| If your idea of purgatory is submitting accounts, you'll sympathize with Russian banks. The central bank requires them to submit reports daily, weekly, monthly, quarterly and yearly. Quantity doesn't necessarily equate with quality: western investors aren't particularly impressed with what they see and the Russians know it. "In the international market," says Igor Komarov, chief accountant at Inkombank, "our balance sheets are as incomprehensible as Chinese grammar." At face value there appear to be few problems: all the necessary figures, such as assets, liabilities, shareholder equity and profits, are reported. But the accounts make no attempt to evaluate a bank's financial situation. Everything is presented in bookkeeping form and follows, with some modifications, the Soviet system of preparing figures as a basis for calculating the tax bill. International institutional investors, rating agencies and analysts need more information than this. They have been pressing banks to produce additional annual reports prepared according to international accounting standards (IAS). Revalued figures produced on this basis show lower equity, asset and profit figures throughout the balance sheet. In the case of Inkombank, for example, its 1995 accounts under Russian accounting standards (RAS) report $308 million of shareholders equity; using IAS the figure is $100 million lower. |