IFRS Gaining Ground in Russia
According to a recent study by the Ministry of Finance, the level of trust in IFRS in Russia has risen significantly in the last three years. When asked the question, “Do you trust information reported in IFRS,” 58% of business professionals answered “yes” in 2007, as compared to 48% in 2004.
The portion of companies in Russia using International Financial Reporting Standards has also increased – to 16% in 2007 vs. 11% in 2004. This gain was led by companies operating in the financial and insurance markets, which saw the number of businesses using IFRS double - from 26% to 52%.
Businesses in the financial and insurance sectors will be required by the Ministry of Finance to adopt IFRS standards by 2010. The Russian Central Bank has also been “actively encouraging” companies to use IFRS as well, according to the study.
The poll also revealed that about 40% of respondents think that IFRS data can be helpful in making management discussions. 30% believe that keeping records in IFRS can help draw investors while 25% believe that IFRS records can be helpful in obtaining loans. 25% believe that IFRS reports can help satisfy shareholder interests “to the maximum degree.”
Of those companies which do not use IFRS, 32% stated that they do not do so because there is no corresponding law or governmental order about the required application of IFRS. Another major reason is the lack of an official translation of IFRS standards into Russian.
While at one time the need to adopt IFRS standards in Russia was driven by a basic need to improve basic accounting in Russia, the need is now driven by the international nature of Russia’s economy and Russia's need to invest in businesses and infrastructure.
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