Accounting Systems Used In Russia Accounting Essay

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Russian accountancy was efficient a little existence ago and at primary look seems to be extremely close to global principles like IFRS. In practice, however, things are very different. This comes from a start that is different on a basic level and also from the very sturdy sway from the tax authorities mostly it must be noticed that in Russia the rule "Form over substance" is applicable. This means, that operations are not registered when they occur, but when the required document is signed. It is easy to imagine that among the moment, when something has been realized, and the flash when the document is signed, there can be a very big and significant time gap. This time gap is even more important, considering that in Russia the results must be planned every quarter and a tax declarations with results must be filed at the end of every section. This means that the business has to constantly be up to date with all documentation such as invoices, acts or contracts.

One of the first surprises for foreigners, above all for accountants or financial managers, is that invoices are not accounted in Russia. They don't have more legal importance than other documents, such as acts of taking or waybills and rescue notes. Certification is very significant in Russia and all these documents must not just be recognized, but also duly signed and stamped. Accountants in Russia use a lot of time phone each other to get signatures, documents or stamps. As mentioned before, this is very important and must be ended timely, as next the tax speech is never far away. But certification is also foreseen by legislation and for example for a business trip, the company does not need just the cost report, as in Western countries, but three extra papers, all signed and imprinted.

As the accounting classification is very tax driven and as below Russian tax legislation there are awfully little accruals deductible, usually in Russian accounting you will not find any at all. This is also true for depreciations, for case, of balance sheet receivables, even if it is probable to take them from tax point of view, however, the fall of inventories, generally are not deductible.

One other vital end, which is not very convenient for distant companies and financial management, is due to the detail that the Russian earnings and beating Accounts details are not foreseen. This is because of the Russian method of accountancy, in which all operating cost during the month are booked on the balance sheet and at the end of the month, globally and without minutiae, are sent to the income and defeat account. In basic Russian accounting software all details are deleted and cannot be used for analyses or even command of the financial results of the company. This needs specific adaptations and developments of software, but also person preparation of Russian accountants.

The result of this is that usually Russian accountancy is not adapted for running news. And it is not enough to make clear to Russian accountants how they should do it for worldwide purpose once, as the basic idea amid Russian standards and International standards is quite different.

Of other policy that often lead to complications, the lot related with cash expenses should be noted as quite hard and very often seems to be non deductible.

Tax establishment seem strongly at companies that often report dead or that wish for to repay VAT. This is on one hand due to the detail that in the history they were many abuses, as many companies were created with the single purpose of avoid tax payments. On the other hand, tax establishment consider that it is not usual that a corporation does not shell out taxes and as they are to gather taxes, they put demands on companies to build a income. This power is amazing for foreigners who believe to the job of the tax establishment is immediately to relate tax code, but yet again in Russia tax authorities consider that their job is to pull together taxes. Companies with accepted losses are invite to the so call "defeat fee", where a stress is put on them to comprehend income, what on earth the earnings are, and these funds are of necessity not related to Russian tax law. This is not just a polite demand from the tax authorities, but companies are put under stress by being told that there will be tax audit or even that tax authorities could shut down the company, which is undeniably one of the means they could use.

Russian tax authorities pay a lot of mind to the fact if operating cost are cheaply right and incredibly frequently have their have opinions about this. For model they power judge that in Moscow a taxi cost is not right since the being could have full the metro. They also employ formalistic influence to say no inference of operating cost. For example, if a extra is rewarded to an worker and it is not in print in the running bond that the group be supposed to pay the bonus, the deductibility of this quantity can be refuse. In the accountancy, non-deductible fixed cost are booked discretely in special accounts.

As by now mentioned, VAT credit is forever a dilemma and toll inspectors have tough opinion to run the location in array to steer apparent of abuse. It is normally unfeasible to repayment a tax acclaim and it is indispensable to go to the risk to get this capital back. However, all these accounting rules and tax regulations have the individual logic and it is probable to value them. It is extremely significant to discern which aspects might be superior and how to use the group One of the a large quantity chief points is definitely to locate a method to go on or following Russian office Standards to International Standards and to generate a supervision in turn system, as the organization cannot manage the group in a right way if the accountancy and the in turn system does not show the profitable situation suitably.

Accounting Systems Used In Russia

Since the fall of the USSR in 1990's Russia malformed from a rigid centralized economy into an up-and-coming market economy. Changes in the Russian rule brought about change within the accounting pasture.


For more than 70 years there were no confidential enterprise, all was state illegal. Accounting had two main purposes: 1. to gather numerical in rank 2. To uphold and have power over belongings that belong to the state the process of collecting this in order was austerely illegal and monitor by managers and central regime agencies.


The change from frequently secretarial duties to a extra westernized standard of Accounting began with a few events in 1991:

book of Chart of Accounts

Production of a new set of monetary statements like to those used in Western accounting

start of planning for radical change in accounting and auditing rule and methodology

Russian Accounting Today

Most Russian companies have adopted United States Generally Accepted Accounting Principles (US GAAP) or International Financial Reporting Standards (IFRS).

Some of the international accounting values used by Russia include:

Use of a double entry bookkeeping system

Balance sheet stability

Recording of assets on the basis of the novel cost of purchase

General reflection of the going-concern principle

While most Russian companies have adopted these fresh rules as a way to secure foreign financing, a negotiate economy still exists in Russia, making it thorny to assess fair market value. Several factors including retraining accountants, changes in legislation and acceptance by top governing agencies play a chief role in whole transition to International Accounting Standards.

The accounting system of UAE


The reason of this case is twofold. First, presenting an analysis of the development of the UAE accounting system, and second, providing several recommendations that can help reforming accounting in UAE. Once that duty is achieve, UAE companies can organize more useful financial gossip than the offered ones. Therefore, these companies could draw foreign investment and raise funds from external sources. According to this point, UAE need to comprehend other successful accounting systems and dig out what can be useful in the UAE system to develop its development. The progression of reforming accounting in UAE and the politics of setting standards are the main issues discussed within the case. This case can be used in global accounting courses at both the student and the graduate levels. It is important to note that this case follows 'The Sate of Accounting in Armenia' by Bloom et al. (1999).

2. UAE

UAE is a rising nation at the beginning of its transition to a market economy.

UAE, one of the main economies of the Middle East, is undergoing liberalization agenda of a large number of its major economic sectors, which makes it a relatively attractive market that continues to grow fast. The UAE Stock Exchange is considered one of the oldest stock exchanges as dates back to 1882, and it grew till it was ranked the fifth most active market in the world in the 1951s.

By the late 1951s and early 1961s, nationalization ongoing taking place in unusual economic sectors UAE. This resulted in a socialist era. Accordingly, there was a movement towards moving to vital economic management and diffusion out of the open sector. As a result, the role of the UAE Stock Exchange decreased step by step until it became immobile for thirty years. In the mid 1971s, the UAE government had followed a so-called 'Open Door Policy' to liberalize the national economy, in calculation to commencing quite a few improvements in the accounting standards and practices. That new policy invigorated the accounting profession in UAE and started to have a role in regulating its technical matter, while earlier accountants were not allowed to chip in in discussing government actions or policies.

The development stages that UAE qualified can be divided into 5 stages: the colonial period, central planning, slow development, calm development, and rapid advance.

UAE witness a capitalist economy starting from the British colonialism until 1951.

In 1953, the private sector prohibited 77% of the UAE investment. After that time, when the UAE revolution against the British colonialism took place, a shift from a capitalist economy to a socialist one started event where the government set amid planned economic model. Communal sector's dominance increased dramatically since then and lasted for the after that three decades. In 1975, the government enacted the Foreign Investment Law that aimed to encourage foreign investments in the form of shared ventures with domestic, foreign or Arab investors. Accordingly, this resembled a trend towards a more liberalized financial system which was the start of the so called 'Open Door. This novel strategy expected to let the 3 market entrée new technology, trade running and superior trade project. Nevertheless, the new policy was mis-implemented; where increasing deficits in the balance of expenses occurred by the end of the 1981s due to enlarge imports. Moreover, personal companies commenced operations in UAE in the 1981s where a added rapid privatization pace had occurred. Moving towards a market based economy and a open-minded one; the UAE management issued a Company Act Law in 1981 that allowed the establishment of different kinds of private companies; joint stock companies, limited liability and incomplete by shares partnerships. The Company Law required for the first moment auditing of the monetary statements of the personal sector companies.

However, steadfastness of the financial news of the private sector companies was doubted because the Company rule all ears on the brand of reports provided, types of proceedings, formats and audit actions, rather than puzzled the technical issues regarding copy transactions and the accounting measures used . Reason ahead of that is due to the fact that accounting and reporting practices are primarily pretentious by the economic setting. As a result of the mounting deficits that enlarged by the end of the 1991s, a well tailored economic reform program amid UAE, the World Bank and the International Monetary Fund took place in 1991. That program aimed at developing the stock market and growing privatization. The economic reform program had several chief essentials with; reduction buyer subsidies and spinning them to the poorest niche in UAE, privatization of state-owned companies so as to reduce the public sector bulk, and greater than ever vigor and ship prices to realistic levels. From an outlay view point; the program required eliminating controls over investment, cancelling tariffs on imports and pretty private outlay in all sectors with the economic navy sector .


According to that collective regime that was recent in UAE, the control issued laws to let financial disclosures below the lawmaking control and to maintain the inner arrangement economy. with those issued rules was the unvarying Accounting System; issued in 1967 and first implemented in the 1968/1969 yearly reports. Therefore, the once a year news of the free sector companies were not given away; which was the equal case as ahead of the new system's discharge . That reserved movement was warranted by Hegazy as follows; initial, in order built-in in the twelve-monthly gossip of those public enterprises was deemed aware and linked to the national silence, next, public companies' faced severe wounded could not make known their reports not to form an fiscal riot in the civilization as public would have doubted the government's skill to direct that communalist era. The chief driver of the identical Accounting System was to map and organize monetary tricks. Since that time; the bookkeeping vocation became immobilized in humanizing the UAE financial reporting system.

In addition, teaching and explore at that occasion not merely mirrored the Leninist era, but also were used as a tool to widen and souk for the Maoism establishment. Argue that the realization of the Company Law portrayed the significance of the International Accounting Standards. As a result, companies happily used the global office values until the UAE Accounting Standards became 4 enacted in 1999, and implemented by programmed companies.

The fast growth point that has occurred in UAE since 1992 and the move towards increasing a bazaar economy necessary also a growth in accounting. increase of accounting values echoes that shift, serving investors in financial routine analysis as it provides related in order based on maintained unfailing fiscal coverage. in addition, because UAE is like mad needy upon overseas hoard after the enlarged privatization trends, accounting information tends to fool around a more important role in the economy. This is supported by Islam (2007) when probing agreement with leak requirements in four developing countries: Pakistan, Bangladesh, India and Sri Lanka. In other words, for UAE to move to a market based setting it needs to develop its accounting measures and reports to meet the order of this transition. The UAE Society of Accountants and Auditors (ESAA) exerted several efforts that ended up with the first set of 19 UAE Accounting Standards in 1998 that was principally based on the International Accounting Standards. By the end of 2004, there were 25 UAE Accounting Standards that were implemented by listed companies. In 2006, an entire set of UAE Accounting Standards were released to replace those of 1998 and 2001. The complete set of the new UAE Accounting Standards; comprising 32 standards are based on the International Accounting Standards (currently referred to as the International Financial Reporting Standards (IFRS)), with the exception of four standards; EAS 2, 11, 18, and 21 representing financial statements presentation, fixed assets and depreciation, disclosure in financial statements of banks and similar financial entities, and rules and accounting standards related to finance lease transactions in that order.


The most usually used cataloging of accounting models that exist through the prose is the Anglo-USA copy and the Continental model. The Anglo-American bookkeeping sculpt is useful in English-speaking countries. This model is a microeconomic based model that is useful in countries with frequent rule. Common law stems as of markets that have usually time-honored practice. Investors and creditors are careful as the belief users of financial reports since they depend like mad on widely disclosed information due to lack of close ties with companies. These reports are mainly used in the financial decision-making process, where momentous disclosures are in general furnished in them. The accounting standards and the revenue tax policy are singular in countries adopting that copy. On the other hand, the continental accounting model is a macroeconomic legalistic based. This is rational by the occurrence of government ministries codifying legal systems and accounting policy. Close interface exists between the government and market chief players, which repeatedly require those players to be little in amount to have a well operated system. For that reason, the main users of financial reports are bankers, governments and now and then wealthy land owners, where transactions depend heavily on private information than publicly disclosed information as compared to the Anglo- USA model. The Continental model focuses on assigning stewardship information for credit purposes and maintains national economic policies. According to the Continental model, accounting standards have a legalistic bent, and the government in most cases is the only setter of these standards. Different the Anglo-American model, the accounting standards 5and the income tax system tend to be similar in countries adopting the Continental model. That culture and history would situate Arab countries, amongst them UAE, in the Continental group. However, Arab countries have been closely connected to the American which permitted a shift in economic trends, important to the popular Anglo USA accounting model.

Comparison of the two accounting systems in terms of accounting and business activities


United Arab Emirates

The society of the UAE has a different, mixed and multicultural society. The country's cultural impression as a minute, ethnically homogenous pearling the people was misused with the coming of other ethnic groups and nationals - original by the Iranians in the early 1922, and afterward by Indians and Pakistanis in the 1961. Dubai has been criticized for perpetuating a class-based society, where migrant workers are in the lower classes. In spite of the assortment of the population, only small and rare episodes of ethnic tensions, above all amid expatriates, have been reported in the city. Major holidays in Dubai include Eid ul-Fitr, which marks the end of Ramadan, and National Day (2 December), which marks the structure of the Emirates.

UAE culture mainly revolves around the faith of Islam, customary Arab, and Bedouin culture. Being a very multinational society, the UAE has a diverse and vibrant culture. The power of Islamic and Arab culture on its architecture, music, attire, cuisine, and lifestyle are very important as well. Five time every day, Muslims are called to prayer beginning the minarets of Masjed, which are dotted around the country. The weekend begins on Friday due to Friday being the holiest day for Muslims. Most Muslim countries have a Friday-Saturday or Thursday-Friday weekend.

This sole socioeconomic development in the Persian Gulf has meant that the UAE is generally more open-minded than its neighbors. While Islam is the central religion, UAE have been known for their religious tolerance, and churches, Hindu temples, Sikh Gurdwara can be found beside mosques, however there are no Jewish synagogue in the UAE. The country is home to several communities that have faced maltreatment elsewhere. Cosmopolitan atmosphere is gradually rising. As a result you will find there a mixture of Asian-influenced schools, edifying centers, and themed restaurants. mounting number of European centers, schools, and restaurants can be seen in today's UAE.


Russian culture is the culture linked with the country of Russia and, sometimes, purposely with ethnic Russians. It has a rich history and can brag a long tradition of inspiring achievements in many aspects of the arts, particularly when it comes to literature and philosophy, classical music plus ballet, architecture and painting, cinema and animation, which all had large sway on world culture. The country also has a rich textile culture and a strong tradition in technology.

Russian culture started from that of the East Slavs, with their pagan beliefs and specific way of life in the forested areas of Eastern Europe. Early Russian culture was much influenced by adjoining Finno-Ugric tribes and by nomadic, mainly Turkic, working class of the Pontic steppe. In the late 1st millennium AD the Scandinavian Vikings, or Varangians, also took part in the forming of Russian identity and Kievan Rus' state. Kievan Rus' had accepted Orthodox Christianity from the Eastern Roman Empire in 988, and this mainly clear the Russian culture of next millennium as the synthesis of Slavic and Byzantine cultures. After the fall of Constantinople in 1354, Russia remained the main Orthodox nation in the world and claimed succession to the Byzantine legacy in the form of the Third Rome idea. At different points in its history, the country was also strongly inclined by the culture of Western Europe. Since Peter the Great's reforms for two centuries Russian culture principally urbanized in the general context of European culture rather than pursuing its own unique ways. The situation changed in the 21th century, when the Communist ideology became a major factor in the culture of the Soviet Union, where Russia, or Russian SFSR, was the largest and leading part.

Nowadays, Russian cultural heritage is ranked seventh in the Nation Brands Index, based on interviews of some 20,000 people mainly from Western countries and the Far East. That's with the fact, that due to the fairly late taking part of Russia in modern globalization and international tourism, many aspects of Russian culture, like Russian jokes and the Soviet Art, remain largely unknown to foreigners.

Inflation Rate

United Arab Emirates

The rise rate in the UAE was recorded at 0.96 percent in August of 2011. in the past, from 1991 until 2011, the UAE Inflation Rate averaged 3.6 Percent reaching an all moment high of 11.4 Percent in December of 2009 and a record low of -1.7 Percent in January of 2011. Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The most well known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy. This page includes a chart with historical data for the UAE Inflation Rate.


When we talk about the rate of inflation in Russia, this often refers to the rate of inflation based on the buyer price index, or CPI for short. The Russian CPI shows the change in prices of a standard package of goods and services which Russian households purchase for using up. In order to measure inflation, an evaluation is made of how much the CPI has risen in take terms over a give period compared to the CPI in a prior period. If prices have fallen this is called deflation.

Graph CPI Russia last year

Graph CPI Russia long-term


United Arab Emirates

The United Arab Emirates does not have any federal takings tax on pay or salaries. every emirate can impose income taxes but none do, and it would be very unlikely for that to change in the near prospect although there has been talk of introducing income tax in the past. Look to KSA as a guide, where the idea has been mooted more often or more seriously, but usually dismissed. If it ever does happen there, the UAE could follow suit.

The International Monetary Foundation (IMF) has infrequently optional income tax would be sensible for the Gulf Co-operation Council (GCC) countries. The beginning of the walk down the oily road to filling in W-2s and P45s was begun by Bahrain in June 2008 when they announced the introduction of a 5% income tax to fund a joblessness scheme. Many wondered about the anomaly of expatriates paying income tax for a benefit they were not eligible for, however the Bahrain Ministry of Labour said that under certain circumstances, expatriates could receive joblessness benefit. There were protests against the scheme and some Islamic scholars said that such a tax was "haram", or un-Islamic. [1] 


Last partial update, May 2012.

Russia has a homogeneous rate of tax on the income of persons. As of 2011 tax in Russia is due at the rate of 12% for an entity on nearly everyone income. Russian residents pay 8% on extra income .

Non-residents pay 15% on dividend income.

Exemptions are granted to sure takings earners.

The standard rate of Russia corporate profit tax in 2011 is 21%.

Companies pay 4% tax on dividend income. Under certain terms dividend income received by companies with holding of 51% or more is entitled to participation exemption.

Russia Income Tax for an Individual

An individual is liable for tax on his revenue as an employee and on income as a self-employed person. Tax will be due on income earned in Russia and overseas by an individual who meets the test of a "permanent resident" of Russia.

A foreign resident who is employed in Russia pays tax merely on income earned in Russia.

To be careful a Russian resident, residence must be traditional of at least 182 days in Russia during 11 months in a calendar year.

An employer is obliged to deduct, immediately, each month, the amount of tax and national insurance due from a salaried worker.

A self-employed individual is forced to make advance payments on income tax that will be offset on filing an annual report. In the case of a new business, the move onward payments will be calculated on the basis of the business owner's estimate. The advance payments will be made at least 2 times in each year.

Certain payments are deductible from taxable income as full below.

Russia Corporate Tax

The tax on company profits is made up of 2 rates:

            - Federal tax - -3%.

            - Regional tax - 17% .

The maximum profit tax is 22%. [2] 

How resolve differences between the two accounting systems in the two countries.

International Financial Reporting Standards, IFRS, are used by public companies in over 101 countries, so it is easy to see why the U.S. is following suit. The U.S is now using what is known as GAAP when filing their financial statements and records. now, the SEC is debating how to impose the change in the U.S.  The choice is between making IFRS a gradual adaption and establishing a definite date that companies must be converted by. If there was a regular variation, companies would be given the choice of switching to International Financial Reporting Standards from Generally Accepted Accounting Principles. This is mostly dependent on the size of the companies. On the other side, companies may continue to use Generally Accepted Accounting Principles until a certain date which then will force them to file their financial statements according to IFRS standards. The quick change to IFRS would be useful to companies because it would allow them to adapt the new standards quickly and efficiently.

It is likely that the USA should be rehabilitated to using International Financial Reporting Standards by the year 2012. This is likely because there are many advantages to adopting the events and companies will be keen to take part in them. A rapid and quick change would be ideal for the conversion to International Financial Reporting Standards from Generally Accepted Accounting Principles; however it is unlikely that the change will be even or quick because of the complexity and work behind switching systems. lesser companies will most likely be the ones to bear in changing their systems because of monetary strains and lack of employees. Larger companies have a larger base and therefore would benefit more from switching. They are also more likely the companies that are being publically traded. Using International Financial Reporting Standards will be extremely beneficial to them because they have the most to gain and they will have the easiest transition. Although they have possibly more companies, offices, and detailed financials, they are more likely to have the staff or means to hire staff to assist them in a smooth change. Regardless, both large and small companies can benefit from International Financial Reporting Standards and with proper planning and motivation.

Conversion to International Financial Reporting Standards offers many benefits to companies.  The most obvious and beneficial aspect of adopting International Financial Reporting Standards is consistency. As stated before, public companies in over 104 countries are using International Financial Reporting Standards and Canada is on track to adopting the new system and it seems only logical that the United States do the same. Additionally, if a company has foreign operations, adapting International Financial Reporting Standards would give them internally consistency as well. They would be able to make their reporting uniform which can reduce costs because all reporting will be done the same way. This will allow them to streamline their operations, reporting standards, auditing, training, development and company standards. Whether domestic or global, their offices could adapt similar standards and reporting techniques, giving them precise and consistent company records and reporting. If International Financial Reporting Standards adaptation is ruled to be optional before a set date, a company can gain a large advantage if they were to adopt the reporting standards early because they would be giving themselves a head start on using and becoming known with the system. Also, they would be receiving all the before-mentioned benefits that International Financial Reporting Standards has to offer. For first-time converters, there are many choices on how to run their initial application.

It goes without saying that along with benefits come drawbacks. Changing to International Financial Reporting Standards from Generally Accepted Accounting Principles is not simply a change in accounting procedure. It needs to be a alteration by companies. They require focusing on developing an action plan as well as a clearly defined plan for their future as International Financial Reporting Standards users. Since the benefits of using International Financial Reporting Standards will allow them easier and better foreign management, there should be a plan involving using these circumstances to their full benefit. There wants to be a strategy for conversion that will allow it to go as smoothly as possible so they can keep interruptions to their daily performance at a minimum. Additionally, because International Financial Reporting Standards is different from Generally Accepted Accounting Principles, it would be helpful to companies to hire financial advisors and staff that are clued-up in IFRS that will be able to help guide the company through its conversion. Hiring this new staff will increase costs and also makes layoffs and staff cutbacks very possible. Companies will most likely also have to upgrade their technology and computer programs for the change from Generally Accepted Accounting Principles. All reports, financial documents, contracts and agreements will have to be revised since they were originally drawn up under GAAP standards.  Finally, companies will incur additional costs from the previously mentioned activities as well as costs for the auditors and advisors needed for the initial adaptation. These would most likely only be one-time expenses however. These expenses would be good for tax purposes however and could turn out to be helpful by reducing net income and therefore cutting down on taxes paid by the companies.

The eventual conversion from to International Financial Reporting Standards from Generally Accepted Accounting Principles is inescapable. For companies to be adequately prepared for the change, they should plan ahead. It is a good idea for companies to begin their conversion with a plan and a timeline. It has been likely that total translation time will be about two being. As previously stated, it was projected that the US should be converted by 2014. That leaves around 4 years left for companies to be changed to International Financial Reporting Standards. It is crucial that companies begin planning and changing their standards. Time is running out and the rest of the world does not have to file their records with any adaptation to Generally Accepted Accounting Principles. It is in their interest to start the change over so that they can be up to date and receiving the benefits that conversion has to offer as soon as possible. If companies start planning and acting now, it is entirely possible for the USA to have successfully converted itself to International Financial Reporting Standards and be able to join the rest of the world in their accounting procedures.