Russian Federation

Member Organizations

Member Organization Associate Other PAOs

  Russian Union of Auditors
  Self-regulatory Organization of Auditors Association “Sodruzhestvo”

Legal and Regulatory Environment

  • Overview of Statuatory Framework for Accounting and Auditing

    Accounting

    The Federal Law on Accounting No. 402-FZ of 2011, Federal Law on Consolidated Financial Statements No. 208-FZ of 2010, and Federal Law on Introducing Changes to the Separate Legislative Acts of the Russian Federation No. 403-FZ of 2014 govern the corporate sector accounting 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, which 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 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; consolidated financial statements of 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. 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.

    The Central Bank of the Russian Federation establishes financial reporting requirements for banks and other financial institutions, insurance companies, and the participants of the securities markets. As mentioned above, entities supervised by the Central Bank must follow IFRS.

    Auditing

    The auditing framework in Russia is established in the Federal Law on Auditing Activities No. 307-FZ of 2008, Federal Law on Introducing Changes to the Separate Legislative Acts of the Russian Federation No. 403-FZ of 2014, and the Federal Law Concerning 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 endorsed by the Government of the Russian Federation.

  • Regulation of Accountancy Profession

    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 an 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 advisory role in the oversight process. The Audit Council is independent of the audit profession and its functions include 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 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.

    The Unified Certification Commission, 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 Unified Certification Commission, candidates must complete their initial accountancy education at a state institution for higher education. A Unified Auditor Certificate is awarded to those who successfully pass the examinations.

    As of 2017, there are two SROs of auditors: the SRO Association “Sodruzhestvo” and the Russian Union of Auditors. The Federal Law on Introducing Changes to the Separate Legislative Acts of the Russian Federation No. 403-FZ of 2014 increased the membership threshold for SROs of auditors to 10,000 individual practitioners and/or 2,000 corporate members (previously 700 and 500, respectively) effective January 2017. Consequently, three other former SROs—the Audit Chamber of Russia, the Institute of Professional Auditors, and the Russian Collegium of Auditors—were derecognized by the Ministry of Finance.

    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.

    Independent audit oversight is executed by the Federal Treasury, which is responsible for conducting QA reviews 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. As of 2017, 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. Prior to 2016, these functions of the Treasury were carried out by the Federal Service for Financial and Budgetary Supervision (Rosfinnandzor).

    Accountants other than auditors are not regulated at the state level. 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. As of 2017, the Ministry of Finance, however, is exploring the possibility of regulating the accounting profession through mandatory membership in SROs.

  • Audit Oversight Arrangements

    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.

    The Audit Council of the Ministry of Finance represents the business and investment community and plays an advisory role in the oversight process. The Audit Council is independent of the audit profession and its functions include 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 professional examinations; (iv) oversee registration of audit firms and auditors, continuing education training, and quality assurance activities of Self-Regulatory Organizations (SROs); and (v) accredit SROs.

    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. In 2016, the Ministry of Finance and Rosfinnandzor became members of the International Forum of Independent Audit Regulators.

  • Professional Accountancy Organizations

    The Audit Chamber of Russia (ACR)

    The ACR, an IFAC Associate since November 2010, was established in 1995 and became an accredited SRO in 2009. Its members are auditors and audit firms. The ACR was derecognized as a Self-Regulatory Organization (SRO) in January 2017.

    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. IPAR joined IFAC in 2001; however, since 2015, it is no longer a member.

    The Institute of Professional Auditors (IPA)

    The IPA was founded in June 2000 by a group of audit firms, and became accredited as an SRO in 2002. An IFAC associate since November 2012, its membership now includes both audit firms and auditors. The IPA was derecognized as a SRO in January 2017.

    The Russian Collegium of Auditors (RCA)

    The RCA was created in June 1992 and had a diverse membership of auditors, audit firms, accountants, lawyers, and IT specialists. The collegium also works to attract accounting, tax, management, financial control, internal audit, and financial experts as its members. The RCA was derecognized as a SRO in January 2017. The RCA joined IFAC as an IFAC associate in 2001 and subsequently became a member in 2008.

    The Russian Union of Auditors (RUA)

    The RUA, prior to 2016 known as the Moscow Audit Chamber (MoAC), was established in 1992 and approved as an SRO by the Ministry of Finance in 2009. It is comprised of auditors and firms. The RUA became an IFAC Associate in 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 is an accredited SRO. 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.

  • Projects or Other Information

    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 priorities of the development of the audit profession during 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.

    As part of the implementation of the Concept, the Federal Law on Introducing Changes to the Separate Legislative Acts of the Russian Federation No. 403-FZ of 2014 increased the membership threshold for Self-Regulated Organizations (SROs) of auditors to 10,000 individual practitioners and/or 2,000 corporate members (previously 700 and 500, respectively) effective for periods commencing on January 1, 2017. A transitional period of up to two years was granted for the Russian audit profession to comply with the new requirements. Between 2015–2016, consultations between SROs were taking place to discuss organizational and governance structures, management of the prospective alliances, and development of related bylaws and constitutions. Nevertheless, implementation of this requirement presented challenges for the audit profession given the shrinking audit market caused by the overall economic downturn. In January 2017, as the requirement for the new threshold became effective, only two of the five SROs complied with the law. The three other SROs were consequently derecognized by the Ministry of Finance.

Adoption of International Standards

  • Quality Assurance

    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 adopted and became effective in January 2017.

    The responsibility for conducting QA reviews is shared between Self-Regulatory Organizations (SROs) and the Federal Treasury. SROs, which are overseen in this activity by the Ministry of Finance, conduct reviews of audit firms that audit non-public interest entities (PIEs). The auditors of PIEs are subject to QA reviews both by the SROs of which they are members and the Federal Treasury. Prior to 2016, QA reviews of PIEs were conducted by the Service for Financial and Budgetary Supervision (Rosfinnandzor).

    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.

    The two SROs— the SRO Association “Sodruzhestvo” and the Russian Union of Auditors—conducted a self-assessment against the requirements of SMO 1 (revised 2012) and reported partial 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.

    Current Status: Partially Adopted

  • International Education Standards

    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, which the Ministry of Finance is responsible for overseeing. The Unified Certification Commission (UCC), the Audit Council of the Ministry of Finance, universities, the Self-Regulatory Organizations (SROs) of auditors, and other professional accountancy organizations that were derecognized as SROs in January 2017, are involved in the implementation of the IPD and CPD requirements for auditors under the oversight of the Ministry of Finance.

    Prior to sitting for professional exams organized and conducted by the UCC, candidates must complete their initial accountancy education at a state institution for higher education. A Unified Auditor Certificate is awarded to those who successfully pass the examinations.

    SROs—the SRO Association “Sodruzhestvo” and the Russian Union of Auditors—are required to monitor their members’ compliance with CPD requirements as outlined in the Law on Auditing Activities.

    Although some of the requirements of IES appear to have been incorporated into the national requirements for auditors, the extent of alignment with the IES needs to be clarified.

    Professional accountancy organizations other than SROs offer voluntary certifications for their members who provide services other than auditing. No further information on the legislation applicable to accountants and the extent of alignment of the existing requirements with IES is available.

    Current Status: Partially Adopted

  • International Standards on Auditing

    Under the Federal Law on Auditing Activities No. 307-FZ of 2008, audits must be conducted in accordance with the Federal Auditing Standards issued by the Ministry of Finance, which in general are based on ISA.

    In 2014, the Federal Law on Introducing Changes to the Separate Legislative Acts of the Russian Federation No. 403-FZ of 2014 introduced the requirement to apply ISA effective January 1, 2017 for all audits, as endorsed by the Government of the Russian Federation. The Audit Council of the Ministry of Finance reviews ISA for their application in the Russian Federation. As reported by the Russian Union of Auditors (RUA), in November and December of 2016 through Order No. 192n and Order No. 207n the Ministry of Finance approved in full the 2015 IAASB Handbook for application in the Russian Federation. RUA also indicated that the Ministry of Finance is planning to endorse the 2016 Handbook in 2018, with the expected effective date of 2019.

    Current Status: Partially Adopted

  • Code of Ethics for Professional Accountants

    In accordance with the Federal Law on Auditing Activities No. 307-FZ of 2008, the Ethics Committee of the Audit Council of the Ministry of Finance establishes the Professional Code of Ethics and the Rules of Independence for Auditors. All Self-Regulatory Organizations of auditors are required to adopt the Code and the Rules for application by their members.

    The Professional Code of Ethics was adopted by the Audit Council in 2012 effective for periods commencing on January 1, 2014. The Russian professional accountancy originations report that it is based on the 2010 version of the IESBA Code of Ethics; however, the extent to which it meets the requirements of the IESBA Code remains to be clarified as it has been translated and adapted. As reported by the Russian Union of Auditors, the 2016 IESBA Code has not been translated in Russian and no defined timeline for its adoption has been established.

    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.

    Current Status: Partially Adopted

  • International Public Sector Accounting Standards

    The Federal Law on Accounting No. 402-FZ of 2011 authorizes the Ministry of Finance to establish accounting requirements for public sector organizations in the Russian Federation. Since 2006, public sector financial statements have been prepared in accordance with national accounting standards, which are accrual-based.

    In 2011, the Ministry of Finance committed to developing public sector accounting standards based on IPSAS. As reported by the Russian Union of Auditors in its 2017 SMO Action Plan, some requirements of IPSAS have been incorporated into national requirements. However, the timeline for full transition to IPSAS has not been indicated.

    Current Status: Partially Adopted

  • Investigation and Discipline

    The Federal Law on Auditing Activities No. 307-FZ of 2009 establishes 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. 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.

    Both SROs have established I&D systems of their members; however, those are not fully in line with the requirements of SMO 6.

    I&D procedures for accountants are generally described in the Federal Law on Accounting No. 402-FZ of 2011. Members of the Institute for Professional Accountants (IPAR), the only professional accountancy organization for accountants, are also subject to IPAR’s Membership Regulations and the Code of Ethics. Based on the information submitted by IPAR in 2014, its system was not in line with the requirements of SMO 6.

    Current Status: Partially Adopted

  • International Financial Reporting Standards

    The Federal Law on Accounting No. 402-FZ of 2011, Federal Law on Consolidated Financial Statements No. 208-FZ of 2010, and Federal Law on Introducing Changes to the Separate Legislative Acts of the Russian Federation No. 403-FZ of 2014 govern corporate sector accounting in the Russian Federation.

    The Law on Accounting requires all entities to prepare financial statements according to the format and content determined by the Ministry of Finance. Entities, aside from those identified below, must apply Russian Accounting Standards set by the Ministry of Finance, which differ from IFRS.

    The Law on Accounting and the Law on Consolidated Financial Statements require the use of IFRS as issued by the IASB 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; consolidated financial statements of 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. It is not clear what version of IFRS is being applied.

    Current Status: Partially Adopted

Disclaimer

IFAC bears no responsibility for the information provided in the SMO Action Plans prepared by IFAC member organizations. Please see our full Disclaimer for additional information.

Methodology

Methodology
Last updated: 12/2017
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