Foreign companies with Russian subsidiaries must maintain RAS (Russian Accounting Standards) records even when reporting in IFRS to the parent. This…
Every foreign-owned Russian LLC faces a fundamental accounting challenge: the parent company reports in IFRS (or US GAAP), while the Russian subsidiary is legally required to maintain accounts in RAS — Russian Accounting Standards (РСБУ). These are different frameworks with different recognition rules, different measurement bases, and different reporting periods. Running both simultaneously, and reconciling the differences, is one of the most underestimated compliance burdens for foreign companies in Russia.
This guide explains the key differences between IFRS and RAS that create reconciliation items, the practical process for maintaining dual records, the role of 1C accounting software, and when to use accounting outsourcing rather than an internal team.
Under Federal Law No. 402-FZ "On Accounting" (2011), all legal entities registered in Russia must maintain accounting records and prepare statutory financial statements in accordance with Russian Accounting Standards (RAS/РСБУ). IFRS is not accepted for Russian statutory reporting — even if the parent group's auditors have signed off on consolidated IFRS accounts that include the Russian subsidiary.
The Russian statutory accounts (отчётность) serve as the basis for:
Corporate income tax calculation (though with numerous additional tax-specific adjustments)
Dividend distribution — dividends can only be paid from RAS net profit, not IFRS profit
Statutory audit (where required)
Filing with Rosstat (Federal Statistics Service) and the FTS
Registration of charter capital changes
A Russian LLC that has accumulated profit on an IFRS basis may have a very different RAS profit — and dividends can only be distributed from RAS retained earnings. An LLC with strong IFRS profitability but a small (or negative) RAS profit cannot legally distribute dividends, regardless of what the IFRS accounts show. This is one of the most common surprises for parent company finance teams. Getting RAS accounting right from the outset — and understanding the RAS/IFRS profit gap — is essential for dividend planning.
For a foreign-owned Russian LLC, the typical approach is to maintain primary records in RAS (in 1C) and prepare an IFRS pack for group reporting purposes as a separate exercise. This is sometimes called "two-track accounting" — one set of records for Russian statutory purposes, one set for group reporting.
1C:Enterprise (8.3) supports parallel accounting — maintaining separate IFRS and RAS chart-of-accounts within the same system, with each transaction coded to both. This is the most elegant solution but requires a 1C implementation specialist to configure correctly. The reconciliation is then produced automatically as a report within 1C rather than as a manual spreadsheet exercise.
Practical requirement: the 1C configuration must be set up by a specialist with both 1C implementation expertise and IFRS knowledge — a relatively rare combination. Cost: typically RUB 200,000–600,000 for the initial setup, depending on complexity.
More common for smaller operations: maintain RAS records in 1C (as required by law), then prepare IFRS adjustments manually in Excel at period-end. The reconciliation items are documented as IFRS-only entries that are not reflected in the RAS records.
This approach is cheaper to implement but more error-prone, requires a detailed reconciliation workbook, and creates more work at each period-end. As the business grows, the manual overlay approach typically becomes unsustainable and migration to parallel 1C accounting is necessary.
Typical items that appear in every IFRS-to-RAS reconciliation for a foreign-owned Russian LLC:
Lease capitalisation under IFRS 16 not reflected in RAS (if RAS lease standard not yet applied)
Different depreciation lives or methods — IFRS useful economic life vs RAS statutory categories
Intercompany balance eliminations (consolidated IFRS only — not relevant for single-entity reconciliation)
Management fee accruals recognised at different periods
Provisions (warranty, litigation) recognised under IAS 37 but not qualifying under RAS
Revenue deferral differences for multi-element arrangements
FX retranslation differences — particularly on long-term intercompany balances
Deferred tax calculation methodology differences under PBU 18/02 vs IAS 12
Practical support for international business in Russia.