RUSSIAN ACCOUNTING STANDARDS

Russian accounting standards are based on the following internationally accepted accounting principles: registering; inventory; pecuniary valuation(calculating the money value of physical quantities); cost calculation; account, that is an accounting record in which similar transactions are entered; double entry; balance sheet; accounts.

Russian accounting requirements are set by the federal authorities and the accounting procedure is regulated in this country by the Russian Federal Law on Accounting and other legal acts which are currently in effect. Russia's turning into a mixed and more open economy brought about new requirements that were no longer met by the domestic accounting standards. To improve the international comparability of the domestic financial reporting the Russian Government adopted the Russian Accounting System Reform. Ten new domestic accounting standards that are substantially similar to the international ones have been set and are now in effect in Russia. The effective disclosure requirements and the current standard set of accounts allow a more adequate interpretation of domestic financial reports.

It has always been a standard practice in Russia that a single accounts schedule specified by the Federal authority is applied within the entire territory of the Russian Federation. Among the developed countries France is the only one in which a single accounts schedule is compulsory within the entire territory of the country. The Russian accounting standards allow the revaluation of fixed assets, which is not a usual practice abroad; still this is not contrary to the international accounting standards.

The main differences between the Russian accounting system and the international accounting standards are as follows:

- revenues and expenses of a business may be sometimes recorded in another accounting period than they have actually been received or incurred, e.g. in the accounts schedule there is Account 31, in which the expenses that have already been incurred, are entered as Deferred Expenses;

- most Russian enterprises do not practise management accounting;

- the Russian method is to keep a special account of small value assets or assets to be worn out in short term and then to accumulate depreciation on them, when the international practice is to record such assets as stocks and to writethemoff when used in production by adding their value to the production cost;

- the Russian accounting standards present a broader interpretation of the term capital investment;

- in accordance with the Russian accounting standards software is recorded as intangible assets, when the international standards require that software is included in fixed assets;

- the Russian method is to record the value of a financial investment as equal to the purchase price of the assets the investment is made in (except banks and investment institutions), this often makes a company's assets value too high.

The international practice is to record the value of such assets as equal to a lower value whether it is the original cost of the assets or their market value and the difference between these values is credited as a profit or debited as a loss, which is analogous to the Russian profit and loss account.