The Standard sets the obligation to store not only accounting documents but also databases with accounting registers (books) on the territory of the Russian Federation.
The only exception is made for organizations that perform their business activities outside of Russia and are required to store accounting documents in the country of their operation pursuant to the laws or rules of that country.
The requirement of the Standard will mainly affect those companies that maintain general corporate accounts in SAP, Oracle and other foreign systems located abroad.
The Russian Ministry of Finance briefly explained (Clause 9(в) of Information Statement No. IS-uchet-33) that the requirement of the Standard ‘does not mean that documents and data cannot be in parallel located outside the Russian Federation in particular cases (for example, when the legislation of the country where the company’s activities outside the Russian Federation are carried out requires that accounting documents should be stored in that country)’, but it neither provided an exhaustive list of the ‘particular cases’ in question, nor said how to ensure the parallel storage of documents and data.
At present, the following questions still require answers:
- What kind of information and for which periods is enough to be stored in accounting databases in the Russian Federation?
- What format should the accounting database have?
- What will be the liability for the failure to comply with the requirement to locate accounting databases on the territory of the Russian Federation?
- Who is to monitor the compliance with the new Federal Accounting Standard requirement and how it will be done?
Experts suggest different solutions to the problem of accounting databases location on the territory of the Russian Federation:
a) Making a copy of the accounting database in the same software programme in which a company/a Group of Companies maintains its accounts (for example, in SAP), and saving this copy on servers in Russia. If the company itself does not have enough capacity to store large volumes of data, then special service companies can provide their capacities.
b) Download of the accounting database from the corporate accounting system to a local accounting system (for example, in 1C). Modern technologies make it possible to automate such a download, but the transfer, however, may distort the balances and requires some additional settings, comparison (alignment) of analytics for almost every account, and additional controls.
c) Reorganisation of accounting processes, which implies accounting databases maintaining in the Russian Federation (i. e. using Russian local accounting software) and regular download of information to the corporate accounting system.
d) Some companies take into account the option of keeping accounting databases as downloads to Excel files (and storing such downloaded Excel files in Russia).
We do not recommend keeping parallel accounting databases in a form of downloading to Excel because:
- in practice, it may be time consuming to arrange the downloading with the required frequency;
- data volumes may exceed the maximum volumes allowed to be saved in Excel;
- information search in Excel differs significantly from searching in a full-fledged database;
- unlike a fully-featured accounting database, Excel downloads cannot provide automatic grouping/ungrouping or correlation between registers with different analytics;
- definitions in the legislation differ and do not provide for unambiguous criteria for the database, therefore, there is a risk that downloads to Excel may not be recognised as a database.
Fines: The Standard itself does not impose any fines for non-compliance.
Article 15.11 of the Administrative Offences Code (Gross Violation of Accounting Requirements) sets the following administrative fines for violation of the requirements regarding accounting registers: 5–10 thousand roubles and 10–20 thousand roubles in the event of a repeated violation, or disqualification for 1–2 years. However, in our opinion, there is no definition relevant to this case in the list of gross violations.
Paragraph 2 of Art. 13.25 of the Administrative Offences Code (Failure to Meet the Legislative Requirements for Storing Documents and Information Contained in Information Systems) requires officials to pay an administrative fine of 2,500–5,000 roubles, and 200–300 thousand roubles for legal entities. These fines are imposed for a ‘failure by a limited (additional) liability company or a unitary enterprise to perform its duty to store documents that are specified by the legislation on limited liability companies, on state and municipal unitary enterprises and by legal regulations adopted in accordance therewith, and the storage of which is mandatory, as well as a failure to comply with the established procedure and terms for storing such documents’. We consider the application of this rule to violations of Federal Accounting Standard 27/2021 to be disputable, although the possibility of an attempt to charge a fine under this article cannot be excluded.
We kindly recommend that you choose a method to locate accounting databases in the Russian Federation now and start the relevant process. A combined option is acceptable: for example, copies of databases can be made for the previous periods and, for the next periods, the data may be initially entered into the local database in the Russian Federation and then transferred to the general corporate system.
The method chosen should be stipulated in the Accounting Policy.
