RAS and IFRS: what the difference is and which to read

The difference between RAS and IFRS lies not in accuracy but in the intended reader and in the entity being accounted for. RAS describes a separate legal entity under formal rules and is written primarily for the state: the tax authority, the statistics service, the regulator. IFRS describes the economic group as a whole and is written for whoever provides the business with capital, which is why the substance of a transaction takes priority there over its legal form. The practical conclusion for an investor is brief: group profit and valuation multiples are taken from IFRS, while RAS is consulted when the dividend base is fixed in that standard or when IFRS statements for the issuer are simply not published. The different versions of the statements are convenient to compare in the financial reports section.

The perimeter: whose result you are actually reading

The main source of discrepancies is not the valuation method but the reporting boundary. The RAS statements of a parent company show its own operations; subsidiaries appear there as financial investments, and their result reaches the parent only through the dividends it receives. IFRS adds up the revenue, expenses and debts of all controlled companies, eliminating the intragroup turnover between them.

This produces the typical distortions. A holding company whose entire operating activity sits in its subsidiaries looks almost empty under RAS: revenue is minimal, and profit jumps around depending on whether the subsidiaries have decided to pass cash upstream. Conversely, a production company that carries the core assets on its books may report a profit under RAS where the group shows a loss under IFRS, because the loss-making segments and the debt servicing sit with other legal entities within the perimeter.

That is why the question "what is the company's profit" has no answer unless the standard is named. The correct question is this: the profit of which entity, for which period and under which standard.

Where the methods differ in substance

Even for the very same transactions, the standards produce different results.

Impairment. IFRS requires assets to be tested regularly against their recoverable amount, with the difference written off to expenses. The impairment mechanism in RAS is more limited, so the carrying amount of assets can stay above their real economic value for years.

Leases. IFRS recognises a right-of-use asset and the corresponding liability on the balance sheet, which increases both assets and debt and changes the structure of expenses. Under RAS a considerable part of leases stays off the balance sheet, and the debt burden looks lighter than it really is.

Financial investments and revaluation. IFRS more often requires fair value and reflects revaluation in profit or loss or in other comprehensive income. RAS relies on historical cost: the figure is more stable, but less connected to the current market.

Currency. A group with foreign assets records a translation difference when the statements of its subsidiaries are converted into the presentation currency; in separate statements under RAS this effect simply does not exist. What exactly this line item is, and why it does not mean a cash loss, is explained in the glossary entry.

The upshot: debt and equity under IFRS are usually presented more conservatively, profit is more volatile, and the picture is closer to the basis on which the business is actually valued.

Why a multiple has to be calculated deliberately

Any multiple is a fraction with a reported figure in the denominator. Put RAS there instead of IFRS and the value changes, although the company is the same. When you see 3,77 on the {{instrument:SBER}} page, it makes sense to understand which statements the profit was taken from and for which period: the last completed year or the trailing recent periods.

Dividends: here RAS still decides

Legally, dividends are paid out of the net profit of a specific legal entity, and that profit is calculated under RAS. The dividend policy, meanwhile, may refer to IFRS figures: group profit or free cash flow. A frequent and unpleasant situation follows: the group is profitable under IFRS, but the parent company has no profit under RAS, and so formally there is no source for the payout either.

So when assessing a future payout, you need to look not at one report but at a chain: the base set out in the policy, the actual figure in the corresponding statements, the decision of the board of directors and the outcome of the shareholders' meeting. The nearest announced payouts are {{dividend_calendar|limit=5}}; the history and parameters are collected in the dividends section, and the dates of board and shareholders' meetings are in the events calendar. It is also worth remembering that for preferred shares the procedure for calculating the payout is often written into the charter and tied to RAS profit; this distinction is covered in the article on ordinary and preferred shares.

Reading order

Step 1. Establish who is reporting: the parent company or the group. Step 2. Check whether the issuer has consolidated statements at all: the obligation to prepare them does not extend to everyone, and for some securities on the equity market only RAS is available. Step 3. Read the IFRS statements to understand the business: revenue by segment, debt including leases, impairments, revaluation items. Step 4. Open the parent company's RAS statements if the question concerns dividends. Step 5. Check the perimeter against the previous period: the sale or purchase of a subsidiary affects comparability more than any accounting method does.

What these standards do not show

Neither RAS nor IFRS says anything about the future, and neither discloses deals that have not been completed. Both standards describe the past, and they do so with a delay. They do not reflect the quality of management, the resilience of demand or regulatory risk. The statements show what happened and how it was recorded; why it happened is to be found in the accompanying disclosures, presentations and the news flow. Unfamiliar line items and terms are convenient to look up in the glossary.