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. Last Updated: 07/27/2016

Accounting Systems Localized for Russia

Basic accounting in Russia is a hassle for foreign companies. The records and reports required under Russian law do not conform to Generally Accepted Accounting Principles, or GAAP, which means that what they need to present to the Russian taxman is different from what is needed by the head office.

Faced with this situation, foreign companies or joint ventures are usually either taking their Russian books and trying to patch together a set of hard currency accounts that conform to GAAP or running two completely parallel accounting systems -- one for rubles the other for hard currency. Both methods are time-consuming, it is easy to make mistakes and it effectively calls for two chief accountants: one Russian and one Western-trained.

The third option, now being pioneered by around 100 Moscow-based companies, is to use a bilingual accounting software package that is able both to conform to GAAP and to satisfy Russian regulations. The area is quite new and today there are only four such packages available.

The Western packages -- SCALA, Platinum, SUN System, and PWS Ideas -- have now all been localized for use in Russia. This means they have documentation and help menus in Russian, are able to generate reports and forms as required by Russian law, and consolidate all of an organization's accounting on one system. These products are not cheap: an implementation of Platinum will cost from $10,000 upwards. So when is it sensible to consider these packages and how do you go about deciding?

According to Rebecca Eggleton, manager of the department responsible for accounting software implementation at Price Waterhouse, the decision to purchase this kind of software depends on how large a Russian operation has become and on how quickly it is likely to grow in the next 12 months. "An operation the size of the typical representative office can handle these operations manually. Once it becomes a corporate cost center ... or is using multiple warehouses then they probably need a bilingual package," she says.

The decision also depends on how committed a company is to its operation here. Rob Rensman, senior consultant at KPMG Moscow, says it can take up to a year before a company can get the full benefit from a bilingual accounting system and a Russian can operate it independently. "It's important not to underestimate the amount of work implementation will take," he says. Though it is possible to be up and running with a general ledger system in two months, full implementation can take a year and training and coaching of staff will also take at least six months.

Each of the systems has their own strengths and weaknesses. Eggleton says the key to successful adoption of one of these packages is the degree to which it is understandable to Russian users.

Rensman says that how a package handles the month closing procedure is the crucial element. "At close of month ruble balances are converted into U.S. dollar format, or in the case of one package, transferred to a separate database. How much the implementor needs to tune the system and how much work a user will have to do to achieve this is where many of the packages fail," he says.

Olga Peterson, Director of Platinum Consulting, the sole distributor of Platinum in the former Soviet Union, stresses local support.

"To implement a system like Platinum successfully you need support from well-trained professionals, well versed in both Russian accounting requirements and GAAP," she says. This means the software company should be able to provide user training, software support and help on implementation of the package.

Robert Farish is the editor of Computer Business Russia. Tel: 198-6207, Internet e-mail: