By Thomas Titsch, Director ERP
Western companies should be aware of Russian accounting aspects when implementing ERP. In the last, the Russian understanding of enterprise planning was accountant driven and to some extent this remains. In order to understand Russian aspects in ERP implementations, you need to look at the aspects of the accounting approach.
Where do the different approaches come from? At this point, it makes sense to look back in history for a moment. In the pre-computer era, the Russians invented the concept of account correspondence. That means that the accounting entries were made into chessboard arrangements like in the picture below.
As an example, an accounts payable invoice would be represented by 2 numbers, 100 RUB net value of purchased goods plus 18 RUB VAT (the light blue boxes in the picture). Accordingly, the accounting entry would look like this:
|Account Debit||Account Credit||Amount|
|GR/IR Clearing (15)||A/P (60)||100|
|VAT (19)||A/P (60)||18|
This approach actually has some advantages for analysis and error search. In this chessboard arrangement, it is easy to see the relationships between the accounts and you would immediately see incorrect postings, e.g. VAT against Material.
Russian Accounting and ERP systems, e.g. 1C, automated this particular approach and thus have a different internal data structure from SAP R/3.
Now, this approach also has some implications:
- When reversing a wrong accounting entry, you need either to reverse the postings or you should be able to just delete an entry; otherwise, the debit and/or credit side of an account would be overstated/understated and all the reports build on that principle would not work. Actually, Russian accountants avoid reversals wherever possible.
- Accountants are very used to searching for errors
by using account correspondence as a tool.
- It also leads to some common practices unusual
for Western accounting, e.g. posting of revenue
as gross amounts with subsequent correction
- Using clearing accounts for segregation of
duties (e.g. bank clearing account) is not really a
- The data structure in SAP and 1C is different.
So, a lot of requirements you will receive from the accountants during the analysis phase of your implementation project have their root cause in this accounting approach and in the desire to
use account correspondence for reconciliation purposes.
But even without account correspondence, accounting in Russia is way more formal than in the West. As an example, even minor purchases like pencils have to be taken on the balance sheet and can be expensed only after use. When purchasing merchandise, all connected costs like transport services, customs duties have to be put to the balance sheet and can be put to cost of goods sold only after the merchandise has actually been sold (in other words you cannot really use standard pricing for merchandise).
There are many more examples like this; for those who want to go deeper into the details, SCHNEIDER GROUP has published the Brochure “Accounting in Russia: The 10 most common Accounting Transactions”.
There are also some specific Russian features in logistics handling that are discussed on the following pages, e.g. the handling of the customs declaration reference, pre-defined print forms for the VAT-invoice and delivery note (TORG-12), etc.
From a technical point of view, both 1C and SAP come with solutions to the specific Russian features. Due to its focus on companies with international business, SAP might require the according system settings and tests, where 1C in most of the cases comes with ready-to-go solutions. The important thing to know is: what is the legal requirement, what is common practice and what
is just nice to have.
We at SCHNEIDER GROUP consult and provide our international clients with the back office services they need to expand their business into or within Russia, Kazakhstan, Belarus, Ukraine, Poland and Germany. Our services include accounting outsourcing, tax consulting, import, EPR systems and support in legal matters. To increase their efficiency and profit, we implement and develop modern technology and constantly improve processes and workflows. We have been utilising the very solutions we provide for over a decade among our 500 experts.