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The convergence of accounting approaches: IFRS 9 financial instruments for purposes of the Russian accounting system. The market economy compliance test

Vol. 22, Iss. 11, NOVEMBER 2019

Received: 22 October 2019

Received in revised form: 27 October 2019

Accepted: 31 October 2019

Available online: 15 November 2019

Subject Heading: INTERNATIONAL STANDARDS OF ACCOUNTING AND REPORTING

JEL Classification: M40, M41, M48

Pages: 1271–1284

https://doi.org/10.24891/ia.22.11.1271

Dolotova M.A. Peter the Great St. Petersburg Polytechnic University, St. Petersburg, Russian Federation
marina.dolotova.1995@mail.ru

https://orcid.org/0000-0003-2486-6709

Subject Reforming the national accounting system for purposes of market economy and IFRS, the accounting community faces the issue of linking the principles of accounting for financial instruments. Whether conditions for placing and raising resources meet market requirements is the matter of judgment, which shall be individually addressed and stipulated in accounting policies. Therefore, it is difficult obtaining respective evidence to confirm the estimate, thus fueling the risk of material misstatements in financial reporting.
Objectives The study represents my own interpretation of the technique used to evaluate whether properties of financial instruments meet market economy requirements, illustrating loan transactions.
Methods Reasonable, reliable and reasoned recommendations are given because the normative and comprehensive approach is used to examine the market economy compliance of loan transactions, including general and special methods of research, such as observation, classification, instrumental techniques for grouping, comparison and generalization.
Results The article discusses the procedure for analyzing whether financial instruments meet market requirements while the national accounting system is reformed, and illustrates loan transactions. For purposes of the market economy compliance test of loans, I proposed standards, materiality tests and the degree of estimation. I determined how credit institutions are involved in the analysis of financial instruments in terms of their compliance with market requirements and related risks for purposes of accounting and financial reporting.
Conclusions and Relevance The convergence of the national accounting system and IFRS makes financial institutions more competitive worldwide. On the one hand, risks grow when materiality standards and criteria are not stipulated by laws for testing purposes. On the other hand, the non-existent standards and criteria give a general view of the variability of input data, their sources, and models that can be used for the analysis, however, considering the business specifics.

Keywords: credit institution, financial instrument, market economy, compliance test, standard, materiality test

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