Russian Federation

Accounting

The Federal Law on Accounting No. 402-FZ of 2011 and the Federal Law on Consolidated Financial Statements No. 208-FZ of 2010 govern the corporate financial reporting in the Russian Federation.

All legal entities registered in the Russian Federation must prepare standalone statutory financial statements for each year ending December 31 in accordance with the Russian Accounting Standards (RAS) set by the Ministry of Finance. The RAS regulates the format and contents of the financial statements and prescribes the chart of accounts along with the recommended accounting entries for typical transactions. Although considerable progress has been made in bringing the requirements of RAS in line with those of IFRS, differences persist. In the absence of RAS guidance, entities may choose to apply relevant IFRS.

The Law on Accounting and the Law on Consolidated Financial Statements require the use of IFRSs as issued by the IASB, translated into Russian, and endorsed by the Ministry of Finance in consultation with the Central Bank of the Russian Federation for the preparation of consolidated accounts of banks and other credit institutions; insurance companies except for those that provide obligatory medical insurance; entities whose securities are listed on the stock exchange; non-governmental pension funds; management companies of investment and pension funds; clearing houses; and certain state-owned companies specified in government decrees. Non-credit financial institutions regulated by the Central Bank of the Russian Federation must apply industry-specific accounting standards that are based on IFRS.

Under the Regulation No. 107, the Ministry of Finance established a body of experts—the National Organization for Financial Accounting and Reporting Standards—to oversee IFRS implementation in Russia.

Auditing

The auditing framework in Russia is established in the Federal Law on Auditing Activities No. 307-FZ of 2008 as amended and the Federal Law on Self-Regulatory Organizations No. 315-FZ of 2007.

Public and non-public joint stock companies, listed entities, insurance companies, investment companies, credit institutions, participants in the securities market, companies that are required to publish their financial statements, and entities with sales greater than RUB 400 million or total balance sheet assets exceeding RUB 60 million in the previous year must have their financial statements audited annually.

Effective January 1, 2017, audits must be conducted in accordance with ISAs as translated into Russian and endorsed by the Ministry of Finance.

Only auditors in the Russian Federation are regulated at the state level. The Ministry of Finance has overall responsibility for the regulation of the auditing profession under the Federal Law on Auditing Activities No. 307-FZ of 2008. The Law specifies the types of services that audit firms may offer; requires all auditors and audit firms to be members of a Self-Regulatory Organization (SRO) in order to conduct auditing activities; determines the responsibilities of SROs; and establishes the initial professional development (IPD) and continuous professional development (CPD) requirements as well as auditing, ethical, and other professional standards to be applied by the profession.

Under the Law, the Ministry of Finance is responsible for overseeing the activities of SROs; accrediting SROs; maintaining a registry of SROs as well as that of auditors and audit firms; overseeing implementation of the IPD and CPD requirements; and defining accounting, auditing, and ethical standards.

The Audit Council of the Ministry of Finance represents the business and investment community and plays an active advisory role in the oversight process. The Audit Council is independent of the audit profession and its functions are to: (i) give recommendations on the standard-setting process by reviewing auditing standards and recommending them for approval to the Ministry of Finance; (ii) approve the code of ethics and independence rules for auditors and audit firms; (iii) determine competencies to be included in the auditor’s professional examinations; (iv) oversee registration of audit firms and auditors, continuing education training, and quality assurance (QA) activity of SROs; and (v) oversee accreditation of SROs.

Under the Law on Self-Regulated Organizations and the Law on Auditing Activities, the responsibilities of SROs include issuing the Unified Auditor Certificates based on Ministry of Finance policies; overseeing compliance of their members with the code of ethics, rules of independence, and CPD; contributing to the accounting and auditing standard-setting processes; organizing training for auditors; carrying out QA reviews of their members; maintaining registers of member auditors and audit firms; and investigating and disciplining their members. As of 2020, only the Self-regulatory Organization of Auditors Association “Sodruzhestvo” (SRO AAS) is recognized as an SRO of auditors in Russia.

To obtain a Certified Auditor qualification, candidates must have a university degree, pass exams conducted by the Unified Certification Commission (UCC), and have three years of practical experience, with the last two years with an audit firm. The UCC, a not-for-profit organization established by the SROs under the Law on Auditing Activities, administers the audit qualification examination. Prior to sitting for professional exams conducted by the UCC, candidates must complete their initial accountancy education at a state institution for higher education.

In addition, under the Federal Law on Auditing Activities No. 307-FZ of 2008, the Federal Treasury is responsible for conducting external quality control review of auditors providing services to public-interest entities (PIEs) and also for investigating and disciplining audit firms for violations of law or professional standards.

Accountants other than auditors are not regulated at the state level but may choose to join a PAO and be subject to its regulation. Accountants who voluntarily join the Institute of Professional Accountants of Russia (IPAR) are self-regulated through the requirements of the institute. The IPAR establishes IPD and CPD requirements for its members and confers voluntary certifications of a Professional Accountant.

Prior to 2016, the Ministry of Finance of the Russian Federation through its Audit Council and the Federal Service for Financial and Budgetary Supervision (Rosfinnandzor) were involved in the regulation and oversight of the audit profession. In early 2016, the Federal Treasury took over the functions of Rosfinnandzor as they related to the regulation and oversight of audit activity.

Under the Federal Law on Auditing Activities No. 307-FZ of 2008, the Federal Treasury is responsible for conducting external quality control review of auditors providing services to public-interest entities (PIEs) such as listed companies; banks and insurance organizations; non-state pension funds; entities where the state interest in the entity's capital is at least 25%; state corporations; and state-owned companies. There are approximately 900 audit firms subject to the Treasury’s inspections. These firms conduct approximately 5,500 PIE audits per annum and are also subject to QA reviews by SROs. The Treasury also investigates and disciplines audit firms for violations of law or professional standards. The Treasury is a member of the International Forum of Independent Audit Regulators.

The Audit Chamber of Russia (ACR)

The ACR was established in 1995 as an non-profit association with voluntary membership of professional accountants with an objective to represent interests of its members, contribute to the development of corporate financial reporting in the Russian Federation, increase the prestige of the profession, and support its members in carrying out their professional activities, among other objectives. Between 2009–2017, ACR was an accredited SRO of auditors. Until 2018, ACR was an IFAC Associate.

The Institute of Professional Accountants of Russia (IPAR)

The IPAR is the only PAO of accountants in Russia, created in 1997 under the auspices of the Ministry of Finance. It is a non-profit association of accountants and its main functions are to assist with the development of the accounting profession, arrange and conduct training and certification of accountants, and represent and promote, nationally and internationally, the interests of the accounting profession. The IPAR confers voluntary certifications of a Professional Accountant, Chief Accountant, Tax Advisor, among other. Between 2001–2015, IPAR was an IFAC Member.

The Russian Collegium of Auditors and Accountants (RCA)

RCA was established in June 1992 and had a diverse membership of auditors, audit firms, accountants, lawyers, and IT specialists. Until 2017, the RCA was a recognized SRO of auditors and after the change of status in 2017 was reorganized as a PAO uniting accountancy professionals on a voluntary basis. RCA confers voluntary certifications of internal auditor, internal controller, and tax advisor. Between 2008–2018, RCA was an IFAC Associate.

The Russian Union of Auditors (RUA)

The RUA, prior to 2016 known as the Moscow Audit Chamber (MoAC), was established in 1992 to unite auditors and audit firms and represent interests of the profession. Until 2020, RUA was a recognized SRO of auditors and was subsequently reorganized as a PAO uniting accountancy professionals on a voluntary basis. RUA offers certification programs for internal auditors, auditor’s assistant, forensic accountants. The RUA has been an IFAC Associate since 2013.

The Self-regulatory Organization of Auditors Association “Sodruzhestvo” (SRO AAS)

The SRO AAS, prior to 2016 known as the Non-profit Partnership—Auditor Association Sodruzhestvo, was established by Order No. 721 of the Ministry of Finance in 2009 and as of 2020, is the only PAO recognized as an accredited SRO of auditors in Russia. It is comprised of auditors and audit firms, although it also welcomes non-auditing professionals. It has been an Associate of IFAC since 2014 and is a member of the International Association for Accounting Education and Research.

In 2016, the Ministry of Finance of the Russian Federation issued the Draft Concept of Further Development of Audit Activity in the Russian Federation, which outlines the development priorities of the audit profession between 2016–2022. The main areas of envisioned reforms include further development of the legal and regulatory framework for audit services, institutions representing the audit profession and audit market, the system of professional certification and continuous professional development, and the quality assurance system. In addition, the Concept calls for increased collaboration of the Russian audit profession with the international stakeholders in the area, including IFAC.

On November 20th, 2019, the Audit Council under the Ministry of Finance approved the Key Directions of Development of the Auditing Activity in Russian Federation for the Period to 2024 (Key Directions). The Key Directions were further detailed in the Road Map for Implementation of the Key Directions published on September 4, 2020.

The Federal Law on Auditing Activities No. 307-FZ of 2008 requires mandatory quality assurance (QA) reviews of audit work. ISQC 1 and other relevant IAASB standards were first in January 2017 and further updated in 2019 to reflect new and revised ISAs.

The responsibility for conducting QA reviews is shared between the self-regulatory organizations (SROs) and the Federal Treasury. As of 2020, only the Self-regulatory Organization of Auditors Association “Sodruzhestvo” (SRO AAS) is recognized as an SRO.

SRO AAS, which is overseen in this activity by the Ministry of Finance, conducts reviews of all its members (membership in an SRO is mandatory to provide auditing services). The auditors of PIEs are also subject to QA reviews by the Federal Treasury.

The Treasury and SROs independently define the structure, questionnaires, and frequency of the inspections that they conduct. SROs carry out QA reviews of their member firms at least once every three years and every five years for individual auditors, while the Treasury performs inspections at least once every 2 years. Discussions are underway to reduce the duplication of inspection activities for audits of PIEs and to this effect a joint QA Review Council was established under the Treasury, with participation of SRO AAS.

The SRO AAS conducted a self-assessment of its system against the requirements of SMO 1 (revised 2012) and reported full compliance. The extent of alignment of the existing arrangements for QA reviews of the Treasury with the requirements of SMO 1 remains to be established. Regardless, all auditors and audit firms are subject to QA reviews that are conducted by SRO AAS and are reportedly compliant with SMO 1.

Current Status: Adopted

The Federal Law on Auditing Activities No. 307-FZ of 2008 establishes the initial professional development (IPD) and continuing professional development (CPD) requirements for auditors. Self-regulatory Organization of Auditors Association “Sodruzhestvo” (SRO AAS) reports in its 2020 SMO Action Plan that these requirements are generally consistent with the requirements of IES; however, the exact extent of alignment remains to be established.

The Audit Council of the Ministry of Finance, universities, SROs of auditors, the Unified Certification Commission (UCC), PAOs, and training providers are involved in the implementation of the IPD and CPD requirements for auditors under the oversight of the Ministry of Finance.

To obtain a Certified Auditor qualification, candidates must have a university degree, pass exams conducted by UCC, and have three years of practical experience, with the last two years with an audit firm. Since March 2020, exams are conducted in accordance with a new process approved by the Ministry of Finance through its Order No. 232-N and a new syllabus and exam structure were introduced by the UCC, which according to SRO AAS, incorporate subject areas and competencies of the IES.

To practice, auditors must join an SRO, which is responsible for its members’ compliance with the CPD requirements that are outlined in the Law on Auditing Activities (120 hours for three consecutive calendar years). As of 2020, only SRO AAS is recognized as an SRO. On an annual basis, the Audit Council of the Ministry of Finance approves priority topics to be included into CPD programs for auditors.

Professional accountants other than auditors are not regulated at the state level but may pursue voluntary professional certifications and may choose to become a member of a professional organization and be subject to its regulation. Accountants who voluntarily join the Institute of Professional Accountants of Russia (IPAR) are self-regulated through the requirements of the institute. The IPAR establishes IPD and CPD requirements for its members and confers voluntary certifications of a Professional Accountant, Chief Accountant, Tax Advisor, among other. The extent of alignment of IPAR’s requirements with IES is not available.

The Russian Collegium of Auditors and Accountants (RCA) confers voluntary certifications of internal auditor, internal controller, and tax advisor. According to the RCA website, its programming takes into consideration IES requirements; however, the extent of alignment is not clear.

The Russian Union of Auditors (RUA) offers certification programs for internal auditors, auditor’s assistant, and forensic accountants. Similarly, the extent of alignment with IES remains to be established.

Current Status: Partially Adopted

The Federal Law on Auditing Activities No. 307-FZ of 2008 as amended regulates auditing activity in the Russian Federation. Under the law, the Ministry of Finance of the Russian Federation is authorized to implement the requirements of the law, including adoption of auditing standards.

Since 2017, ISA as issued by the IAASB, translated into Russian by the National Organization for Financial Accounting and Reporting Standards (NOFA Foundation), and endorsed by the Government of the Russian Federation are to be applied in all mandatory audits. The endorsement process is regulated by the Policy Statement on Recognition of the International Standards on Auditing for adoption in the Russian Federation, 2015.

Under the Law on Auditing Activity, public and non-public joint stock companies, listed entities, insurance companies, investment companies, credit institutions, participants in the securities market, companies that are required to publish their financial statements, and entities with sales greater than RUB 400 million or total balance sheet assets exceeding RUB 60 million in the previous year must have their financial statements audited annually.

The Audit Council of the Ministry of Finance reviews ISA for their application in the Russian Federation. Information on the applicable ISAs is available on the Ministry of Finance website. As of 2020, the 2016-2017 IAASB Handbook has been endorsed for application effective February 12, 2019 through the Minfin Order No. 2N of January 2019. Although the 2018 IAASB Handbook has not been endorsed in its entirety, ISA 250 was adopted in Russia in 2019 and ISA 540 is in the final stages of its endorsement. ISA 315 (2019) has been translated and, as of December 2020, awaiting a translation permission from IFAC.

Current Status: Partially Adopted

In accordance with the Federal Law on Auditing Activities No. 307-FZ of 2008, auditors must abide by the Professional Code of Ethics and the Rules of Independence for Auditors. The Ethics Committee of the Audit Council of the Ministry of Finance establishes the above requirements, which were last adopted in 2019.

The above Code is reportedly based on the 2018 International Code of Ethics issued by the IESBA. NOCLAR requirements were adopted by the Council on Audit Activity in December 2017 and came into effect on January 1, 2018.

In 2020, the Self-regulatory Organization of Auditors Association “Sodruzhestvo” (SRO AAS) initiated a comprehensive review of national ethical requirements against those stipulated in the soon to be released 2020 International Code of Ethics. The Task Force was created, uniting translators, representatives of the SRO AAS, profession, and other interested parties. An action plan was developed to establish ongoing processes to incorporate the new and revised pronouncements of IESBA into national requirements.

Professional accountants other than auditors are not regulated at the state level but may choose to become a member of a professional organization and be subject to its regulation. The Institute for Professional Accountants (IPAR), which unites accountants, adopted IPAR’s Code of Ethics for Professional Accountants in Business, which incorporates Parts A and C of the 2009 IESBA Code of Ethics. The Code has been effective since January 2013. No information on the adoption of the IESBA Code by other PAOs in the Russian Federation—the Audit Chamber of Russia (ACR), the Russian Collegium of Auditors and Accountants (RCA), the Russian Union of Auditors (RUA)—is available.

Current Status: Partially Adopted

Since 2006, public sector financial statements have been prepared in accordance with the accrual-based national accounting standards approved by the Ministry of Finance under the Federal Law on Accounting No. 402-FZ of 2011. In 2011, the Ministry of Finance committed to public sector accounting standards based on IPSAS and made the official translation of the 2010 version of IPSAS available on its website. In 2017, a consultation on adoption of IPSAS was announced by the Ministry of Finance.

In 2019, with the adoption of the Federal Law No. 247-FZ, federal accounting standards for public sector are distinguished from federal accounting standards for other entities. The authority for adopting the standards continues to lie with the Ministry of Finance, now through its Public Sector Accounting Standards Council.

Current Status: Partially Adopted

The Federal Law on Auditing Activities No. 307-FZ of 2008 and the Federal Law on Self-Regulatory Organizations establish requirements for investigation and discipline (I&D) of members of the auditing profession. The law requires Self-Regulatory Organizations (SROs) to develop investigative and disciplinary systems to address violations by their members of applicable laws, auditing standards, and the Russian Professional Code of Ethics and Rules of Independence.

In addition, the Federal Treasury has the authority to investigate and discipline auditors and audit firms who provide services to public-interest entities and exercises this authority in accordance with the Procedures for disciplinary measures of audit firms. Both SROs and the Treasury can issue a range of sanctions for non-compliance. However, only SROs may suspend or expel auditors and audit firms. The Treasury refers cases to SROs for disciplinary actions. As of 2020, only SRO AAS is recognized as an SRO. To coordinate procedures, the SRO AAS together with the Federal Treasury of the Russian Federation developed a joint Classifier of misconduct, last amended in September 2018.

SRO AAS has established an I&D system for its members operated in accordance with the Procedures for Applying Disciplinary Measures to Members of the SRO AAS, last amended in 2020. In 2020, SRO AAS conducted a self-assessment of its system against the requirements of SMO 6 and reported full compliance.

Professional accountants other than auditors are not regulated at the state level but may choose to become a member of a professional organization and be subject to its regulation.

In 2017, the Russian Union of Auditors, and IFAC associate, conducted a self-assessment of its I&D system against the requirements of SMO 6 and reported the following gaps in compliance: the results of the investigative and disciplinary proceedings are not made available to the public and are reviewed only internally and there are no processes in place to liaise with outside bodies on possible involvement in serious crimes and offences. No information is available on the RUA’s I&D system following its derecognition as an SRO of auditors.

Members of the Institute for Professional Accountants (IPAR) are subject to IPAR’s Membership Regulations. Based on the information submitted by IPAR in 2014, its system was not in line with the requirements of SMO 6.

No information on the I&D mechanisms of other PAOs in the Russian Federation—the Audit Chamber of Russia (ACR) and the Russian Collegium of Auditors and Accountants (RCA) is available.

Current Status: Partially Adopted

The Federal Law on Accounting No. 402-FZ of 2011 and the Federal Law on Consolidated Financial Statements No. 208-FZ of 2010 govern the corporate financial reporting in the Russian Federation.

All legal entities registered in the Russian Federation must prepare standalone statutory financial statements for each year ending December 31 in accordance with the Russian Accounting Standards (RAS) set by the Ministry of Finance. The RAS regulates the format and contents of the financial statements and prescribes the chart of accounts along with the recommended accounting entries for typical transactions. Although considerable progress has been made in bringing the requirements of RAS in line with those of IFRS, differences persist. In the absence of RAS guidance, entities may choose to apply relevant IFRS.

The Law on Accounting and the Law on Consolidated Financial Statements require the use of IFRSs as issued by the IASB, translated into Russian, and endorsed by the Ministry of Finance in consultation with the Central Bank of the Russian Federation for the preparation of consolidated accounts of banks and other credit institutions; insurance companies except for those that provide obligatory medical insurance; entities whose securities are listed on the stock exchange; non-governmental pension funds; management companies of investment and pension funds; clearing houses; and certain state-owned companies specified in government decrees. Non-credit financial institutions regulated by the Central Bank of the Russian Federation must apply industry-specific accounting standards that are based on IFRS.

Under the Regulation No. 107, the Ministry of Finance established a body of experts—the National Organization for Financial Accounting and Reporting Standards—to oversee IFRS implementation in Russia. It is appears that the 2015 IFRS Blue Book and some subsequent new and revised IFRSs have been translated into Russian. However, the version of IFRS currently applied in the Russian Federation is not clear.

Current Status: Partially Adopted

Relevant Organizations

• Audit Chamber of Russia (ACR)
• Institute of Professional Accountants of Russia (IPAR)
• Institute of Professional Auditors (IPA)
• Federal Treasury 
• Ministry of Finance of the Russian Federation
• Russian Union of Auditors (RUA)
• National Organization for Financial Accounting and Reporting Standards (NOFA)
• Russian Collegium of Auditors (RCA)
• Self-regulatory Organization of Auditors Association “Sodruzhestvo” (SRO AAS)

Relevant Legislation

• Federal Law on Accounting No. 402-FZ, 2011
• Federal Law on Consolidated Financial Statements No. 208-FZ, 2010
• Federal Law on Auditing ? 307-FZ, 2011
• Ministry of Finance Rules and Regulations
• Ministry of Finance Regulation on Endorsement of the International Financial Reporting Standards and Interpretations of the International Financial Reporting Standards for their Application in the Territory of the Russian Federation, 2011
• IFRS as endorsed for application in the Russian Federation
• Ministry of Finance Order on the Regulations of the Audit Council No. 14 N, 2009
• Draft Concept of Further Development of Audit Activity in the Russian Federation, 2015 (in Russian)

Relevant Publications

• Audit Chamber of Russia, SMO Action Plan, November 2013.
• Self-regulatory Organization of Auditors Association “Sodruzhestvo,” SMO Action Plan, January 2021.
• Crowe Horwath, Country by Country Financial Reporting and Auditing Framework: Russia, January 2015.
• Deloitte, “Russian Legislation Update: Accounting, Financial Reporting and Auditing,” 2014.
• Deloitte & Touche, “IPSAS in Your Pocket,” 2015.
• Institute of Professional Accountants of Russia, SMO Action Plan, November 2013.
• Institute of Professional Auditors, SMO Action Plan, May 2013.
• IFRS Foundation, “IFRS Application Around the World?Jurisdictional Profile: Russia,” June 2016.
• Russian Union of Auditors, SMO Action Plan, December 2017.
• Public Finance International, “Russia Set to Introduce ‘IPSAS-based’ Accounting Standards,” February 2013.
• Russian Collegium of Auditors, SMO Action Plan, December 2012.