Comparative Accounting

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Comparative Accounting

Comparative Accounting - Russia

Introduction

Any financial or investment decision is made by one way or another on the basis of accounting. The principles of financial accounting, however, are different in different countries. Moreover, in many countries including Russia, there is no clear distinction between financial and tax accounting. The purpose of this paper is to explain briefly the basic principles and techniques of financial accounting and provide a summary of the principles and practices authorized by Russia.

Literature Review

Immediately after the demise of the Soviet Union the Soviet uniform accounting system, this developed many decades for the control of a centrally planned economy. The origination of new system of Russian accounting which is characterized by radical changes in the national chart of accounts and accounting provisions, including a great match international standards. In the USSR, accounting was used as an instrument for the protection of socialist property and execution of the central government plans. These goals are achieved through rigorous monitoring and auditing results of the financial operations through or on behalf of the higher administrative authorities and central departments. Such controls include checking status of assets and use of factors of production. In addition, verified compliance, describes the amount and composition of working capital, the procedure for the production of goods and services, and also set the cost of production and size of financial gain, along with ways to use it.

The main regulatory accounting document records “Regulation on Accounting and Reporting in the Russian Federation” was approved by the Government Order dated February 16, 1992. Most of the work transformed the accounting system by the Ministry of Finance with the assistance of experts from several international organizations including the UN, European Union, World Bank and the leading international accounting firms.

Today the Russian accounting principles consistent with International Financial Reporting Standards (IFRS) in the following paragraphs:

The use of double-entry system;

The assets at cost of acquisition;

The general acceptance of the principle of a going concern;

Valuation of assets and liabilities in foreign currency at the market exchange rate, the Central Bank of Russia on the balance sheet date.

Some other concept of accounting closed to Western principles such as the recognition of sales and related costs and revenues. One of the essential differences of the Western standards is regarding the utilization of the fund in order to meet obligations. This can be created by specialized funds through deductions from annual income. For example during the fiscal year when the other company's resources are not available to cover expenses or losses must be used in a special reserve fund.

Another important difference is that some expenses are not deductible when calculating the profit before tax, but instead reduces the revenue deducting the tax. A significant discrepancy appears due to the administrative and management costs associated with the production, capitalized, rather than treated as expenses in the period, as would be the case, the application of Western principles.

Since the Russian system of accounting has been traditionally focused only on the solution of financial problems, internal control system of the current ...
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