Preparation of accounting reporting is based on the data of accounting registers. To ensure individual responsibility of the accounting department personnel the registers are printed and signed monthly by persons prepared them. These persons are responsible for correctness of reflection of business transactions in the storage registers.
The Company provides interested persons with accounting reporting refleting state of its assets and liabilities, income and expenses according to composition and procedure provided by the the Law on accounting.
Accounting reporting is signed by the Director of the Company and by the Director for accounting policy of the Company.
The annual accounting reporting is approved by the decision of the annual meeting of shareholders of the Company.
Interim accounting reporting of the Company is drawn up within 30 days upon completion of the quarter, the annual – within 90 days upon year completion.
Accounting of property, liabilities and business transactions of the Company is performed in Rubles and kopecks. Accounting reporting is drawn up in thousand Rubles.
An explanatory note to the annual accounting reporting contains the following information:
information on the organization,
financial situation of the organization,
comparability of data for the reporting and previous years,
methods of estimation and material articles of accounting reporting:
сhanges in the accounting policy for the next accounting year.
Structure of an explanatory note can vary, if there are no facts of separate sections (e.g. non-application of accounting rules, сhanges of the accounting policy) or activity of organization requires additional expalnations.
Decion of the accounting year profit distribution taken by the annual meeting of shareholders of the Company is reflected in the accounting reporting for that period in which the meeting was held, that is the next year to the accounting one.
The final part of the Auditor’s Opinion issued following the results of the mandatory audit of accounting reporting is enclosed to the reporting submitted to the meeting of shareholders for approval. The Company provides the annual reporting in compliance with addresses and terms provided by the exisiting law. Besides, the Company should publish the annual reporting not later than June 1 of the year next to the accounting one.1.
Procedure of formation, approval and changes in the accounting policy
Within the year the Director for the accounting policy of the Company performs preparation and gives reasons of decisions relating to change in different accounting policy statements which can be accepted for execution starting with the next year, if otherwise is grounded by the reason of this change.
Any change in the accounting policy is executed in a form of amendments and changes in this statement which are approved in accordance with the same procedure as the statement by means of organizational-administrative documentation (orders, regulations etc.) of the Company.
Changes in the accounting policy are declared by the Company in the explanatory note to the accounting reporting for the year prior to the year of the beginning of their application.
If the Company’s business activity includes new facts of business activity which accounting methods are not specified in the accounting policy, the supplement to the accounting policy is drawn up. The supplement to the accounting policy is drawn up in a form of the supplement to this Statement which is not considered as its new edition and applicable from the date of approval.
Disclosure of the accounting policy methods accepted when forming the accounting policy, which influence essentially on estimation and taking of decisions by interested users of the accounting reporting, is performed by the Company by means of inclusion of quotations from this statement into the explanatory note to the accounting reporting for the reporting period.
The accounting methods are recognized to be essential, if interested users of the accounting reporting not knowing the applicaton of these methods fail to estimate reliably the financial situation, flow of funds or financial results of the activity of the Company.
The Company applies the working book of accounts of the accounting which is the Appendix to this Statement.
The working book of accounts of the accounting allows imlementation of the schedule of registration and grouping of data on the facts of the business activity, used for drawing up of necessary forms of reporting (financial, statistic, tax, budget management system) and intended for unification of the accounting of the Company.
Process of registration and grouping of data is performed by means of standard set of accounts (sub-accounts), analist’s handbooks on accounts (sub-accounts, technical accounts), accounts correspondence combined with the applied analitics handboks.
Changes and amendments in the working book of accounts are made centrally by means of the order of the Director for the accounting policy of the Company authorized by the Director of the Company.
Procedure of Assets and Liabilities Inventory
The Company performs the inventory for the purposes of ensuring the reliability of data of the accounting and accounting reporting. All types of assets and liabilities of the Company, including the property (notwithstanding location) possessed by the Company on an ownership basis, accounts receivable and payable, capital items, property not belonging to the Company but itemized in the accounting on off-balance sheet accounts (property under custody, received for sale under commission agreement, leased etc.) are subject to the inventory procedures.
Primary goals of the inventory are: discovery of actual property, comparison of actual property with the accounting data, check of completeness of liabilities reflexion in the acounting report.
The inventory is obligatory:
prior to the annual accounting reporting (except for the property inventory of which has been made not earlier than October 1 of the accounting year):
fixed assets and intangible assets – once per year as of October 1,
commodity and material valuables – once per year as of October 1,
financial liability – once per year as of December 31,
shifting of inventory custodians;
reveal of facts of embezzlement, abuse or property damage;
at reorganization or liquidation of the organization;
in other cases provided by the law of the Russian Federation.
Besides inventory procedures provided for the purposes of the accounting reporting, the Company makes inventory necessary to confirm the data of operative accounting and other purposes.
The Director of the Company or authorized heads of the structural subdivisions (branches) of the Company over the structural subdivisions (branches) entrusted them approve inventory schedule.
Inventory commissions, which members are approved by the Director of the Company, are formed for the purposes of inventory.
Discsrepancies between actual property and the data of the accounting discovered at inventory are reflected in the accounts of accounting in the following order:
surplus assets is entered at market value as of the date of inventory, corresponding amount is credited to the account 91 «Miscellaneous income and expenses»;
shortages of assets and their damage within the norms of natural loss are related to costs of production or circulation, and above the norms – to guilty persons. If guilty persons are not detected or the court refused recovery of losses from them, so the losses of shortages of assets and their damage are written-off to the account 91 «Miscellaneous income and expenses».
2. Methodic aspects of accounting policy This secton is devoted to chosen methods of accounting that essentially affect on estimation of decision taking by the users of the accounting reporting. These methods are tipical when forming the accounting policy of the Company.
General requirements to accounting. Reqirements and assumptions accepted for accounting and drawing up of accounts. Requirement to information formed by the accounting system
The accounting system of the Company should ensure the reliability, completeness and accuracy of accounting information at accepted level of costs for its preparation and submission.
The accounting reporting is considered to be reliable and complete, if it has been prepared in compliance with the rules provided by regulatory acts on the accounting.
The accounting reporting is considered to be accurate, if it does not contain essential errors. Absence of errors is secured by means of multilevel reliability control of accounting keeping and preparation of accounting reporting of the Company: control of a specialist performing corresponding accounting procedures, control of the head of the structural subdivision of the accounting department, who signs consolidated accounting registers, audits.
The external accounting reporting for users includes information on the property status of the Company (it is provided in a form of accounting balance sheet – Form No. 1), financial results of activity and changes in financial situation of the Company (it is provided in a form of the profit and loss statement – Form No. 2), interpretations and explanations useful for wide circle of interesterd users when decision taking (it is provided in a form of Appendices to the balance sheet – Forms No. 3 «Statement of changes in equity», No. 4 «Cash flow statement», № 5 «Appendix to balance sheet» and in an explanatory note).
The annual reporting is provided by the Company in full scope of the forms, including the expalanatory note, interim accounts are provided by the Company in a scope of the Accounting balance sheet and Profit and Loss Statement.
When forming the information the Company is governed by standard requirements to accounting keeping and reporting preparation: requirement of prudence, requirement of completeness, requirement of retionality, requirement of consistency, requirement of priority of the content over the form.
Apart of the forgoing requirements the Company implements the accounting process (including preparation of reporting) basing on the following assumptions:
the property and liabilities of the Company are accounted apart of the property and liabilities of owners of this organization (separate entity assumption of the organization);
the Company will proceed its activity in the foreseeable future, and it does not have intentions and necessity of liquidation or significant activity reduction, and, therefore, the liabilities will be repaid in accordance with the established pricedure (going concern assumption of the organization);
the accounting policy chosen by the Company is applied in a sequential order: from one reporting year to another, within one organization as well as by a group of associated organizations (assumption of the consistent application of accounting policies);
facts the business activity of the Company relate to that reporting period (and, therefore, reflected in the accounting reporting), in which they have taken place, irrespective the actual time of receipt or payment of monetary funds connected with these facts (the accrual principle assumption).
General approaches to qualification of accounting entities
Assets of the Company are divided into assets and expenses (incomplete investments in assets formation).
Within the reporting period the Company uses (expends) resources of different kinds: material, financial, labor and other. Value appraisal of resource use accepted for accounting is qualified as expenses (incomplete investments in assets formation).
Upon expiration of accrual period expenses lead to assets formation (fixed assets, finished products etc.), or expenses (decisions relating to write-off to losses of incomplete capital investments in virtue of liquidation or sale of incomplete construction project, write-off of expenses to R&D, which did not give results, write-off of prime cost of performed works and rendered services etc.).
Moment of completion of expenses accrual period is determined by that moment, when conditions of assets recognition are observed or it is obviously that accrued expenses reduce economic profits of the Company without formation of any asset.
Expenses are divided into capital (non-current) and operational (current).
The Company considers expenses to be capital, which are intended to form non-current assets, including expenses for purchase of new objects, new construction, extension, reconstruction, upgrading and technical re-equipping. All other expenses are recognized by the Company as current.
Value appraisal of the used resources – expenses – is preliminary calculated on calculating accounts:
expenses for production of goods, works, services (current) – account 20;
general business expenses – account 26;
expenses for acquisition (formation) of non-current assets (capital investments) – account 08.
Expenses accounting is conducted in item-by-item section on expenses accounts for acquisition (formation) of non-current assets.
Expenses accounting is conducted in section of nomenclature numbers, batches, uniform group of inventories on expenses accounts for acquisition (formation) of current assets.
Upon expiration of expenses accrual period the Company recognizes that expenses led to formation of an asset, if formation of property item, which use or alienation results in economic profit in future, have happened. Only property items belonging to the Company on an onweship basis (separate entity assumption) are recognized by the Company as assets.
Future economic profits are potential opportunity of property to induce directly or indirectly monetary funds or their equivalents to the Company. There is a belief that a property item will bring economic profits in future, when it can be:
used separately or in association with another item during the process of production of goods, works, services intended for sale;
exchanged to another property item;
used for settlement of accounts payable;
distributed between the participants.
In order property item is recognized in the accounting reporting, its value must be measured with enough degree of reliability. The Company recognizes value measurement to be reliable enough in case, when property item is ready to be used for the planned purposes, and all expenses connected with its conditioning are recognized in the accounting reporting and valued on the grounds of accounting documents, contract or market rates and tariffs.
If expenses failed to lead to asset formation, the Compnay recognizes charges upon termination of the period of accumulation of expenses. At the same time reduction of economic profits of the Company as a result of disposal of assets (monetary funds, other property) and (or) liabilities leading to reduction of the capital (excluding reduction of participants’ contributions) are recognized to be expenses.
The Company recognizes expenses only in case, when disposal of assets is of unconditional nature. If under definite conditions disposed assets are returned to the Company, accounts receivable or another asset formation (e.g. financial investments) are recognized in the accounting reporting.
The Company does not recognize monetary funds or another property transferred with condition of possible or obligatory consequent return (granted loans, advance payments, transfer of property to a commissioner or attorney for disposal, turnover taxes itemised separately in the settlement documents with suppliers etc.) to be expenses.
Income means growth of economic profits of the Company as a result of receipt of assets (monetary funds, another property) or payment of liabilities leading to capital increase, except for participants’ (property owners) contributions.
The Company does not recognize receipt of monetary funds or other property aquired with condition of possible or obligatory consequent transfer to other participants of business turnover (granted loans, advance payments, turnover taxes itemised separately in the settlement documents with buyers etc.) to be income.
Accounts receivable are considered to be short-term, if the term of their redemption does not exceed 12 months after ther reporting date. Other accounts receivable is considered to be long-term. At this the fixed term is calculated beginning from the first day of a calendar months next to the months in which this asset has been accepted to accounting.
The Company recognizes accounts payable in the accounting reporting, if there is a probability of the outflow of the Company’s resources able to bring economic profits which is the consequence of fulfillment of existing liability, moreover amount of this liability can be valued with enough degree of reliability.
Amount of assets value with the deduction of its liability amount (accounts payable) is recognized to be the Company’s capital.
General approaches to valuation of accounting entities
To accept property and liabilities to the accounting the Company conducts their valuation in monetary terms. Valuation of property is conducted as follows:
property received by the Company as contribution into authorized capital is valued according to monetary value determined by the founders (shareholders) of the Company in compliance with requirements of the existing law;
property purchased by the Company for payment is valued according to amount of actual expenses for its purchase. In case of inessentiality of the expenses amount (3% of the contract price) for purchase of securities (except for amounts paid to a seller in accordance with the contract), these expenses are recognized by the Company as miscellaneous expenses;
property produced by the Company is valued at its production primecost (actual expenses connected with the property item production);
material values remaiming after write-off of the fixed assets unfit for recovery and further use, spare parts formed as a result of fixed assets recovery (reconstruction, upgrading, repair) are valued at the current market price for the date of write-off of the fixed assets or for the date of acceptance of spare parts to accounting;
property aquired by the Company free of charge and property revealed at the Company’s assets and liabilities inventory are valued at the current market value for the date of acceptance of property to accounting;
the current market value is monetary funds which can be obtained after sale of the asset specified for the date of acceptance to accounting.
The current market value is formed basing on prices for this or similar property. In this case information on the price must be confirmed by the documents or an expert.
Information on prices for analogous fixed assets received in writing from production organizations, information on level price held by State statistical authorities, trade inspections as well as mass media and in specialized literature, expert reports (e.g. appraisers) relating to value of items of the fixed assets are used when determining the current market value. Expert report is the report of an independent expert or an authorized specialist (specialits) of the Company possessing special knowledge and skills. These specialists are appointed by the order of the Director of the Company or persons authorized as members of permanently acting committee for acceptance to accounting and write-off of property.
The current market value of securities with market quotations is accepted in the amount of their market price, calculated in accordance with the established procedure by the trade organizator in securities market and confirmed by documents:
property received by the Company under contracts providing fulfillment of obligations (payment) by non-monetary assets (under barter contracts in particular) is evaluated according to cost of values transferred or subject to transfer by the Company. Cost of values transferred or subject to transfer by the Company is fixed from the price basing on which the Company usually determines cost of similar values under comparable circumstances.
Evaluating property aquired basing on any grounds its actual cost is formed adding expenses born by the Company to condition the property for it to be fit for use (for expert examinations, consultations and estimations, payment for services of agents and other intermediaries, for supply, assembly and trial startups, registration of transactions, payment of duties etc.).
Cost of property in which they are reflected in the balance sheet is not subject to alteration except for cases provided by the law of the Russian Federation.
For non-current assets (except for intangible assets) it is admitted in case of further construction, firther equipping, reconstruction, upgrading, partial liquidation and reestimation of items of fixed assets.
For current assets it is admitted, if inventories are morally absolete, fully or partially lost their initial quality or which current market value, selling cost reduced.
Adjustment of value from accouting to market one is performed for financial investments basing on which the current market value can be determined in accordance with the established procedure.
If for the moment of property receipt (fixed assets, inventories etc.) the document of cost of received items are not available, they are reflected in the accountingn statements according to conditional value taking into account agreed cost, delivery expenses determined in compliance with data of transport railroad waybills and other shipment documents.
Accounts receivable and payable (including those under received/granted creits, loans) are reflected in the accounting reporting taking into account interests, fines, penalties, forfeits accepted or inflicted.
Property related to depreciated assets (fixed assets, intangible assets and profitable investments in material values) is reflected in the accounting reporting according to residual value (initial cost deducting accumulated depreciation).
Net-valuation method providing formation of reserves for reduction of cost of specified assets on separate accounting accounts is applied in accounting reporting for the property related to securities and accounts receivable.