: Also known as the statement of retained earnings. It reflects changes in profit for a given financial period.

Cash flow statement: This statement summarizes a company's financial transactions for a given period, dividing cash flows into operating, investing, and financing flows. The guidance for this report is contained in IFRS 7.

In addition to these basic statements, the company must also provide exhibits summarizing its accounting policies. The full statement is often looked at in comparison to the previous statement to show changes in profit and loss. The parent company must prepare separate reports for each of its subsidiaries, as well as consolidated IFRS financial statements.

Comparison of IFRS standards and American standards (GAAP)

There are differences between IFRS and generally accepted accounting standards in other countries that affect the calculation of the financial ratio. For example, IFRS is not as strict in defining revenue and allows companies to report income more quickly, so therefore the balance sheet under this system can show a higher income stream. IFRS also has different requirements for expenses: for example, if a company spends money on development or investment for the future, it does not necessarily have to show it as an expense (ie it can be capitalized).

Another difference between IFRS and GAAP is how inventory is accounted for. There are two ways to track inventory: FIFO and LIFO. FIFO means that the most recent item of inventory remains unsold until the previous inventory is sold. LIFO means that the most recent unit of inventory will be sold first. IFRS prohibits LIFO, while American and other standards allow participants to use it freely.

History of IFRS

IFRS originated in the European Union with the intention of spreading it throughout the continent. The idea quickly spread around the world as the "common language" of financial reporting allowed for greater connections around the world. The United States has not yet adopted IFRS, as many view US GAAP as the gold standard. However, as IFRS becomes a more global norm, this could change if the SEC decides that IFRS is appropriate for American investment practices.

Currently, about 120 countries use IFRS, and 90 of them require that companies' financial statements be fully presented in accordance with IFRS requirements.

IFRS is supported by the IFRS Foundation. The IFRS Foundation's mission is to “ensure transparency, accountability and efficiency in financial markets around the world.” The IFRS Foundation not only enforces and monitors financial reporting standards, but also makes various suggestions and recommendations to those who deviate from the practice guidelines.

The purpose of the transition to IFRS is to simplify international comparisons as much as possible. This is difficult because each country has its own set of rules. For example, US GAAP is different from Canadian GAAP. Synchronization of accounting standards around the world is an ongoing process in the international accounting community.

Transformation of financial statements in accordance with IFRS

One of the main methods for preparing financial statements in accordance with IFRS requirements is transformation.

The main stages of transformation of financial statements in accordance with IFRS:

Development of accounting policies;
Selecting functional and presentation currencies;
Calculation of initial balances;
Development of a transformation model;
Assessing the company's corporate structure in order to determine subsidiaries, associates, affiliates and joint ventures included in accounting;
Determining the characteristics of the company’s business and collecting information necessary to calculate transformation adjustments;
Regrouping and reclassification of financial statements according to national standards to IFRS.

Automation of IFRS

It is difficult to imagine the transformation of IFRS financial reporting in practice without its automation. There are various programs on the 1C platform that allow you to automate this process. One such solution is “WA: Financier”. In our solution, it is possible to translate accounting data, map to accounts in the IFRS chart of accounts, make various adjustments and reclassifications, and eliminate intra-group turnover when consolidating statements. In addition, 4 main IFRS reports are configured:

Fragment of the IFRS Statement of Financial Position in “WA: Financier”: IFRS “Fixed Assets” tab.

The International Accounting Standards Committee (IASC) was created in 1973. During these years, the accounting profession experienced significant changes - during the same years, FASB (Financial Accounting Standards Board) was created in the USA, and a national organization was created in the UK to develop standards.

The beginning was made after informal meetings of representatives of the accounting associations of Great Britain (ICAEW) and the USA (AICPA). Then, after consultation with the accounting associations of Canada, Australia, Mexico, Japan, France, Germany, the Netherlands and New Zealand, these countries were invited to participate in the international project. Due to British pressure coupled with its financial contributions, the Committee (IASC) was located in London. The headquarters of the IASB is also located there, which took over all the functions of the Committee after its restructuring in 2001.

The real reasons for the creation of the IFRS Committee are shrouded in mystery. Of course, at that time there was already a need to create a single language for the growing international business. But, most likely, the main motivation was the UK's desire to create an organization to develop international standards in defiance of the European Union's attempts to create the same body. Indeed, if the countries of Europe had done this first, then the continental model of accounting (Code model of reporting) would have dominated international standards, and not the model (Anglo-Saxon) that was adopted in Great Britain and most English-speaking nations (Anglo-Saxon). Saxon financial reporting approach).

In March 1974, E1, the first draft standard called Disclosure Of Accounting Policies, was issued and adopted in January 1975. 2 standards were issued in 1975, 3 more in 1976, two in 1977, three in 1978.

Initially, few people used these standards, but over time the situation has changed greatly.

List of current IFRS standards

IAS 1 Presentation of Financial Statements

IAS 2 Inventories

IAS 7 Statements of Cash Flows

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

IAS 10 Events after the end of the reporting period

IAS 11 “Construction Contracts” (no longer valid on January 1, 2018; new revenue standard effective from 01/01/18 - IFRS 15)

IAS 12 Income Taxes

IAS 14 Segment Reporting

IAS 16 “Property, Plant and Equipment”

IAS 17 “Leases” (IAS 17 “Leases”) () (ceased to be effective on January 1, 2019; the new lease standard is effective from 01/01/19 - IFRS 16)

IAS 18 “Revenue” (IAS 18 “Revenue”) (ceased to be effective on January 1, 2018; the new revenue standard is effective from 01/01/18 - IFRS 15)

IAS 19 Employee Benefits

IAS 20 Accounting for Government Grants and Disclosure of Government Assistance

IAS 21 The Effects of Changes in Foreign Exchange Rates ()

IAS 23 Borrowing Costs

IAS 24 Related Party Disclosures

IAS 26 Accounting and Reporting for Pension Plans

IAS 27 Consolidated and Separate Financial Statements

IAS 28 Investments in Associates

IAS 29 Financial Reporting in Hyperinflationary Economies

IAS 31 Interests in Joint Arrangements

IAS 32 Financial Instruments: Presentation

IAS 33 Earnings per share

IAS 34 Interim Financial Reporting

IAS 36 Impairment of Assets

IAS 37 Provisions, Contingent Liabilities and Contingent Assets (details, )

IAS 38 Intangible Assets ()

IAS 39 Financial Instruments: Recognition and Measurement

IAS 40 Investment Property

IAS 41 Agriculture

IFRS 1 First-time Adoption of International Standards

IFRS 2 Share-based Payment

IFRS 3 Business Combinations

IFRS 5 Non-current assets held for sale and discontinued operations

IFRS 6 “Exploration and evaluation of mineral reserves” ()

IFRS 7 Financial Instruments: Disclosures

IFRS 8 Operating Segments

IFRS 9 Financial Instruments ()

IFRS 10 Consolidated Financial Statements ()

IFRS 11 Joint Arrangements

IFRS 12 Disclosure of Interests in Other Entities

IFRS 13 Fair Value Measurement

IFRS 14 Regulatory Deferral Accounts( Regulatory Deferral Accounts) - will come into force on January 1, 2016

IFRS 15 Revenue from Contracts with Customers ( Revenue from Contracts with Customers) — will take effect from January 01, 2017(read and). In September 2015, the effective date of the standard was postponed. The new effective date is January 1, 2018.

Amendments to International Financial Reporting Standard (IFRS) 15 “Revenue from Contracts with Customers” were introduced on April 12, 2016

IFRS 17 “Insurance Contracts” was issued on May 18, 2017, will come into force on January 1, 2021

All names of standards in Russian are taken from the texts of the translation of IFRS into Russian on the website of the Ministry of Finance of the Russian Federation.

They can be viewed at: http://www.minfin.ru/ru/perfomance/accounting/mej_standart_fo/docs/

IFRS GAAP Financial statements Areas of accounting

Cost accounting Financial accounting Forensic accounting
Fund accounting Management accounting Tax accounting
Budget accounting Bank accounting

Audit Financial control

International Financial Reporting Standards(IFRS; IFRS English) International Financial Reporting Standards ) - a set of documents (standards and interpretations) regulating the rules for preparing financial statements necessary for external users to make economic decisions regarding the enterprise.

IFRS, unlike some national reporting rules, are standards based on principles rather than on rigid rules. The goal is that, in any practical situation, drafters can follow the spirit of the principles, rather than trying to find loopholes in clearly written rules that would circumvent any basic provisions. Among the principles: accrual basis, going concern principle, prudence, relevance and a number of others.

Application in various countries

International financial reporting standards have been adopted as mandatory in several European countries. In most European countries, companies whose securities are traded on the stock exchange are required to prepare financial statements in accordance with IFRS.

In the United States, which now uses its own accounting standards US GAAP, in August 2008 the Securities and Exchange Commission presented a preliminary plan for the transition to IFRS and the abandonment of GAAP. In accordance with this plan, starting from 2010, transnational American companies (it is expected that by this time there will be at least 110 of them) will be required to provide reporting in accordance with IFRS. It is expected that starting from 2014, reporting under IFRS will become mandatory for all American companies.

In 2011, the first 63 standards and interpretations were recognized as applicable in the Russian Federation. Consolidated financial statements must be provided by organizations covered by Law No. 208-FZ, starting with reporting for 2012.

List of currently valid standards

IFRS

IAS

IAS 1 Presentation of Financial Statement
IAS 2 Stocks
IAS 7 Cash Flow Statements
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
IAS 10 Events After the Balance Sheet Date
IAS 11 Construction Contracts
IAS 12 Income Taxes
IAS 16 Property, Plant and Equipment
IAS 17 Leases
IAS 18 Revenue
IAS 19 Employee Benefits
IAS 20 Accounting for Goverments Grants and Disclosure of Goverment Assistance
IAS 21 The Effects of Changing in Foreign Exchange Rates
IAS 23 Borrowing Costs
IAS 24 Related Party Disclosures
IAS 26 Accounting and Reporting by Retirement Benefit Plans
IAS 27 Consolidated and Separate Financial Statements
IAS 28 Investments in Associates
IAS 29 Financial Reporting in Hyperinflationary Economies
IAS 31 Participation in joint ventures (Financial Reporting of Interests in Joint Ventures)
IAS 32 Financial Instruments: Presentation
IAS 33 Earnings per Share
IAS 34 Interim Financial Reporting
IAS 36 Impairment of Assets
IAS 37 Provisions, Contingent Liabilities and Contingent Assets
IAS 38 Intangible Assets
IAS 39 Financial Instruments: Recognition and Measurement
IAS 40 Investment Property
IAS 41 Agriculture

In addition to standards, interpretations that reveal a particular issue of application of standards are mandatory for use:

IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities
IFRIC 2 Members" Shares in Co-operative Entities and Similar Instruments
IFRIC 4 Determining whether an Arrangement contains a Lease
IFRIC 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds
IFRIC 6 Liabilities arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment
IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies
IFRIC 8 Scope of IFRS 2
IFRIC 9 Links to Reassessment of Embedded Derivatives
IFRIC 10 Interim Financial Reporting and Impairment
IFRIC 11 IFRS 2 - Transactions with group shares and treasury shares (IFRS 2 - Group and Treasury Share Transactions)
IFRIC 12 Service Concession Arrangements
IFRIC 13 Customer Loyalty Programs
IFRIC 14 IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
IFRIC 15 Agreements for the Construction of Real Estate
IFRIC 16 Hedges of a Net Investment in a Foreign Operation
IFRIC 17 Distributions of Non-Cash Assets to Owners
IFRIC 18 Transfers of Assets from Customers
SIC 7 Introduction of the Euro
SIC 10 Government Assistance - No Specific Relation to Operating Activities
SIC 12 Consolidation - Special Purpose Entities
SIC 13 Jointly Controlled Entities - Non-Monetary Contributions by Venturers
SIC 15 Operating lease. Incentives (Operating Leases - Incentives)
SIC 21 Income Taxes - Recovery of Revalued Non-Depreciable Assets
SIC 25 Income Taxes - Changes in the Tax Status of an Entity of its Shareholders
SIC 27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease
SIC 29 Service Concession Arrangements: Disclosures
SIC 31 Revenue: barter transactions including advertising services (Revenue - Barter Transactions Involving Advertising Services)
SIC 32 Intangible Assets - Web Site Costs

Notes

Literature

First application of IFRS. - M.: Alpina Publisher, 2013. - 448 p. - ISBN 978-5-9614-2241-2

It makes sense to first decide on the question: “IFRS - what is it?” This concept is deciphered as a complex of specialized documents, or rather standards, through which the procedure for creating financial statements that are freely available to external users is regulated.

IFRS versus the Russian accounting system

First of all, there is a difference in the end users of information, which includes relevant accounting indicators grouped according to the above standards. In particular, the Russian model was aimed at government agencies and statistics, and the international one at investors, enterprises and financial institutions. As a result, the associated differences in interests and needs for financial information also reveal different principles on which the procedure for generating this reporting is based.

Thus, a mandatory rule in IFRS is the priority of content regarding the form of presentation of previously specified information. When talking about the Russian accounting system, this point is most often omitted.

A practical example would be a situation in which PBU considers part of the capital of an enterprise, although regarding their economic nature there are very few distinctive features from bonds. Under IFRS, these features are significant enough not to be included in equity.

The purpose of introducing IFRS to Russian enterprises

In order to create something that is adequately perceived and understandable to users in different countries, international standards were introduced. Their goal is to unify the preparation of the considered set of documents and provide data on the activities of a company.

It is worth highlighting the list of documents defining IFRS aimed at their unification regarding the order of creation, namely:
balance sheet;
Report on ;
Profits and Losses Report;
report on changes in capital or other transactions in this area;

Along with the above reports, enterprises can also generate certain reviews for the management team, which display the profit indicators of a given company.

IFRS - what is it?

This accounting system looks like a specific set of documents, including the following elements:

preface to the provisions of the standards under consideration;
clarification of the fundamental principles of preparation and form of presentation of this type of reporting, in essence the concept of IFRS;
standards and corresponding interpretations to these documents.

Each of the above documents has its own significance, but is used exclusively in conjunction with other elements. Thus, from the previously indicated list it means that IFRS are standards, each of which has a clearly established structure.

The semantic aspect of the standards of the accounting system under consideration

They establish rules that determine the procedure for deciphering individual transactions performed in the course of carrying out the core activities of the enterprise and reflected in the financial statements.

It is important to note that the standards adopted by the relevant body before 2001 are called International Accounting Standards or abbreviated IAS, and then, since 2001, International Financial Reporting Standards, the abbreviation of which has the same spelling - IFRS.

Current above standards

The main IFRSs developed before 2001 include:

International Financial Reporting Standards

The list of standards of the accounting system under consideration, adopted since 2001, is as follows:

“Adoption of International Financial Reporting Standards for the first time” (IFRS No. 1).
“Share-based payments” (IFRS No. 2).
Business Combinations (IFRS No. 3).
“Insurance Contracts” (IFRS No. 4).
“Non-current assets held for sale and discontinued operations” (IFRS No. 5).
"Exploration and Evaluation of Mineral Resources" (IFRS No. 6).

What is the significance of the current year regarding the accounting system in question?

From official sources it became known that the last volume of IFRS 2014, called the “Red Book,” is ready. It contains rules for international accounting, including those that will come into force after January 1 of the current year. An example is the amendments to the ninth standard, called “Financial Instruments,” adopted in 2001. There are also two sets of annual changes regarding IFRS 2011-2013 and IFRS 2010-2012, one interpretation of fees, the constitution of the IFRS Foundation, and a detailed work plan.

What's good about this accounting system?

In order to create a financial report that is correct by international standards, IFRS will be indispensable in helping.

It is worth highlighting a number of advantages of this accounting system, which may be associated with the activities of the following entities:

investors, as this is due to clarity, transparency, reliability and lower costs.
Companies, because the costs of activities to attract investment are reduced, there is a unified accounting system, there is no need to harmonize financial information, there is order in both internal and external accounting.
Auditors: due to the fact that there is uniformity in the fundamentals, there is an opportunity to participate in the adoption of relevant standards, large-scale trainings are conducted.
The developers of these standards themselves - due to the fact that this is an excellent opportunity to exchange experience, the basis for future national standards and the convergence of existing ones.

All of the above helps once again to get an answer to the question: “IFRS - what is it?”

How to smooth the process of transition to IFRS?

The reform objectives include the following:

Special training of accountants to the level of professional knowledge of the basics of the accounting system in question.
Strengthening in the minds of enterprise managers a real interest in providing truthful and objective information.
The final differentiation of accounting into tax, financial and management.

The importance of the transition is determined by the fact that IFRS are standards that are a compromise between the world's main accounting systems.

The appeal of accounting reform to businesses around the world

The IFRS financial statements under consideration can make it easier for companies from different countries to enter world-class capital markets, and will also increase the comparability of information and make it more transparent for external users.

Specifically, Russian enterprises will be able to speak the same language with their foreign colleagues and strengthen their business position in foreign markets from the point of view of equality of opportunity, as a result of which multiple prospects of international capital markets will become available.

The implementation of IFRS will have a positive impact on quality, in particular on its improvement, and will also contribute to updating information systems and motivating staff.

In addition, attracting foreign capital without reporting prepared in accordance with IFRS is currently very difficult. And it doesn’t matter whether this will be done either with the help of Western banks, or by entering the stock market located abroad, or by attracting private investment from abroad. A potential foreign investor will most likely not understand reporting prepared in accordance with PBU. Therefore, it is worth taking care of generating reports regulated by IFRS.

Companies are aware of the fact that in the near future, international standards will become national. For many firms, IFRS reporting is already required today in order to secure a significant competitive advantage by attracting resources in international borrowing markets such as bonds, loans or IPOs.

Thus, all of the above helps to understand in more detail the question: “IFRS - what is it?”

International financial reporting standards came to us in 2012, but even today the question constantly arises in organizations about how to prepare reports in accordance with IFRS. In this regard, we will help you understand the basics of standardization, draw up consolidated statements using the example of an industrial enterprise and present their differences from conventional financial statements.

IFRS: SCOPE AND COMPOSITION

International standards began to be developed in 1973 to create unified principles of accounting and reporting in different countries. International standards came to Russia in full only in 2012 with the adoption of Order of the Ministry of Finance of Russia dated November 25, 2011 No. 160n “On the implementation of International Financial Reporting Standards and Explanations of International Financial Reporting Standards on the territory of the Russian Federation.”

The main difference between Russian accounting standards (RAS) and international ones is that IFRS is not a set of requirements and laws, but advisory regulations with a number of requirements for the structure of financial reporting.

Important point: the application of IFRS does not cancel RAS.

According to paragraph 2 of Art. 3 of Federal Law No. 208-FZ dated July 27, 2010 (as amended on July 3, 2016) “On Consolidated Financial Statements” (hereinafter referred to as Federal Law No. 208-FZ) consolidated financial statements of the organization are prepared along with the accounting(financial)reporting of this organization, compiled in accordance with Federal Lawdated 06.12.2011 No. 402-FZ(in ed. from 05/23/2016) « About accounting».

Often, organizational specialists have difficulty distinguishing between IFRS/IAS and IFRS/IFRS (International Accounting Standards) and IFRS/IFRS (International Financial Reporting Standards). Until 2001, the standards were called IAS, and after 04/01/2001 the name IFRS appeared, so both standards are united under the concept “IFRS”.

Sometimes accountants, for ease of understanding, refer to IAS as accounting standards, and IFRS as financial reporting standards.

Who should apply IFRS on the territory of the Russian Federation

Federal Law No. 208-FZ disclosed scope of application of international standards,which applies to:

credit organizations;
insurance organizations (with the exception of medical insurance organizations operating exclusively in the field of compulsory medical insurance);
commodity exchanges;
management companies of investment funds, mutual funds and non-state pension funds;
clearing organizations;
federal state unitary enterprises, the list of which is approved by the Government of the Russian Federation;
joint stock companies whose shares are in federal ownership and the list of which is approved by the Government of the Russian Federation;
other organizations whose securities are admitted to organized trading by including them in the quotation list.

IFRS documents consist of:

International Financial Reporting Standards (IFRS);
International Financial Reporting Standards (IAS);
Interpretations prepared by the International Financial Reporting Interpretations Committee (IFRC);
clarifications prepared by the previously existing Standing Committee on Interpretations (SIC).

Composition of International Financial Reporting Standards (IFRS)

IFRS (IFRS) 1 « First application of International Financial Reporting Standards»

The objective of the standard is to ensure that an entity's first IFRS financial statements and its interim financial statements for that portion of the period covered by those financial statements contain information of high quality that:

is transparent to users and comparable across all periods presented;
represents the necessary starting point for accounting in accordance with International Financial Reporting Standards;
can be prepared at a cost that does not exceed the benefits obtained from it.

First financial statements according to IFRS for an organization is the first annual financial statements for the preparation of which the organization adopts International Financial Reporting Standards and confirms this by including in these financial statements an explicit and unambiguous statement of its compliance with IFRS.

The organization must prepare and submit introductory report on the financial position under IFRS as of the date of transition to IFRS, thus creating a starting point for accounting in accordance with International Financial Reporting Standards.

IFRS (IFRS) 2 « Share-based payments»

The purpose of the standard is to establish financial reporting procedures for an entity that engages in share-based payment transactions. This standard requires an entity to recognize in profit or loss and the statement of financial position the effects of share-based payment transactions, including costs associated with transactions that grant share options to employees.

IFRS (IFRS) 3 « Business combinations»

Business combination- a transaction or other event in which the acquirer gains control of one or more businesses. Transactions that are sometimes referred to as “true mergers” or “mergers of equals” are also business combinations.

The purpose of this standard is to improve the relevance, reliability and comparability of the information that a reporting entity presents in its financial statements about a business combination and its consequences. To achieve this objective, IFRS 3 sets out principles and requirements for how an acquirer:

recognizes and measures in its financial statements the identifiable assets acquired, liabilities assumed and any non-controlling interest in the acquiree;
recognizes and measures goodwill (an asset that represents future economic benefits resulting from other assets acquired in a business combination that are not separately identified or recognized) acquired in a business combination, or the gain on a bargain purchase;
determines what information to disclose that enables users of financial statements to evaluate the nature and financial consequences of the business combination.

IFRS (IFRS) 4 « Insurance contracts»

The purpose of the standard is to establish a procedure for reflecting insurance contracts in the financial statements of an organization entering into such contracts as an insurer (the party obligated under the insurance contract to pay compensation in the event of an insured event), which will remain in effect until the board completes the second phase of its project under insurance contracts. In particular, the standard requires:

limited improvements in the procedure for accounting insurance contracts by insurers;
Disclosures that identify and explain the amounts recorded in an insurer's financial statements for insurance contracts and help users of those financial statements understand the amount, timing and uncertainty of future cash flows for insurance contracts.

IFRS) 5 « Non-current assets held for sale and discontinued operations»

The purpose of this standard is to prescribe the accounting for assets held for sale and the presentation and disclosure of discontinued operations. In particular, the standard requires:

measure assets held for sale at the lower of book value and fair value less costs to sell, and discontinue depreciation on such assets;
Present assets held for sale separately in the statement of financial position and results of discontinued operations separately in the statement of comprehensive income.

Discontinued operations is a component of an organization that has either been disposed of or has been classified as held for sale and represents a separate major line of business or geographic area in which the activities are carried out.

IFRS (IFRS) 6 « Exploration and evaluation of mineral reserves»

The purpose of IFRS 6 is to determine the treatment of exploration and evaluation activities for mineral reserves in financial statements. In particular, the standard requires:

limited improvements to existing practices in accounting for exploration and evaluation costs;
entities that recognize exploration and evaluation assets, testing those assets for impairment in accordance with this IFRS and measuring any impairment in accordance with IAS 36 Impairment of Assets;
disclosures that identify and explain the entity's financial statement amounts related to exploration and evaluation activities and help users of those financial statements understand the amount, timing and certainty of future cash flows from any recognized exploration and evaluation assets .

IFRS (IFRS) 7 « Financial instruments: information disclosure»

The purpose of the standard is to establish requirements for entities to disclose information in their financial statements that enables users to evaluate:

the impact of financial instruments on the financial position and financial performance of the organization;
The nature and extent of the risks to which the entity is exposed during the period and at the end of the reporting period in connection with financial instruments, and how the entity manages those risks.

IFRS (IFRS) 8 « Operating segments»

An entity must disclose information that enables users of its financial statements to evaluate the nature and financial consequences of the activities that the entity engages in and the economic environment in which it operates.

IFRS (IFRS) 10 « Consolidated financial statements»

The purpose of this Standard is to prescribe principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities.

IFRS (IFRS) 11 « A jointentrepreneurship»

The purpose of this standard is to establish principles for the preparation and presentation of financial statements of entities engaged in business activities that are controlled jointly (that is, joint ventures).

IFRS (IFRS) 12 « Disclosure of participation in other organizations»

The purpose of this Standard is to require an entity to disclose information that enables users of its financial statements to evaluate:

the nature of its involvement in other entities and the risks associated therewith;
the impact of such participation on its financial position, financial results and cash flows.

IFRS (IFRS) 13 « Fair value measurement»

fair value- an assessment based on market data rather than an organization-specific assessment. Observable market transactions or market information may exist for some assets and liabilities. There are no market transactions or market information for other assets and liabilities. However, the purpose of measuring fair value in both cases is the same - to determine the price at which an orderly transaction between market participants to sell an asset or transfer a liability would occur at the measurement date in current market conditions.

Composition of International Financial Reporting Standards (IAS)

IFRS) 1 « Presentation of financial statements»

This Standard establishes a framework for the presentation of general purpose financial statements to ensure that an entity's financial statements are comparable with its historical financial statements and with the financial statements of other entities. This Standard sets out general requirements for the presentation of financial statements, guidance on their structure and minimum requirements for their content.

A complete set of financial statements includes:

statement of financial position as at the end of the period;
statement of profit or loss and other comprehensive income for the period;
statement of changes in equity for the period;
cash flow statement for the period;
notes, which consist of a summary of significant accounting policies and other explanatory information;
comparative information for the previous period;
statement of financial position at the beginning of the previous period if the entity applies any accounting policy retrospectively, retrospectively restates items in its financial statements, or reclassifies items in its financial statements.

An organization may use names for these reports other than those used in this International Standard. For example, the title “Statement of Comprehensive Income” may be used instead of the title “Statement of Profit or Loss and Other Comprehensive Income.”

IFRS (IAS) 2 « Reserves»

The purpose of the standard is to determine the accounting treatment of inventories. The key issue in accounting for inventories is determining the amount of cost that is recognized as an asset and carried forward until the corresponding revenue is recognised.

The standard provides guidance on determining cost and its subsequent recognition as an expense, including any write-down to net realizable value. It also provides guidance on the costing formulas that are used to allocate costs to inventory.

In accordance with IAS 2, inventories are measured at the lower of cost or net realizable value without selling expenses.

FOR YOUR INFORMATION

In the Accounting Regulations “Accounting for Inventories” (PBU 5/01), approved by Order of the Ministry of Finance of Russia dated 06/09/2001 No. 44n (as amended on 05/16/2016), there is no such method.

IFRS (IAS) 7 « Cash flow statement»

The purpose of this standard is to require information about historical changes in an entity's cash and cash equivalents in the form of a statement of cash flows that classifies cash flows for the period as flows from operating, investing and financing activities.

IFRS (IAS) 8 « Accounting policies, changes in accounting estimates and errors»

The purpose of this standard is to establish criteria for selecting and changing accounting policies, together with accounting treatment and disclosure of changes in accounting policies, changes in accounting estimates, and corrections of errors.

The standard is intended to improve the relevance and reliability of the information contained in an entity's financial statements, as well as the comparability of those financial statements over time and with the financial statements of other entities.

IFRS (IAS) 10 « Events after the reporting period»

The purpose of the standard is to specify when an entity must adjust its financial statements to reflect events after the reporting period.

The standard contains requirements for the information that an entity must disclose in relation to the date the financial statements are authorized for issue and events that occur after the reporting date.

Events after the reporting date are those events that occur between the reporting date when the financial statements are authorized.

IFRS (IAS) 11 « Construction contracts»

The purpose of this standard is to prescribe the accounting for revenue and costs associated with construction contracts. Due to the nature of the activities carried out under construction contracts, the date of commencement of such activities and the date of completion of such activities generally fall within different reporting periods. Thus, the main objective of accounting for construction contracts is to distribute the revenue and costs associated with the contract across the reporting periods in which construction work is carried out.

IFRS (IAS) 12 « Income taxes»

The purpose of this standard is to determine the accounting treatment for income taxes. A key issue in income tax accounting is how to account for current and future tax consequences:

future reimbursement (redemption) of the carrying amount of assets (liabilities) that are recognized in the statement of financial position of the organization;
transactions and other events of the current period recognized in the financial statements of the organization.

IFRS (IAS) 16 « Fixed assets»

The purpose of the standard is to specify the accounting treatment of property, plant and equipment so that users of financial statements can obtain information about an entity's investments in property, plant and equipment and changes in those investments.

The main issues in accounting for fixed assets:

asset recognition;
determination of the book value of assets;
depreciation;
impairment losses.

Fixed assets are tangible assets that:

meet asset recognition requirements;
intended for use in production, performance of work, provision of services, for rental, for administrative purposes;
intended to be used for more than one period.

IFRS (IAS) 17 « Rent»

The objective of this Standard is to prescribe appropriate accounting policies and disclosures for leases for lessees and lessors.

IFRS (IAS) 18 « Revenue»

The purpose of the standard is to determine the accounting treatment of revenue arising from certain types of transactions and events.

The main question when accounting for revenue- determine the moment when it needs to be recognized. Revenue is recognized when it is probable that future economic benefits will flow to the entity and those benefits can be measured reliably. This Standard specifies the conditions under which these criteria will be satisfied and, therefore, revenue will be recognized. This standard also provides practical guidance on the application of these criteria.

According to RAS, income can be shown only in the event of a transfer of ownership of goods; for IFRS this is not a determining factor. As for expenses, for IFRS, unlike RAS, it is not necessary to document expenses.

IFRS (IAS) 19 « Employee benefits»

This Standard sets out rules for an organization's accounting and disclosure of employee benefit information. The purpose of the standard is to establish such rules. IFRS 19 requires an entity to recognize:

obligation in the case where the employee provided a service in exchange for remuneration payable in the future;
an expense when an organization uses the economic benefit resulting from the provision of a service by an employee in exchange for compensation.

IAS 20 Accounting for Government Grants and Disclosure of Government Assistance

This standard should be applied when accounting for and disclosing information about government grants and other forms of government assistance. According to IFRS 20, government grants include government assistance in the form of transfers of resources to certain companies in exchange for past or future compliance with the conditions associated with the provision of the subsidy.

FOR YOUR INFORMATION

An analogue of the IAS 20 standard in Russian legislation is the Accounting Regulations “Accounting for State Aid” (PBU 13/2000), approved by Order of the Ministry of Finance of Russia dated October 16, 2000 No. 91n.

IFRS (IAS) 21 « Impact of changes in exchange rates»

An organization can conduct foreign exchange transactions in two ways: enter into transactions denominated in foreign currencies or own foreign subsidiaries. In addition, an organization may present its financial statements in foreign currencies.

The purpose of this Standard is to determine how foreign currency transactions and the performance of a foreign operation should be reported in an entity's financial statements and how to translate the financial statements into the presentation currency.

IFRS (IAS) 23 « Borrowing costsm»

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are included in the cost of that asset. Other borrowing costs are recognized as expenses.

IFRS (IAS) 24 « Related Party Disclosure»

The purpose of the standard is to provide disclosure in financial statements of information necessary to address the possibility that the existence of related parties, transactions and balances, including contractual obligations for future transactions with such parties, may have an effect on the financial position, profit or loss of the entity. .

IFRS (IAS) 27 « Separate financial statements»

The purpose of this Standard is to prescribe accounting and disclosure rules for investments in subsidiaries, joint ventures and associates when an entity prepares its separate financial statements.

IFRS (IAS) 28 « Investments in associates and joint ventures»

The purpose of this standard is to define the rules for accounting for investments in associates and the requirements for applying the equity method when accounting for investments in associates and joint ventures.

An associated organization is an organization over whose activities the investor has significant influence and which is neither a subsidiary nor an interest in a joint venture.

IFRS (IAS) 29 « Financial reporting in a hyperinflationary economy»

In a hyperinflationary economy, presenting an organization's performance and financial position in local currency without conversion is not useful. Money is losing purchasing power at such a rate that comparing amounts from transactions and other events that occurred at different times, even within the same accounting period, is misleading.

IFRS (IAS) 32 « Financial instruments: presentation»

The purpose of the standard is to establish the principles by which financial instruments are presented as liabilities or equity, and by which financial assets and financial liabilities are offset.

The standard aims to enhance users of financial statements' understanding of the significance of financial instruments to an entity's financial position, results of operations and cash flows.

A financial instrument is any contract that simultaneously creates a financial asset for one entity and a financial liability or equity instrument for another.

IFRS (IAS) 33 « Earnings per share»

The purpose of this standard is to establish principles for the determination and presentation of earnings per share to facilitate comparisons of the performance of different entities within the same reporting period or of the same entity across different reporting periods.

IFRS (IAS) 34 « Interim financial statements»

The purpose of the standard is to define the minimum content of an interim financial report and to establish recognition and measurement principles in complete or condensed financial statements for the interim period.

IFRS (IAS) 36 « Impairment of assets»

The purpose of this standard is to specify the procedures that an entity must use to account for assets to ensure that their carrying amount does not exceed their recoverable amount.

IFRS (IAS) 37 « Provisions, contingent liabilities and contingent assets»

The objective of this Standard is to ensure that the appropriate recognition criteria and measurement basis are applied to provisions, contingent liabilities and contingent assets so that sufficient disclosure is made in the notes to the financial statements to enable users to understand their nature, timing and amount.

IFRS (IAS) 38 « Intangible assets»

This standard requires an entity to recognize an intangible asset only when certain criteria are met. The standard also establishes procedures for measuring the carrying amount of intangible assets and requires certain disclosures about intangible assets.

IAS 39 Financial Instruments: Recognition and Measurement

The purpose of this standard is to establish principles for the recognition and measurement of financial assets, financial liabilities and certain contracts for the purchase and sale of non-financial items.

The standard defines such a concept as hedged item which is either an asset, a liability or a firm commitment that exposes the entity to changes in fair value or future cash flows. Hedging of financial instruments consists of partial or full compensation of changes in the fair value or cash flows of hedged (protected) items of financial instruments.

IFRS) 40 « Investment property»

The purpose of the standard is to establish the accounting treatment of investment property and related disclosure requirements.

This Standard should be applied by entities to all types of financial instruments when recognizing, measuring and disclosing investment property.

Investment property is property (land or building) held by the owner or lessee under a finance lease for the purpose of receiving rental payments, capital gains, but not for use in the production or supply of goods or services or for administrative purposes, or for sale in the normal course of business.

IFRS (IAS) 41 « Agriculture»

The purpose of the standard is to establish accounting procedures, financial reporting and disclosure requirements for agricultural activities.

PREPARATION OF CONSOLIDATED REPORTING

In accordance with Federal Law No. 208-FZ, consolidated financial statements mean systematized information reflecting the financial position, financial performance and changes in the financial position of the organization.

Let's consider an example of compilation and analysis of consolidated reporting according to IFRS standards using the example of the enterprise Alfa JSC, which controls the activities of two enterprises - Beta JSC and Gamma JSC, engaged in the production and maintenance of units and spare parts for cars.

The statement of profit or loss and other comprehensive income (statement of comprehensive income) (Table 1) is similar to the statement of financial results (Form No. 2) of financial statements under RAS.

Table 1. Consolidated statement of comprehensive income for 2015 and 2016, thousand rubles.
Index	2016	2015	2016 to 2015
Index	2016	2015	thousand roubles.

Cost of sales
Gross profit
Selling, general and administrative expenses
Formation of a reserve for impairment of fixed assets, goodwill and intangible assets
Other operating income/expenses, net
Operating profit
Financial income/expenses, net
Positive/negative exchange rate differences
Profit before tax
Income tax
Profit for the reporting period

In addition to this type of consolidated report, it is possible to provide more detailed information on some items, for example, on sales revenue (Table 2).

Table 2. Revenue analysis for 2015 and 2016, thousand rubles.
Index	2016	2015	2016 to 2015
Index	2016	2015	thousand roubles.
Revenue
Unit repair
JSC "Beta"
JSC "Gamma"
Maintenance
JSC "Beta"
JSC "Gamma"

JSC "Beta"
JSC "Gamma"

From the presented analysis it is clear that for all types of activities considered, enterprises have an increase in revenue, with the exception of JSC Gamma in terms of repair of automobile units. This drop occurred due to the fact that based on the percentage of readiness of one contract of Gamma JSC, the main revenue was recognized in the 2015 financial statements.

The statement of financial position is very similar to the balance sheet under RAS. According to regulatory data the statement of financial position under IFRS must include items representing the following amounts:

fixed assets;
investment properties;
intangible assets;
financial assets;
investments accounted for using the equity method;
biological assets;
stocks;
trade and other receivables;
cash and cash equivalents;
the total amount of assets classified as held for sale and assets included in disposal groups classified as held for sale in accordance with IFRS 5 Non-current assets held for sale and discontinued operations;
trade and other accounts payable;
estimated liabilities;
financial obligations;
current tax liabilities and assets as defined in IAS 12 Income Taxes;
deferred tax liabilities and deferred tax assets as defined in IAS 12;
liabilities included in disposal groups classified as held for sale in accordance with IFRS 5;
non-controlling interests represented in equity;
issued capital and reserves attributable to the owners of the parent organization.

The organization must represent additional items, headings and subtotals in the statement of financial position, when such representation is relevant to understanding its financial condition.

Let's consider an example of preparing a report on the financial position of Alfa JSC (Table 3).

Table 3. Statement of financial position, thousand rubles.
Index	2016	2015	Change
Index	2016	2015	thousand roubles.
Assets, total
Fixed assets
Intangible assets
Accounts receivable
Advances issued
Other assets and investments in other organizations

Accounts receivable for taxes and fees
Cash and short-term deposits
Deferred tax assets
Equity, total
Authorized capital
Extra capital
retained earnings
Liabilities, total
Credits and loans
Liabilities for finance leases, pension plans
Deferred tax liabilities and other provisions
Accounts payable
Advances received
Debt on taxes and fees

NOTE

The form of the balance sheet according to RAS is clearly stated in the Order of the Ministry of Finance of Russia dated 07/02/2010 No. 66n (as amended on 04/06/2015) “On the forms of financial statements of organizations”, while the form of the statement of financial position according to IFRS is missing (there is only a number rules and articles that should be displayed in the report).

The amount of assets (293,491 thousand rubles) must be equal to the amount of liabilities (equity + liabilities = 293,491 thousand rubles) similar to the preparation of the balance sheet.

At the stage of preparing consolidated financial statements, it is customary to calculate EBITDA(profit before interest expenses, taxes and accrued depreciation) (Table 4).

Table 4. Calculation of EBITDA, thousand rubles.
Index	2016	2015	2016 to 2015, %
Unit repair
JSC "Beta"
JSC "Gamma"
Maintenance
JSC "Beta"
JSC "Gamma"

JSC "Beta"
JSC "Gamma"
Total EBITDA

This indicator has recently become especially popular among investors and lenders. This indicator can be calculated only if the company keeps records in accordance with IFRS standards. Our standards do not provide for the calculation of this indicator, but nevertheless, the calculation formula for Russian practice has been slightly adapted, and EBITDA in this case will be equal to the sum of profit from sales and depreciation charges.

It is important to calculate debt to EBITDA ratio (Code), which reflects the ability of the enterprise to meet its obligations, characterizing its solvency:

Code = Liabilities / EBITDA.

Code 2015 = 220,794 thousand rubles. / 69,145 thousand rubles = 3.19;

Code 2016 = 157,435 thousand rubles. / 54,352 thousand rubles = 2.90.

The higher this indicator, the more problems the company has with debt obligations and the less ability it has to pay off these obligations at the expense of its own profits.

INSTEAD OF CONCLUSION

Having considered the features of preparing consolidated financial statements, it is worth noting the similarities with Russian financial statements. In the example considered, the Alpha company controls the activities of several enterprises, which generate their own individual reports. Next, it prepares consolidated statements, combining data from the enterprises under its control. At the same time, the accounting policies of all enterprises should be similar in basic issues.

Most often, in practice, so-called management companies release their version of the accounting policies to the enterprises under their control, on the basis of which the subsidiaries must adjust their own version.

A. N. Dubonosova, Deputy Managing Director for Economics and Finance