A Federal Law that increases administrative liability for violating the Russian accounting requirements (Federal Law No. 77-FZ, viewable here in Russian; the “Law”) came into force on 10 April 2016. The Law amends Article 15.11 of the Code on Administrative Offences (the “Code”). CMS first reported on the legislation when the bill was adopted at its first reading last year.

The new edition of the Code adds the acts listed below, which amount to gross violations of the Russian accounting requirements, as new separate administrative offences:

  • registering facts that did not occur in the economic life of an organisation, making fictitious or sham entries in accounting registers;
  • keeping parallel accounts (i.e. accounts other than those required by statute);
  • preparing accounts that are not based on the organisation’s accounting data or data contained in its other registers; and
  • failing to keep accounting documents that must be stored in accordance with the requirements specified by the Federal Law on accounting (on which we reported earlier).

The Law significantly increases the fines for officials in organisations. For repeat offences, such officials risk being disqualified from holding similar positions for a period of one to two years.

The officials liable under the new Law are the heads of organisations and their chief accountants (or any other person entrusted with an organisation’s bookkeeping), whose duties include organising bookkeeping and storing accounting documents. The heads of organisations should pay special attention to these new developments since, according to law enforcement practice, they are more often held liable than chief accountants.

The violations stipulated by Article 15.11 of the Code are generally detected by tax officials in the course of tax control measures. Based on their findings, the tax officials issue an act establishing administrative liability. In light of the tightening of administrative liability for these violations, the heads of organisations should ensure that their accounts are correctly kept and should also be particularly careful when communicating with the tax authorities during documentary and on-site tax audits.