Russian Banks Face Major Challenges in move to IFRS Accounting
Russia is moving in ‘fits and starts’ toward more transparent reporting under International Financial Reporting Standards (IFRS), according to a report by Standard & Poor’s. ‘In December 2003, the Central Bank of Russia (CBR) finally initiated the long-awaited process of the transition of Russian banks to IFRS, with the publication of the first set of regulatory norms,’ said credit analyst Ekaterina Trofimova, ‘although a final transition date remains elusive.’ Standard & Poor’s views as positive the introduction of IFRS for Russian banks, as this will provide an important basis for the reinforcement of the regulatory and supervisory environment, and it is a major element in the whole package of banking reforms in Russia. ‘The Russian banking sector needs to improve investor confidence by improving transparency, namely through fair presentation of the banks’ financial position and results, and timely and thorough public disclosure of banks’ finances, ownership, and operations,’ explained Trofimova. ‘Trustworthy accounting practices and financial transparency are pillars of any banking system. While Russian banks’ transition to IFRS is likely to be lengthy and controversial, it may in the longer run radically affect overall banking practices and industry structure, particularly if combined with enhanced regulatory and disclosure requirements.’