International financial reporting standards as a main tool of accounting system reforming in Kazakhstan

Application of the principles and techniques of international accounting standards (IAS) in the national accounting system indicates that the IAS - it is not only the methods and approaches for accounting and reporting, but also, to a certain extent, it is a sign of democratic civilized society.

The need for a common business "language", as traditionally called accounting, was due to the development of international trade, transnational corporations, the globalization of financial markets. The financial statements of companies in different countries have differences which depend on social, economic and political factors. Differences in approaches to the content of the financial statements significantly complicated the analysis of information and decision-making. Therefore, Committee on International Accounting Standards Board (IASB) was created by the agreement of professional accountancy bodies in Australia, the UK, Ireland, Canada, the Netherlands, Germany, Mexico, USA, France, and Japan to ensure the harmonization of financial reporting in June 29, 1973. Initially, the aims of IASB were formulating, publication and improvement accounting standards for the public interest, as well as facilitate their acceptance and compliance in all countries. International Financial Reporting Standards do not require legislative consolidation and voluntarily applied worldwide. All companies in our country are required to keep their accounts in accordance with IFRS. At the same time a number of laws were adopted, which related to the preparation of consolidated financial statements in accordance with IFRS. IFRS allows domestic enterprises to improve their investment attractiveness and transparency, provides access to the global capital markets. There are some positive aspects. But why the transition to IFRS has become a headache for the Kazakh companies?

Let's try to sort out this issue. The organization of accounting in some countries is affected by the following factors:

• major users of accounting information (government, banks, and individuals);

• enterprises which involved in the investment process;

• the degree of the market and securities exchanges development;

• the degree of investors participation in international business.

Accounting is not only the business language, but also it is a tool of international communication. Most of the major corporations today – it is multinationals which owned by national capital, but international in its activities carried out abroad.

There were several alternative accounting systems of financial reporting, claiming the role of global standards on the historical stage of development:

• U.S. generally accepted accounting principles (U.S. GAAP);

• EU directives;

• International Financial Reporting Standards (IFRS).

Methods of evaluating of the accounting objects and the amount of disclosed information in the financial statements depend on the requirements of users of financial statements.

The main external users of information, which provided on the basis of the financial statements, are current and potential investors. Financial statements must be based on principles which common to all economic subjects to make effective decisions for external users. Creating of such principles and monitoring their performance - is the main task of regulatory accounting. Conducted comparative analysis of financial reporting principles allowed to identify the main differences in the models of financial reporting of American and Kazakh companies.

The main specific features of financial accounting regulation in the U.S. are:

• independent of organizations that govern the financial and tax accounting. It establishes a complete separation of financial and tax accounting;

• clear orientation of regulatory organizations to the information needs of users - present and future investors and creditors.

Both influence to stable development of stock market.

Securities and Exchange Commission is a main key in the regulatory system of financial accounting and reporting in the United States. The Commission was established in 1934 after the global economic crisis. It is a public service, whose main objective is to monitor compliance with the laws, which governing the issuance and trading of securities, to protect investors.

Inclusion of the issuer's securities in any U.S. exchange quotation sheets only possible with the approval of the financial statements of the company (in the form of a registration report when of the securities emission and quarterly reports) by the Securities and Exchange Commission. Commission checks compliance with the requirements in terms of financial information to be disclosed and publishes financial statements of companies. Despite the status of public service, the Commission is an agency independent of the executive branch. Importantly, almost since its inception, the Commission has transferred its authority to develop and adopt standards of financial accounting to professional organizations. It is principally engaged in the development of formal financial reporting requirements, overseeing their implementation, and only in exceptional cases it is included in the regulatory process of accounting of certain assets and liabilities, income and expenses.

Audit is a mechanism of validation of financial statements, its effectiveness is ensured by professionalism, independence and property liability of the auditor. In this regard, the Association of Professional Accountants of the United States plays an important role in the regulation of financial accounting in the United States. Certificate of the Public Accountant, which is issued by the Association on the basis of the results of its examination, gives the exclusive right to sign an audit opinion on the financial statements of compliance with U.S. GAAP.

Association of Professional Accountants of the United States develops auditing standards, defines the requirements for auditors and audit organizations, carries out training sets and qualifications of auditors. Although Association has lacks of authority to develop and adopt standards of financial accounting, it forms professional staffs, which is involved in the preparation of standards and monitor their compliance [6].

The Council of Financial Accounting Standards Organization is an organization, which develops and adopts standards of financial accounting. It is independent non-governmental organization, funded through publications and sponsors. The standard is adopted with the consent of five of the seven voting members, which to ensure their independence must not conduct any other professional and commercial activities. The process of formulation and adoption of standards is clearly formalized, ensures their quality and the views of all stakeholders. It includes steps such as the formation of a group of experts in the given accounting issue, the publication of the draft standard and open discussion. The Committee of development problems of financial accounting is at the Council of Standards. The main task of this Committee is timely detection of problems in the financial accounting and the development of options for possible solutions [7].

Analysis of the regulatory system of financial accounting in the United States shows how the public and government bodies highly evaluate the significance of financial accounting for the country's economy. Also they evaluate availability of system which combined public and professional regulation of financial accounting, in which independent professional organizations are developing standards that governed financial accounting and audit of financial statements, and The Securities Commission - development of formal reporting requirements and their enforcement, and monitoring of compliance legislation. Thus, the regulatory system of financial accounting in the United States is able to provide professional and objective approach to the development of standards and two-level control system. Perhaps the US do not confront with the IFRS, as in Kazakhstan.

The main objective of the U.S. financial reporting is providing information for investors to monitor the effectiveness of investment. It is reached by the complex action of the three areas of financial accounting regulation:

• Developing conceptual accounting principles, which characterize the main methods of processing and presentation of financial information;

• Development of targets, which are complex qualitative and formal requirements to the result of financial services - financial statements;

• Developing requirements for accounting technique of individual objects.

The criteria were developed based on the conceptual accounting principles in the United States according to which the assets, liabilities, income and expenses are recognized in the financial statements of the company. American accountant solves a number of key issues during the reporting. For example, when considering the nature of the consumables operation, accountant determines whether this amount is attributed to the expense of the reporting period or activated as deferred expenses. The operation, which results in an increase in assets, either directly relates to income for the period, or relates to deferred income. Since accounting data intended for external users, the purpose of administration of the company is to provide information of a positive nature. It helps to attract investment using the accounting options that capture the most revenue in the financial statements and the maximum amount of costs to activate that is transferred to future periods.

IFRS, on the contrary, seek to avoid the company's ability to manipulate financial situation of company. Therefore it excludes income in profit and loss statement, which is not related to this period, but the total reflection of all costs incurred.

In accordance with these restrictions costs may be reflected on the balance sheet as an asset, if the likelihood of the economic effect of its use in the following periods is greater than 50%, transaction or event that is the cause of the right to economic benefits in the future, have already taken place, the cost or value of the asset can be measured reliably. If the probability criterion is not made, the expense is recognized in the profit and loss statement. The expense is recognized in the profit and loss statement, if:

• economic effect of the transaction (cash or other consideration) has been received, or with a high degree of probability will be received in the reporting period;

• revenue can be reliably measured;

• transaction or event giving rise to the income, have already taken place.

If the income criterion is not satisfied, the amount relates either to accounts payable or accounts for deferred income. If other criteria are not satisfied, then the operation is not reflected in the reporting forms and balances, but if it can affect the assessment of the financial situation of the company (significant), it must be described in the notes to financial statements. Amounts are carried on the accounts of financial accounting after determining the nature of the operation.

There are no standard charts of accounts in the U.S. Each company develops its own chart of accounts to meet the needs of financial, tax and management accounting. Such a plan can have several thousand accounts, therefore group of accounts are linked to specific rows of financial reporting forms. Standard reporting forms are not developed in the United States. The forms of financial statements are created by the company based on the requirements of the standards, the Securities and Exchange Commission, financial needs analysis, taking into account the need for disclosure in the financial statements of all significant items [7].

In Kazakhstan more attention, compared to order of the subsequent evaluation of financial investments, is given the rules of formation of their original cost, which are regulated in detail for professional participants and other economic objects. U.S. GAAP requires the assessment of the initial cost of investments in accordance with the general rules of asset's original cost estimates that allow referring to the original cost of all costs directly attributable to the acquisition. Regulation of the procedure of forming the initial cost in the United States and Kazakhstan has a different target orientation. U.S. GAAP has a goal to avoid unnecessary costs referring to the original cost of the asset, and our domestic regulations - on the contrary, to avoid unnecessary costs referring to the cost. Hence such differences are. There are actually very much differences. In addition, there are several problems still to be resolved:

• lack of consistency of IAS with other legislation;

• significant time lag of publication of international standards changes;

• shortage of qualified personnel;

• weak functioned national system of professional certification.

Internal audit system have been introduced mandatory only for joint stock companies, LLP can optionally enter a unit staff.

Another issue that has not been resolved to this day is the current tax legislation which is not always permit to shift the accounting data for their application for tax purposes. The new Tax Code of the Republic of Kazakhstan is intended to settle this problem. Examples of "problematic" moments are revaluation and impairment of assets, their classification as an asset, in the functional currency accounting and useful life. Analysis of the provisions of the Tax Code in relation to IFRS brings conflicts which inevitably occur during tax audits.

First of all, such situations are based on the following circumstances:

• in some cases, IFRS requires different or alternative approaches to accounting objects and requires professional judgment;

• when registration the asset IFRS does not take into account the right of ownership of the asset, and is based on the transfer of a substantial portion of the risks and rewards associated with the asset;

• IFRS are subject of frequent changes made by IASB that can neutralize all attempts to bring the tax laws in accordance with IFRS as of a certain date.

Thus, the differences in accounting for certain assets and liabilities in the U.S. and Kazakh financial reporting systems caused fundamentally different approaches to financial accounting in the United States and Kazakhstan. Despite the recognition of all financial reporting principles accepted in the United States, the Kazakh financial accounting and reporting have tax character, which characterized the priority of formal requirements on the presence and nature of the primary documentation before the economic substance of transactions, which in practice usually leads to an overstatement of financial results. In addition, the landmark of tax accounting does not allow the devaluation of assets, while their real value, which is one of the main means of monitoring the effectiveness of placements owners. I.e. Kazakh accounting methods do not allow a shareholder to assess how effectively the leadership of money deposited, and a comparison with other companies. Simple declaration of advanced financial accounting and reporting principles, based on the unity of fixation and analysis of economic information in accounting, is not enough for their implementation in domestic practice.

REFERENCES

1. IFRS

2. RK Law "On Accounting and Financial Reporting" from 28.02.2007. Number 235.

3. RK Law "On taxes and other obligatory payments to the budget" from 13.12.2008 № 2235 (with amendments 01. 01. 2014)

4. Teplova T.V., Grigorieva T.I. Situational financial analysis scheme, tasks, cases: Proc. manual for schools. - Moscow: Publishing House. House HSE, 2006.