Public Perception of the Role of Accounting in a Transition Economy: The Case of Russia

Abstract

This paper explores the perceived role of accounting in Russia, a country transitioning from a post-socialist to a market economy. A survey was conducted to examine the public views on (1) the main functions of accounting, (2) the primary role of users of financial statements, (3) the level of demand for financial information, (4) the perceived financial statements’ reliability, and (5) the importance of reliable financial information. Our results show that the Russian accounting system can be classified as macro-user oriented. Although accounting is perceived to serve chiefly management needs, the main purposes of financial reporting are perceived to be tax calculation and compliance with government reporting requirements, and the primary users of financial statements are supposed to be business owners and government. The public feels that financial statements lack reliability, and companies manage earnings downwards. The study identifies potential reasons for misreporting. The financial reporting reliability is perceived to have greater impact on the country’s economy than on the person.

Keywords: financial reporting, Russia, transition economy, opinion survey, performance evaluation, people perceptions, society, accounting

JEL Classification: M4, P3