Introduction of IFRS as the only accounting and reporting standards in banks of the Republic of Belarus

The Law of the Republic of Belarus No. 210-Z dated October 11, 2022 “On Amendments to the Laws on Accounting and Reporting” (hereinafter – the Law) amended the Law of the Republic of Belarus No. 57-Z dated July 12, 2013 “On Accounting and Reporting” (hereinafter – the Law on Accounting and Reporting) according to which banks, Joint-stock company “Development Bank of the Republic of Belarus”, non-bank credit and financial organizations, the National Bank (hereinafter – banks) starting from January 1, 2025, when conducting accounting and preparing financial statements, shall follow the International Financial Reporting Standards and their Explanations (hereinafter – IFRS) in the application of accounting principles, formation of accounting policy, application of accounting estimates and preparation of financial statements.

It is assumed that other financial institutions that, according to the current legislation, reflect their transactions in accounting in accordance with the regulatory legal acts of the National Bank of the Republic of Belarus regulating accounting and reporting issues of banks and non-bank credit and financial organizations will also keep records and prepare reports only in accordance with IFRS.

Pursuant to Article 5 of the Law, by January 1, 2025, legislative acts will be brought into line with the provisions of the Law, effective from January 1, 2025. It is envisaged to introduce amendments due to the application of IFRS by banks in accounting to the Tax Code of the Republic of Belarus, decrees of the President of the Republic of Belarus, resolutions of the Council of Ministers of the Republic of Belarus, regulatory legal acts of the National Bank and other state bodies. Currently, the National Bank is preparing draft resolutions of the Board of the National Bank of the Republic of Belarus, developed taking into account the provisions of IFRS.

In view of the need to implement measures aimed at introducing IFRS as the primary and only accounting and reporting standards, the above financial institutions need to implement a number of measures that will include the elaboration of the following issues:

• development of a set of measures for the transition to the application of IFRS (including the definition of the plan and the stages of the implementation of IFRS, the timing of the implementation of the plan by stages);
• development of regulations for the interaction of the bank’s divisions in the implementation of measures for the transition to the application of IFRS, in order to consolidate their functions and responsibilities;
• development of relevant local legal acts and methodologies (including document management, interaction of departments, internal control);
• analysis of transactions reflected in the bank’s accounting from the point of view of compliance of their classification, valuation, accounting model with the requirements of IFRS, as well as assessment of the corresponding effect of the transition to IFRS;
• updating existing software systems;
• conducting a periodic analysis of the bank’s readiness to transition to IFRS;
• training of employees IFRS (including management personnel, financial services, risk service specialists, internal control and internal audit, business unit specialists), etc.

The transition of the accounting system to reporting in accordance with IFRS will require not only significant organizational, technical and methodological measures, but also the transformation of business processes and risk management systems, restructuring the consciousness of employees in all areas of activity, improving their professional training, developing skills to form professional judgments.

There are only two accounting years left before the introduction of IFRS in banks as the primary and only accounting and reporting standards, which may not be enough to implement serious transformations.  Currently, for a number of reasons, not all banks are ready for a painless and rapid transition to IFRS, which is confirmed by relevant surveys.

Thus, our company recommends starting right now to develop a set of measures for the transition to IFRS, to make appropriate assessments for the transition to IFRS in order to work out methods, eliminate errors and distribute the costs of the transition to IFRS over time.

Business Assurance has a team of specialists with appropriate training, relevant experience and the ability to provide consulting support in the application and transition to IFRS as part of the provision of appropriate consulting services.