Abdalova E.B., Smirnova V.E.
DIFFERENCES BETWEEN ACCOUNT RECEIVABLES IN RUSSIAN AND INTERNATIONAL REPORTING STANDARTS *
Аннотация:
In the article the existing differences between RAS and IFRS in accounts receivables were analyzed: recognition of this current asset, evaluation, provisioning, termination of recognition
Ключевые слова:
IFRS 9, financial instrument, accounts receivables, current asset
Practical approach shows existing differences in accounts receivable (A/R) between Russian Accounting Standards (RAS) and International Financial Reporting Standards (IFRS) that can affect, in our opinion, future convergence of International and Russian accountings. Accounts receivable is one of the most important current assets of a company that influences on a company's liquidity and financial attractiveness for investing and is thoroughly examined by external users. The A/R value is one of the most important indicators of changes of forecast expectations in financial position of a company, gives a snapshot of the company's liquidity and ability to use free cash flows without A/R amounts from customers. Accounts receivable are the amounts owed by the customers for goods or service to the company. A/R is the deferred payment to the company. There is no special Standard in IFRS that would be referred to A/R. IFRS 9: Financial Instruments adopted on the 27 July 2014 and it replaced IFRS 39, mostly it includes common requirements of the recognition, measurement, financial assets such as loan and receivables. Under IFRS 9 accounts receivable is classified as the financial instrument. And this is the first and important difference in Russian and International accounting. The second difference between IFRS and RAS is the assessment of accounts receivable. Thus, according to Russian Accounting Standards A/R is measured at the actual value, that is, at the value of completed business processes. There are also some conditions so that A/R can be classified as the financial asset of the company, such as: the certain probability for the company of obtaining economic benefits and its amount could be determined authentically. In this case, we can talk about the company’s right to debt recovery from customers and contractors. However, according to IFRS 9 the initial measurement of A/R is made at fair value. The main claim for accounts receivable is the absence of quotes in an active market. After that, A/R is measured at the depreciated cost that is calculated using the effective interest rate method. But there is an exception of trade A/R, it is measured at the value of completed business transactions. There is another existing and important difference between IFRS and RAS, that refers to all financial assets and instruments, including trade and other receivables. For example, according to RAS A/R is valued by its historical cost, whereas according to IFRS 9 this financial instrument is recognized by applying the discounted cash flow method. This is due to receiving the A/R amounts from customers in temporary difference and to the depreciation of cash. In our opinion, that principle for recognition A/R can provide more transparent information of relevant financial position of a company for external users. It follows from the above that there are differences in provisioning for A/R recognition. In IFRS 9 a provision for impairment of receivables is established according to the expected credit loss model. An expected credit loss model is the present value of all cash shortages over the expected life of the receivables in the event of default. According to IFRS 9 the provision for impairment of receivables should be established for gains and losses either at the time of A/R recognition or for the first reporting date. This provision for impairment of receivables is established during all expected life of the long-term current asset. According to RAS there is established the provision for doubtful debts for A/R. It is established in the moment of recognition accounts receivables. The doubtful receivable is the receivables that isn’t paid with high probability that they wouldn't be paid within the time period stated in the contract, and without any means of guarantee. The aim of the pools is to reflect reliable information about the company financial position. There are three methods of provision for doubtful accounts receivables: interval method, expert method, statistic method. In our opinion for Russian companies is better to learn from the experience of using the expected credit loss model because it includes various risks of growth negative forecasted changes in different market segments. The particular interest of accounts receivables in 9 IFRS is using factoring as a highly effective form of receivables financing. In accordance with the new model of classifying financial instruments in 9 IFRS using factoring may affect the classification and measurement of trade receivables. When the company makes factoring contract, it ceases recognizing asset. It means that company can't use the valuation model for trade receivables by depreciated value. So, trade receivable is evaluated by the value through other comprehensive income or by the fair value through profit or loss. There are a number of different types of factoring arrangement: 1. factoring without recourse – is this case factor purchases all company's receivables without right of return; 2. factoring with recourse – in this case factor has the right to return uncollectable receivables; 3. factoring with limited recourse – in this company is guaranteed not to suffer losses, factor can return receivables as the guarantee limit. Thus, the analysis showed that there are significant differences in accounts receivable (A/R) between Russian Accounting Standards (RAS) and International Financial Reporting Standards (IFRS): the evaluation, provisioning, termination of recognition. Despite the lack of the special Standard in Russian and international practice of accountings, companies can show more transparent information of A/R for external users at transition on IFRS.
Номер журнала Вестник науки №4 (25) том 1
Ссылка для цитирования:
Abdalova E.B., Smirnova V.E. DIFFERENCES BETWEEN ACCOUNT RECEIVABLES IN RUSSIAN AND INTERNATIONAL REPORTING STANDARTS // Вестник науки №4 (25) том 1. С. 49 - 52. 2020 г. ISSN 2712-8849 // Электронный ресурс: https://www.вестник-науки.рф/article/2960 (дата обращения: 25.04.2024 г.)
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