Practicalities%20of%20International

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Practicalities of International Financial
Reporting Standards Implementation New
International Standards on Auditing Edge
Sergey Moderov Head of International Financial
Reporting Department
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Group of Companies Issues

• Control -
• is the power to govern the financial and
  operating policies of an entity so as to obtain
  benefits from its activities
• Consolidated financial statements -
• financial statements of a group presented
• as those of a single economic entity

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How to find all the entities under control?

• Ask Management
• See internet and professional magazines
• Look at strange transactions
• - Loans
• - Non-market price transactions
• See data of the Client
• - List of companies on the walls
• Ask Client employees
• All controlled entities must be consolidated

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Entities under common control

• Are widely used for tax and formal independence
  purposes
• Using of Special Purpose Entities
• Plan to build traditional holding might be in the
  place
• Entities under common control might be
  consolidated in a aimed Group by
• - applying IFRS 3 Business Combinations
• - carve out method and predecessor
  accounting method
• Example TGK-14 (RAO UES)

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Fair Value

• The amount for which
• an asset could be exchanged, or a liability
  settled,
• between knowledgeable, willing parties
• in an arms length transaction.
• Fair value exists always, market value - not
• Auditors check in
• Leasing
• Business combinations
• PPE, investment property revaluations

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Audit of fair value

• Look at professional appraisal report
• Perform recalculations
• Look at the market of similar transactions,
  average rates
• Look at usual business process and independence
  of parties
• Using the work of an expert (within the firm or
  not)

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New International standards on auditing

• Clarity project
• The same in more simple words
• Apply or not Sarbannes Oxley or another set of
  strict rules
• Follow ethics codes

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New International financial reporting standards

• Financial instruments reducing complexity (10
  June 2008)
• Business combinations next phase
• - Full goodwill approach
• - Minority interest becomes non-controlling
  interest
• IAS 1 Presentation of financial statements
  change
• - Balance sheet becomes Statement of
  financial position Profit and loss statement
  becomes Comprehensive income

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Drivers of clients adopting IFRS

• Usually such clients are leaders on the market
• Really aggressive firms
• Who plan to issue bonds or stocks (IPO)
• Whos Parent reports in accordance with IFRS
• Who uses IFRS principles in management accounting

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Questions or comments?
Sergey Moderov Head of International Financial
Reporting Department