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• “Accounting (financial) reporting must give reliable an idea of ​​the financial position of an economic entity as of the reporting date, the financial result of its activities and cash flows for the reporting period, necessary for users of these statements to make economic decisions"

Art. 13.1 of the Law “On Accounting in the Russian Federation”

Almost all major market participants reported for 2015 according to international financial reporting standards (IFRS). Significant discrepancies in financial results according to the national methodology and according to IFRS, despite the convergence of the two approaches, forced Banki.ru to delve deeper into this topic. This review examines the results of the 20 largest Russian credit institutions.

The table below shows the financial results of banks (top 20 by asset size, according to the financial rating of Banki.ru) according to RAS and IFRS.

N/A - no data. Bank Rossiya commented that it does not disclose IFRS statements for 2015 due to the international sanctions in force against it.

As you can see, financial results using the two methods in almost all cases differ significantly from each other, and sometimes are completely opposite: for example, some banks show a profit under RAS and at the same time record a loss under IFRS, and vice versa.

This discrepancy is explained by significant differences in the principles of accounting and reporting under IFRS and according to the Russian methodology. Let's look at the main ones.

Form vs content

One of the fundamental differences between IFRS and RAS is the difference in determining the main priority when preparing financial statements. The conceptual framework establishes a general requirement: transactions must be recorded in accordance with their content, and not on the basis of the legal form alone.

This principle is clearly visible in many IFRSs: according to international standards, it is not so important what legal form a particular fact of economic activity is given - it is much more important what it represents from an economic point of view.

In Russian accounting, the situation is different: the emphasis is invariably placed on the form, rather than on the economic meaning of the transaction, which can lead, for example, to an incomplete reflection of the potential liabilities of the enterprise and, as a result, to incorrectly assessed risks and benefits.

Reflection of transactions according to the “Priority of economic content over legal form” approach allows you to objectively assess the state of affairs in order to make correct and effective investment decisions.

Fair value vs historical cost

IFRS adheres to the concept of fair value, the main purpose of which is to provide information about the financial condition and performance of an entity based on fair value. This approach estimates the value of assets and liabilities at the reporting date and provides a realistic view of the value of the business - vital information for any investor.

The concept of fair value is found in RAS, but there is no single concept, as well as the procedure for its application. In reality, the Russian methodology operates only with historical cost.

Professional judgment vs primary document

In IFRS, the decisive factor in the formation of accounting entries is the opinion of a specialist. In RAS, professional judgment of management is reduced to a minimum, and the basis for recording in accounting is the primary document. The fact that most financial specialists view Russian reporting solely as tax reporting cannot but have a corresponding impact on the reliability of the latter.

Discounting vs nominal payments

When accounting according to IFRS, value discounting is used, that is, amounts are recalculated taking into account the time value of money. This allows you to adhere to the vector mentioned above - generating reports for investors and creditors.

RAS does not oblige organizations to reflect any reporting items on a discounted basis (with the exception of long-term estimated liabilities).

Thus, in IFRS, discounting can be used when accounting for deferred payment for property, plant and equipment, intangible assets or inventories. According to RAS, such income/expenses are calculated based on the nominal amount of payments. The result may be a gap in the value of assets between RAS and IFRS.

Shareholder Help: Equity vs Profit and Loss

According to IFRS, contributions to capital made by owners/participants are recognized directly in equity, as are dividends distributed to owners/participants.

RAS does not provide for a separate procedure for accounting for income and expenses when carrying out transactions with owners, therefore, in practice, contributions to capital are reflected in the income statement.

Impaired long-lived assets vs overvalued book value

IFRS principles govern asset impairment. According to international standards, the economic “exhaust” from an asset is always greater than its book value: otherwise, its acquisition is simply impractical.

In the RAS methodology, the provision that intangible assets can be checked for impairment exists only in the form of a recommendation, that is, it is not mandatory. There are no rules at all regarding fixed assets, as a result of which the book value is often overstated.

Consolidation vs financial investments

IFRS provides the opportunity to generate consolidated reporting - unified reporting of the group (parent company and its subsidiaries). Consolidation is formed to provide information not only about those assets and liabilities that are legally owned by the parent company itself, but also about those that it controls. Thus, it is important to understand that the consolidated financial statements under IFRS, in addition to the parent organization, also include the results of subsidiaries, which also contributes to the emergence of discrepancies in financial results.

RAS does not contain the concept of consolidation (when preparing consolidated statements, Russian companies always rely on IFRS). All investments of the company in the authorized capital of other organizations are reflected as part of financial investments. At initial recognition they are measured at the cost of their acquisition. If shares are traded on an organized securities market, then at each reporting date they are reflected in the statements at market value.

Conclusion: same goals, different results

Currently, the declared goals of reporting in accordance with IFRS and reporting according to Russian standards are the same - to provide a reliable picture of the activities of the enterprise/organization. Moreover, IFRS is now “developing” almost according to the Russian version, namely: it provides more and more detail - the number of pages in the collection of IFRS standards has increased more than tenfold over the past ten years.

However, many of the banks examined show a completely different picture when analyzing their statements under RAS and IFRS. The discrepancies are due to the fact that in the domestic approach the emphasis is on the compliance of financial statements with the provisions of legislative acts, while in IFRS attention is paid to the usefulness of information in making economic decisions for a wide range of users. That is, the economic essence of financial information.

It turns out that the declared goals are the same, but the results are different.

From theory to practice

Declining profitability and losses

It is important to separately note that the main reason for the reduction in profitability and losses of Russian banks in 2015 was the decrease in solvency and the level of real income of borrowers, which led to an increase in overdue debt and, as a consequence, the need to form reserves for possible losses. Thus, according to the Central Bank of the Russian Federation, overdue loans (including interbank loans) as of January 1, 2016 amounted to more than 3 trillion rubles, which is 54% higher than the previous year. At the same time, reserves for possible losses at the end of 2015 increased by more than 1 trillion rubles, amounting to 4.53 trillion rubles as of January 1, 2016, which significantly worsened the profitability indicators of banks.

Another, no less important reason is the decrease in net interest income due to the significantly increased cost of funding and raising resources for banks (as a result of a sharp increase in the key rate by the Bank of Russia in December 2014). According to the 102nd form of banks as of January 1, 2016, net interest income of the banking sector for 2015 decreased by about 430 billion rubles (-17.1%), amounting to 2.09 trillion rubles.

Discrepancies in the amount of reserves

The amount of accrued reserves under IFRS in most cases turns out to be higher than the reserves accrued under RAS. The key point that determines the difference is the fact that according to IFRS, the calculation of the reserve does not take into account the property pledged as collateral: the emphasis is on the assessment of the borrower himself (or his business) and its ability to generate cash flows. (Property can be taken into account only if it has a reliable valuation and high liquidity.) According to Russian standards, if a number of requirements are met, the pledge of property can significantly reduce the amount of the actually created reserve. Thus, there are often cases when the amounts of the calculated and actually created reserves differ radically due to the accounting of property, which leads to a distortion of the real economic meaning.

In this regard, a number of problems arise in Russian practice: difficulties in the professional assessment of property and the fairness of its collateral value, its liquidity, quality of monitoring, etc. The most striking confirmation of the current situation is the creation today of separate banking departments for working with non-core assets that are desperately trying to sell those same “highly liquid” pledges and return at least part of the funds to the bank.

Separately, we note that according to IFRS, in the bank’s balance sheet, the amount of loans provided to customers is adjusted by the amount of reserves created for possible losses and is reflected at the “net” or “cleared” value in the line “Loans and receivables”.

Below is a table reflecting the amount of formed reserves for 2015 (banks from the top 20 in terms of assets, according to the financial rating of Banki.ru) according to RAS and IFRS.

VTB (IFRS-profit 1.7 billion rubles; RAS-profit 49.1 billion rubles)

Let us remind you that according to RAS, VTB does not provide consolidated statements, but only the results of the parent bank. It is the consolidation of reporting under IFRS that largely explains such a significant discrepancy in financial results. The VTB Group includes about 20 organizations operating in different segments of the financial sector, including outside Russia. The financial results of the subsidiaries determined such significant discrepancies in the indicators. There was also a significant difference in the volume of reserves formed for possible losses: according to RAS, the figure was 54.9 billion rubles, and according to IFRS - 167.5 billion rubles.

Rosselkhozbank (IFRS-loss of 94.2 billion rubles, RAS-loss of 75.2 billion rubles)

Note that interest income and expenses of Rosselkhozbank according to RAS for 2015 were significantly higher than according to IFRS. This fact is explained by the fact that in IFRS reporting, interest income and expenses for all debt instruments are reflected using the effective interest rate method (which includes all commissions and fees, as well as transaction costs, discounts, etc.). If the bank has doubts about the timely repayment of issued loans and other debt instruments, they are written off to their recoverable amount, with subsequent recognition of interest income based on the effective interest rate.

Representatives of Rosselkhozbank did not provide comments on this issue.

BM Bank (formerly Bank of Moscow) (IFRS-profit 1.2 billion rubles, RAS-loss of 63.7 billion rubles)

An interesting fact is that according to IFRS the group showed positive net interest income after deducting reserves, but according to RAS they were negative. It is also worth noting that according to RAS the bank shows a positive revaluation of foreign currency (about 16.3 billion rubles), while according to IFRS the group suffered significant losses on this item. This is explained by the fact that when calculating the revaluation of foreign currency assets, as well as RAS standards, the bank used preferential rates established by the Central Bank of the Russian Federation in order to reduce regulatory risks that arose as a result of the sharply increased volatility of the ruble in the period of late 2014 - early 2015. Please note that from April 1, 2016, preferential rates were abolished.

Representatives of the bank explained the above discrepancies as follows: “The difference in the financial result is caused by approaches to risk assessment: according to IFRS, the assessment is more conservative; the creation of reserves for loan losses was carried out in the previous period (in 2014). Also, according to IFRS, the necessary reserves for assets included in the Volga Federal District were created at the beginning of the process of financial rehabilitation of the bank, and according to RAS they are created evenly in accordance with the agreed schedule.”

"Russian Standard" (IFRS-loss of 14.097 billion rubles, RAS-profit 14.364 billion rubles)

The key factor that contributed to such a large discrepancy in the results obtained was the financial assistance provided to the bank by its shareholder. The bank’s press service explained to us that “financial assistance to the bank from a shareholder in RAS is reflected through the “Profits and Losses” section; in IFRS it is reflected directly in the bank’s capital.”

The amount of contributions to reserves for possible loan losses also had a significant impact on the bank’s financial results. Thus, according to RAS, the volume of reserves (24.623 billion rubles) turned out to be noticeably less than the deductions generated under IFRS (48.559 billion rubles).

It should be noted that in order to reduce operating costs, the bank seriously reduced the number of employees over the year (from 18,924 to 8,492 people), the number of divisions (from 312 to 161) and stopped implementing individual investment projects, switching to the development of new products in the hope of increasing profitability in the future .

Sovcombank (IFRS-profit 19.295 billion rubles; RAS-profit 10.240 billion rubles)

In the case of Sovcombank, it is important first of all to note that the IFRS indicators are the consolidated results of the Sovcombank group, which, in addition to the credit institution, also presents data from subsidiaries, affiliates and joint ventures and enterprises of the group. A significant portion of Sovcom's profits in 2015 came from transactions with securities - the group's portfolio showed significant growth over the year. The volume of accrued reserves under IFRS (9.021 billion rubles) was less than those reserves that the bank accrued under RAS (13.463 billion rubles), and the bank's net interest income was slightly higher than the results obtained under RAS. These factors combined contributed to the difference in profits received.

Let's consider the main features of the use of IFRS by banks, as well as those IFRS standards that are a priority for any financial director, accountant or financial specialist working in banks and financial institutions.

If you work in a bank or any other financial institution, you are well aware that IFRS is a little different. More precisely, the standards are still the same, they are just applied a little differently.

What is this connected with?

Unlike companies whose activities are related to products and services, banks work primarily with money.

For other types of companies, money is basically just liaison for their operations, and most goods or services are not related to money (financial activities).

In other words, money-related transactions, such as servicing a bank account, are “ancillary” transactions to the main business activity.

But the main product or service of any bank or financial institution (we will call them by the general word “banks”) is operations with money in various forms:

• Credit money,
• Deposit money
• Growing your money (and also shrinking your money)
• Services related to money
• Ability to use money (credit cards, bank accounts, etc.).

As a result, the financial reporting of banks is significantly different from what you would expect to see in the reporting of a “regular” company.

Let's look at the 3 most pressing topics related to IFRS for banks and financial institutions.

1. Financial instruments (IFRS 9, IAS 32).

If you work in a bank, standards for financial instruments are MANDATORY for you. After all, money is a financial instrument in itself!

In short: IFRS 9 introduced a new expected credit loss (ECL) model for recognizing impairment of financial assets. And the banks were hit hard.

Why?

Most other types of entities may use the simplified approach permitted by IFRS 9 for impairment of financial assets and calculate loss provisions solely to the extent of expected credit losses over the life of the financial instrument.

However banks cannot use the simplified approach for the largest group of their financial assets - loans.

Banks need to apply a three-step general model for recognizing losses.

This means that banks must:

• Decide whether individual financial assets will be monitored jointly (many similar loans with lower volumes) or individually (large loans).
• Carefully analyze financial assets and assess which of the 3 stages each financial asset is in.
• Based on the stage of the financial asset, the bank must assess how to calculate the amount of the provision equal to:
  1. 12-month expected credit losses; or
  2. Expected credit losses over the life of a financial asset.
• To make the above calculation, the bank must collect a large amount of data for assessment:
  1. Probability of default within 12 months;
  2. Probability of default after 12 months;
  3. Credit losses in the event of default.
• Banks may have to allocate their loans across different portfolios and monitor relevant information for each portfolio separately based on certain common characteristics.

All of the above carries important challenges for the IT department, client managers, bank statisticians and analysts and many other specialists involved in updating internal systems so that all information is provided in a timely manner and in acceptable quality.

This is no easy task!

1.2. Classification and valuation of financial instruments.

Financial assets make up the majority of banks' assets.

Currently, IFRS 9 classifies financial assets based on two tests:

• Contractual Cash Flow Test (SPPI Test) and

Based on the assessment of these tests, the financial asset may be classified for measurement by:

• By fair value through profit or loss (FVTPL); or
• By fair value through other comprehensive income (FVOCI). In this case, further accounting depends on the type of asset.

Banks and other financial institutions, mainly securities trading companies, investment funds and similar entities, need to analyze their own business model for individual portfolios of financial assets (trading securities, debt collection, etc.) and then decide whether to their classification and evaluation.

In relation to the 2 tests above, it should be emphasized that each financial asset and liability should be initially recognized at fair value (sometimes including transaction costs).

Here you also need to refer to IFRS 13 Fair Value Measurement. This standard sets out the principles for determining fair value and is therefore very important for any bank's financial reporting.

1.3. Distinguishing between equity and debt financial instruments.

Banks carry out various operations related to money and financial instruments - we have already talked about this.

Due to the variety and complexity of transactions, banks need to correctly classify whether a banking financial instrument is equity or debt, or even a mixture of both.

IAS 32 Financial Instruments: Presentation provides more precise rules on how to properly distinguish between the two types of instruments.

Why is this issue so relevant for banks?

Because incorrect identification of equity funds / debt funds / composite financial instruments may lead to incorrect reporting of the bank’s financial results, including various financial indicators that assess the capital and financial position of the bank.

2. Presentation of financial statements (IAS 1, IAS 7, IFRS 7)

Banks present their financial position and financial performance very differently from other companies. Let's look at 3 main financial statements.

2.1. Statement of financial position of the bank (IAS 1).

2.2. Statement of profit or loss and other comprehensive income of the bank (IAS 1).

Similar to the statement of financial position, IAS 1 does not prescribe the precise format of the statement of total comprehensive income.

The company must choose the format in which it will present its financial results that is suitable for its business.

It's no surprise that a bank's statement of profit or loss and other comprehensive income usually begins with interest income and interest expense!

Typically, you'd expect to see interest information reported somewhere toward the end of the statement, in financial transactions, and sometimes not reported at all.

However, interest income and expenses are the most important items for a bank, since that's what banks usually do - they deposit your money and give you interest for it. (= bank interest expenses), and they lend you money and charge interest for it ( = bank interest income).

Because banks typically charge you some fees for servicing your bank account, there is a fee income line item on the report.

To illustrate, here is a comparison of the income statement and other comprehensive income of a regular company and a bank.

Comparison of the statement of profit or loss and other comprehensive income of a bank and a regular company.

2.3. Cash flow statement (cash flow).

Banks' approach to money and therefore cash flow statements also looks different.

When you prepare a cash flow statement, you typically group individual cash flows into 3 sections:

• Operating activities,
• Investment activities and
• Financial activities.

2.4. Information disclosure.

In addition to the disclosures made by other non-financial companies, banks must make a number of other disclosures related to their own activities.

Most Important Disclosures:

1. Capital disclosure in accordance with IAS 1:

Here the bank reveals how it manages capital, with a focus on:

• Descriptive information about money management strategies,
• Some numerical data on money management,
• Are there any external capital requirements for the bank and
• Does the bank meet the requirements for credit institutions, and if not, what are the consequences?

2. The full range of information disclosure in accordance with IFRS 7 “Financial instruments: information disclosure”.

These disclosures relate primarily to financial instruments and should, in any case, be taken into account by banks. Focuses on:

• The meaning of financial instruments, including their breakdown by category, their fair value and how it is determined, accounting policies for financial instruments;
• The risks associated with financial instruments and their nature and extent, including credit risks, market risks and liquidity risks;
• Transfer of financial assets;
• And other questions.

3. Consolidation and special purpose companies (IFRS 10, IFRS 12).

Banks love to use special purpose companies (SPE, from the English "special purpose entity" or SPV, from the English "special purpose vehicle").

This used to be a "great and creative" way to hide some unwanted or dangerous assets from the public eye, since special purpose vehicles were typically not included in the consolidated accounts (so no one noticed them).

Even today, many banks use literally hundreds of SPEs for various purposes, mainly to securitize its receivables, carry out some tax transactions, to finance assets, etc.

A bank needs to assess very carefully whether it controls the SPE, using the same methodology as for any other voting controlled entity.

As a result, you may see many companies in a bank's consolidated financial statements.

Other issues of bank reporting.

Other critical areas for banks and financial institutions to pay attention to are basically the same as for any other company, but they can be more significant and significant:

• Leases - Some arrangements are not called "lease", but their contents are often finance leases. As a result, some contracts may be moved from off-balance sheet to on-balance sheet.
  [cm. See also full text of IFRS 16 ]
• Employee benefits - banks often provide a number of specific employee benefits, such as:
  • Free bank accounts or other banking services for employees.
  • Contributions to pension funds.
  • Health care schemes for both serving employees and retirees.
  • And many others.

As a result, banks are actively using all the tricks associated with the IAS 19 Employee Benefits standard.

• Hedge accounting - Banks often use hedging.

Of course, this list of standards is not exhaustive, however, the listed standards can be considered a starting point into the complex topic of IFRS accounting in banks.

When preparing reports for 2008, banks were guided by the Methodological
Russian recommendations “On the procedure for drawing up and presenting credit
financial reporting organizations" set out in the Letter of the Bank of Russia dated
February 16, 2009 No. 24-T, which contain the requirements of IFRS as of
January 1, 2008
Every year the Bank of Russia prepares new Methodological Recommendations, but they
do not contain explanations on possible early application of new standards
and interpretations, as well as changes made to existing standards.

Authorized capital of banks created in the form of companies
with limited liability
In February 2008, the IASB issued amendments
to standards that allow banks created in the form of limited companies
assigned responsibility, show capital in reporting, i.e.
improve financial performance and ratio analysis. These amendments
Not a single bank applied early.
Taking into account the requirements of IFRIC 2 “Equity participation in cooperatives
and similar financial instruments" (Members’ Shares in Co-operative Entities and
Similar Instruments), authorized and additional capital, accumulated unrealized
bathroom profit and other capital items of LLCs registered in Russian-
legislation, were previously usually classified in reporting according to
IFRS as debt instruments. Such banks did not have a “Capital” section
in the balance sheet, but only the subsection “Net assets attributable to owners”
in the “Long-term liabilities” section.
This requirement is established by the data legal regulation document
organizations. So, according to Art. 26 of the Law “On Limited Liability Companies”
“1 participant of the company has the right to leave it at any time independently
Simo from the consent of its other participants or society. The company is obliged to pay
show the participant who submitted an application to withdraw from it the actual cost
his shares or give him property of the same value within six months
from the end of the financial year in which the application for withdrawal was submitted
company, unless a shorter period is provided for by its charter.
According to the requirements of IAS 32 “Financial instruments: presentation
information" and KIMFO 2, these organizations do not have the right to obstruct
to pay off the obligation, so they cannot show in the financial statements
capital and must recognize liabilities to participants in the amount of net
assets.

1 Federal Law of February 8, 1998 No. 14-FZ “On Limited Liability Companies”
ness."
This interpretation did not allow Russian banks to report
according to IFRS capital, except for consolidated groups where the parent company,
created in the form of an LLC, was a resident of other countries, in legislation
which probably do not have a norm on the possibility of unhindered exit.
In February 2008, the IASB published changes to IAS 1
Presentation of Financial Statements and IFRS 32 and related financial
instruments similar in characteristics to ordinary shares and accounting
included in financial liabilities. These changes are mandatory
for use from reporting periods that begin on January 1, 2009. Rules
their early application is similar to any early application of IFRS,
i.e. with disclosure of this fact and additional information in the notes
to financial statementsb
In the Methodological Recommendations “On the procedure for compiling and presenting
credit organizations financial statements” is set out in force before
January 1, 2009, the procedure for reflecting LLC capital. The data is presented in table. 1.

Table 1

Rules for reflecting the capital of a bank created in the form of an LLC

Reflection in financial statements under IFRS of obligations to participants
kami of the relevant LLCs in the amount of net assets cannot fully
reveal the essence and nature of these financial instruments. Contributions to statutory
capitals of limited liability companies inherently correspond
contributions to the capital of any other companies, with the exception of simplified procedures
leaving society.
The changes made by the IASB do not affect compliance with all
requirements established in IFRS 32 necessary for classifying data
instruments as equity instruments, i.e. as part of capital.
The requirements for participants to receive a portion of their net assets are set out in clause 16(a)
IFRS 32. These include the following:

2 Letter of the Central Bank of the Russian Federation dated February 16, 2009 No. 24-T “On methodological recommendations “On the procedure for compiling
registration and presentation of financial statements by credit institutions." P. 52.

Ownership of an equity instrument gives the holder the right to receive
proportional share in net assets in the event of liquidation of the LLC;
- the instrument belongs to the class of instruments that are the least valuable
priority over other claims in respect of assets, based on the established
the priority established by law for the execution of creditors’ claims,
whereas the demands of all participants are equal and are determined only by the share of participants
Nika;
- the requirements of society participants have the same properties, not
have no more characteristics (except that a member of society has the right
leave the society at any time, regardless of the consent of its other participants
or a company with payment of his share), which would satisfy the criteria
classification as a financial liability;
- expected cash flows for the instruments under consideration are determined
are mainly profit or loss, changes in the value of net
assets or changes in the fair value of recognized and unrecognized
net assets of the company during the term of the instrument (not including
any influence from the instrument itself);
- the company has not issued any other instruments with terms similar to
reasonable terms of shares in companies that significantly limited or
would establish fixed compensation for residual income of holders
tools.
These criteria are met for most Russian LLCs, especially
for banks, since the Central Bank of the Russian Federation sets requirements for the amount of the authorized
capital. In this regard, we believe that it is advisable for banks to use
amendments to IFRS 1 and IFRS 32 and classify the net assets of companies
as equity rather than liabilities in the 2009 accounts.

Presentation of financial statements
New edition of IAS 1 Presentation of Financial Statements
contains major amendments related to the separation of operations with property
nicks and shareholders from other changes in equity capital. Data
changes enhance user capabilities for analysis and comparison
financial reporting data.
The release of a new edition of the standard is associated with the implementation of a joint project
The IASB and the US Financial Accounting Standards Board (FASB) on conversion
IFRS and US GAAP geniuses. The changes made are aimed at bringing
in accordance with IFRS 1 and FAS 130 “Statement of Comprehensive Income”3.
In the new edition of IFRS 1, the names of the reporting forms have been changed: “accountant
"balance sheet" to "statement of financial position"
position); in the English version - the name of the cash flow statement
(cash flow statement to statement of cash flows). Despite the fact that IFRS 1 uses
The terms “other comprehensive income”, “profit or loss” and “total
total income", credit organizations have the right to use other terms

3 FAS 130 Statement of Comprehensive Income was adopted in June 1997 and is effective for reporting periods
starting from December 15, 1997

To indicate the total amounts, provided that their meaning embedded in the standard
darte, is not distorted.
A comparison of editions of IFRS 1 is presented in table. 2.

table 2

Comparison of editions of IFRS 1

Changes in the presentation of capital are caused by new requirements for
identification of financial reporting components based on the aggregation of similar
characteristics within one report. In addition, a new form has been introduced - report
about total income. Changes in the capital of a credit institution during the reporting period
periods relating to transactions with owners must be presented
as part of the statement of changes in equity. Other changes in capital
income that are not related to the owners are reflected in the statement of comprehensive income.
The concept of “comprehensive income” is similar to that
US GAAP concept and means the change in the volume of the company’s net assets over
reporting period as a result of transactions or other events, the source of which
are not its owners. Total comprehensive income includes all components
nents of “profit or loss” and “other comprehensive income” that cannot
be included in the income statement due to the fact that they do not meet
criteria for recognizing it in profit or loss. In terms of components
other comprehensive income refers to those types of income and expenses that
previously reflected directly in capital.
Other comprehensive income includes:
- changes in the amount of the reserve for revaluation of fixed assets, with the exception of
the impairment recorded in profit/loss;
- actuarial gains and losses on defined benefit plans
payments recognized in accordance with IAS 19 Remuneration
employees";
- profits and losses arising from the restatement of financial statements -
of foreign operations IAS 21 “The Impact of Changes in Currency
courses";
- profits and losses arising from the revaluation of financial assets,
classified as available for sale (IAS 39)
“Financial instruments: recognition and evaluation”);
- change in the value of the cash flow hedging instrument,
profit or loss on the hedging instrument attributable to its effectiveness
tive part (IFRS 39).

Sample form of a statement of other comprehensive income for the option with two
reports are presented in table. 3.

Table 3

Sample form of a statement of other comprehensive income for the year,

In accordance with Appendix 4 to the Regulations of the Bank of Russia dated March 26
2007 No. 302-P “On the rules of accounting in credit institutions”
ations located on the territory of the Russian Federation" the profit and loss statement contains
components that, according to the new requirements of IFRS 1, must be reflected
in the statement of other comprehensive income.
The new edition of the standard changes the requirements for information disclosure.
They relate to both reclassification adjustments and presentation
comparable data.
Reclassification adjustments are those amounts that have been reclassified
included in profit or loss of the current period that was recognized
included in other comprehensive income in the current or previous periods.
The components of other comprehensive income included in equity are
upon disposal of financial assets should be included in the statement of other items
total income. For example, transferring a reserve from capital to the statement of other
total income, called recycling of components of other total
income, in the new edition of IFRS 1 received the name “reclassification”
reclassification adjustment.
At the same time, such operations did not have any new content; only the
requirements for their disclosure. They must be reflected for each component
other comprehensive income in the statement of comprehensive income or in the notes.
This is necessary for users to have a clearer understanding of the report structure
on profits and losses and to avoid double counting. This approach allows
see the results of managing resources entrusted to the management of the organization.
An approximate form for disclosing reclassification adjustments attributable to
related to the components of other comprehensive income is presented in table. 4.

Table 4

Sample Disclosure Form for Reclassification Adjustments
in the statement of comprehensive income for the year ending December 31, thousand rubles.

In addition, the new edition contains requirements for disclosing the influence
income tax on each component of other comprehensive income. This
the impact may be presented in the statement of comprehensive income or in
requirements in two versions: each component is allowed to be disclosed as after
accounting for the tax effect, and before it is taken into account - with a reflection of the general tax
effect in one sum. An approximate form of disclosure is presented in table. 5.

Table 5

Sample form for disclosing the impact of income taxes
to components of other comprehensive income for the year,
ending December 31, thousand rubles.

To comply with the requirements of the new edition of the standard, banks only need
will make adjustments to the reporting model and to the working chart of accounts (in terms of
accounts used directly for transfer to reporting lines).
Since credit institutions have been submitting reports for several years,
they should wait for the new amendments to IFRS 1, which are currently being worked on
IFRS works. If such amendments are adopted before the end of 2009, then banks
It is worth applying them ahead of schedule in the reporting for 2009.

Reporting in unstable market conditions
Banks face special challenges for disclosing information.
strong market situation. In such conditions, it is necessary to make financial
reporting is more informative.
The most important part of the reporting of most banks is the statement of
provision of information on the sustainability of financial results and financial
provisions. Key cash flow information needs to be disclosed
and financing strategies, including information on ongoing implementation
necessary assessment of the availability of funding sources.
It is necessary to provide detailed information about the tests performed on
the subject of impairment and references to external sources of information, as well as an explanation
understand the current market situation and changes that have occurred over the past
12 months and their impact on business.
For example, the amount of the allowance for impaired loans is based on an estimate
management of these assets at the reporting date after analyzing the cash flows
funds that may arise as a result of the alienation of the debtor’s property
minus the costs of obtaining and selling collateral. Market in Russia for pain
Most types of collateral, in particular real estate collateral, are highly
suffered from the resulting instability in global financial markets, which
led to a decrease in the level of liquidity of certain types of assets. As a result
tate actual sale price after alienation of the debtor's property
may differ from the value used in calculating provisions for impairment
opinion.
The following examples of information disclosure can be given.
The fair value of investments quoted in an active market is based on
van at current demand prices (financial assets) or supply prices
(financial obligations). In the absence of an active market for financial
The bank determines the fair value of instruments using methods
assessments. These techniques include the use of information from recent operations
transactions made on market conditions, analysis of discounted cash
flows, option pricing models and other valuation techniques, widely
used by market participants. Valuation models reflect current market
conditions at the valuation date that may not be indicative of market conditions
conditions before or after the valuation date. As of the reporting date, management analyzed
reviewed the models used to ensure they were properly
reflect the current market situation, including relative liquidity
market and current credit spreads.
As a result of instability in financial markets, the
be carried out on a regular basis, arm's length transactions for financial
instruments available for sale and therefore, in the opinion of management
industry, financial instruments are no longer considered to be quoted on active
market in accordance with IFRS 39.
Management cannot reliably determine the impact on financial
the bank's position further reduces the liquidity of financial markets
and growing instability in currency and stock markets. It believes that they
all necessary measures are taken to support sustainability and growth
business under the current circumstances.
Of particular importance is the disclosure of information about professional
judgments and estimates in the field of accounting.