Many foreign investors in Russia already know that Russian accounting is very formalistic. The chart of accounts is defined by the Ministry of Finance, and its use is compulsory for all companies active in Russia. The accounting is supposed to be done using pre-defined forms (e.g. an “act” has to be created for all rendered services, and a special “schet factura”, or a VAT invoice, is required for VAT purposes). Usually, any kind of commercial activity has to be documented, signed, and stamped, which makes efficient document flow one of the most important tasks of any accountant in Russia.
For the same amount of commercial activity, accounting transaction volume is doubled and many more documents have to be gathered and created in Russia, compared to most Western countries.
The EDI process that started in Russia substantially changed the process of creating official primary accounting documents and accounting document exchange as a whole.
Here we will illustrate some examples of how to use a predefined chart of accounts in the accounting program 1C for the 10 most common accounting transactions.
1. Services rendered between OOOs: 100% advance payment
2. Services rendered between OOOs in Euro: 50% advance payment
A Russian OOO renders services to another Russian OOO for 2 000 EUR + VAT on the condition that 50% will be paid in advance and the remaining 50% will be made as a ﬁnal payment. The exchange rate for 1 EUR is 60 RUB at the time of the advance payment. While the services are being rendered, the exchange rate climbs to 65 RUB and when the outstanding payment is made, 1 EUR is equal to 70 RUB.
3. Goods delivery between OOOs: 1/3 advance payment, 2/3 after delivery
4. Import of goods: EXW with 50% advance payment, 50% after delivery
This example deals with a delivery of goods totalling 100 000 EUR from a non-Russian company to a Russian OOO under shipping terms of “EXW” (Ex-Works) with 50% of the sum being paid in advance and 50% as a final payment. The transportation cost to the border of the Customs Union is 500 000 RUB; the cost of the customs broker is 100 000 RUB. According to internal regulations, the transportation cost will be included in the value of the goods. The customs tariff is 15% and the import VAT rate is 18%. When the advance payment is made, the exchange rate for 1 RUB is 60 EUR. When the goods are delivered, it is 65 RUB and when the outstanding payment is made, 1 RUB is equal to 70 EUR.
7. Employee salary calculations
8. Value added tax (VAT)
In Q2, an OOO:
- Made an advance payment to a supplier for 10 000 RUB gross and received a VAT invoice (1 525 RUB);
- Purchased goods and services for 78 000 RUB gross (VAT 11 898 RUB), VAT invoices have been received;
- Purchased consulting services from a foreign company for 60 EUR (3 000 RUB) net and paid for these in the same quarter;
- Rendered services totalling 150 000 RUB gross (including VAT of 22 881 RUB);
- Received an advance payment from the customer for 118 000 RUB gross (VAT 18 000 RUB).