Accounting Report, August/October 2001
Igor Zhuravlev

Accounting Qualification: Is it Supplementary Education or Necessity

To a large extent, the investment attractiveness and effective corporate governance are driven by the realistic planning and transparency of accounting system of an enterprise.

Currently, there are certain achievements in implementing the Russian Accounting Reform Program. Existing accounting regulations (PBUs) have been revised along with the development of new ones. The Russian official translation of International Financial Reporting Standards (IFRS) has been prepared, which facilitates their study by the wide audience of interested users. However, some of the major shortcomings still require further examination.

According to the Foreign Investment Advisory Council (FIAC) meeting chaired by the Prime minister and held in May 2001, the Russian accounting reform towards international standards has been proceeding slowly and at some cost. The FIAC includes representatives of the leading international companies such as BP Amoco, Mobil, Mitsubishi, Coca-Cola, Citibank, BASF and others. The representatives of these firms believe that the accounting reform is a primary factor for stabilizing the Russian economy.

This issue is crucial, which is evidenced by PricewaterhouseCoopers stating that the non-transparency of financial statements of Russian enterprises has resulted in a shortfall of ten billion US dollars in direct foreign investment. («Company» magazine, May, 2001). Troika Dialogue has summarized data on the understatement of assets of Russian enterprises, which resulted from corporate governance risk. Enhanced transparency and corporate governance should increase the overall capitalization of Russian companies twice as much or by 54 billion US dollars.

There are very few companies whose high P/E ratio results from proper corporate governance, including transparent accounting records in compliance with international norms. One factor contributing to this problem is the drastic shortage of Russian specialists with appropriate knowledge and practical skills. Such specialists were not required in a centralized economy. Currently we are facing the following situation: on the one hand, more than three thousand companies are willing to get listed on organized markets, and therefore, have to prepare lAS-based financial statements; while, on the other hand, there are three and a half million Russian accountants that have no prior experience with these procedures.

According to the Ministry of Finance, this is one of the major reasons why Russia will be able to move to IFRS no earlier than 2005. However, there is an ongoing need for solutions aimed at ensuring transparency in accounting and reporting.

Managers of many enterprises recognize the need for training qualified accountants based on international management accounting practices and this training is already being implemented. There are various training programs in universities and specialized training centers. Many international institutions proactively assist in training and upgrading the qualifications of Russian accountants.

However, training frequently ends up covering some general theoretical aspects of IFRS accounting and reporting, and many training programs fail to promote the necessary professional skills.

Nevertheless, some training programs successfully operate in Russia because they are conceptually sound. Qualified Russian practitioners have been localizing these courses in Russia. Training covers case studies and other course materials that are continually updated to conform to international requirements.

The International Association of Bookkeepers (IAB, Great Britain) offers one of the most successful training programs. It has been operating since 1973 and is currently training more than ten thousand certified specialists throughout the world.

The professional development program for IAB accountants has been in Russia since 1998. The IAB certificate and qualification meet modem accounting requirements, because the syllabus and examination questions are continually updated to conform to internationally accepted practices. The IAB qualification is recognized in more than 90 countries, and certifies that an expert is competent and professional enough to meet  International accounting and reporting requirements.

The training program covers basic concepts and principles of western accounting systems, including easy and understandable examples of their practical application. The nature and techniques of adjusting entries at the end of reporting period are illustrated by many examples to ensure full implementation of the matching rule and accrual basis of accounting. The training also covers setting up provisions and their adjustment (for doubtful debts, early payment discounts, impairment of assets and others).

The training program focuses on accounting in sole proprietorships, partnerships and non-for-profit organizations. Courses address basic rules and peculiarities of these businesses and also different formats of statements and financial reporting rules for each type of business.

Course materials include a large number of case studies covering various topics and provide problems for review with their solutions.

The IAB provides for three levels of training, including foundation, intermediate and final. Given their previous experience, Russian accountants usually begin their training process directly from the intermediate level. Students who successfully pass the intermediate level exam meet the criteria for International Qualification as a member of the IAB.

The final level program covers in-depth and advanced study of the previously covered material, as well as topics such as accounting for corporations and manufacturing enterprises, fundamentals of the financial analysis based on accounting data and others. Those who successfully pass exam at this level shall be entitled to an absolute IAB membership and Fellow of IAB qualification.

IAB syllabus formally provides bookkeepers training. However, it is worth mentioning that the courses also address advanced financial analysis problems and even managerial accounting elements. In fact, the material is intended to provide training in a wide range of accounting solutions based on international practices. In the course of textbooks study a reader gets a complete picture of accounting principles applied in developed market economies. As a result a bookkeeper obtains sufficient skills in preparing major financial statements for all types of business, is able to make right decisions when measuring and recognizing major accounting items, and is capable to manage methods for financial analysis based on accounting data.

The IAB Program covers several regions in Russia such as Moscow, Saint Petersburg, Kazan, Yekaterinburg, and Novosibirsk. Presently, Postgraduate-RAA training center is a representative office IAB in Moscow. The training center closely cooperates with Sodruzhestvo, Association of accountants and auditors, and also the Russian Board of Auditors. Given steadily growing demand for IAB educational services, the decision was made to establish Russian/English enterprise on the basis of Postgraduate-RAA, which shall be delegated exclusive authority to open new training centers in Russia and CIS. IAB and Postgraduate-RAA first managers signed a respective protocol to support this decision in May 2001.

IAB graduates are expected to continue their professional growth, taking into account constantly growing demand from Russian specialists for continued training after Bookkeepers qualification. After the Final level specialists get an offer to continue training on the basis of Institute of Financial Accountants (IFA) that was founded in UK in 1916, which is an IAB strategic partner. The IFA program is closely connected to the previous IAB stages and provides for module training with a consequent appellation of four qualifications (Accountant Technician, Associate of IFA, Fellow of IFA, BA degree under IFA), each certified by IFA diploma. The first degree of Accountant Technician (Accountant Manager) is a module that includes the following subjects: accounting (credit is given to the final IAB level), managerial accounting, taxation and business legislation.

Along with advanced international accounting issues, the IFA also includes subjects for financial managers and directors, consultants and analysts in accounting and control. Completion of the IFA training program corresponds to a Bachelor's degree in Economics and Finance. Presently, Postgraduate-RAA and IFA are about to complete localization of this program in Russia. The training and examination will be conducted in Russian.

In addition to the training of practicing accountants and auditors, the Russian Representative office of IAB/FA Postgraduate-RAA cooperates with Russian universities by offering special rates to full time university students. University students have been expressing their keen interest in IAB/IFA training programs because of their wiliness to have a prestigious international education to complement their Russian university degree, and, besides, they have confidence in education that meets international requirements.

Mr. Zhuravlev, General Director of the Russian Representative Office of IAB/IFA «Postgraduate-RAA».
Any additional informa
tion is available at,
numbers: +7(095) 231-1059 and +7(095) 436- 0927 in
or by
e-mail: [email protected]  and  [email protected].


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