Analyzing the financial statements of foreign companies is a task that often falls on managers of the financial department, or is performed by external financial consultants. This obligation is often assigned to managers or sales department who directly cooperate with foreign counterparties.

It can be difficult to understand financial indicators and understand what they indicate without special training. But with the help of a simple and affordable technique, you can quickly assess the financial condition of a foreign partner.

In our Newsletter we will tell you about key indicators containing in IFRS financial statements, their meaning and using for initial analysis of the counterparty.

IFRS is the International Financial Reporting Standards (IFRS). IFRS allows companies to keep their accounting in a language understandable to international investors. In other words, it is a "single language" for the financial statements of companies around the world.

Previously, each country had its own standards, for example, the financial reports of French companies were completely different from those of organizations from Japan. This created difficulties for investors and counterparties, as it was hard to compare data and assess the financial condition of the company. IFRS was developed to simplify this process by standardizing the reporting of financial information.

Today, companies that operate in international markets or attract foreign investment are required to report under IFRS. This standard is also important for Russian companies. It allows you to attract capital from foreign markets or conclude transactions with international partners.

IFRS reporting consists of the following forms:

Each of these forms answers different questions about the company's activities, and together they make an overall view of the financial condition.

To get an overview of the financial condition of the company, it is enough to consider several key indicators, and identify negative and positive factors.

During the analysis of key indicators, negative and positive factors in the company's activities should be identified. This method will help you quickly assess the financial condition of the company.

The negative factors may include:

Positive factors include:

If negative factors are dominant, it is necessary to refuse to cooperate or conduct prepayment transactions and vice versa.

Using this express technique, you can get an initial picture of the financial condition of a foreign counterparty in a few minutes.

What if a foreign company does not report according to international standards and conducts accounting only in accordance with national requirements?

This express method allows you to assess the financial condition of the company, regardless of the applicable national standard.

Obviously, the correlation of lines between IFRS and national standards of financial accounts (for example, RAS in Russia, HGB in Germany, CAS in China or GAAP in the USA) may vary depending on the specific standard, but all requirements have common comparable positions. Comparable positions include key financial indicators such as:

By analyzing and combining these indicators, you can determine the financial condition of the future foreign partner using the express method.

The Information and Analytical System Globas allows you to conduct an in-depth check of the financial condition of a foreign counterparty, identify a temporary loss of solvency and conduct broad analytics on all forms of financial accounts.

Financial accounts of international companies are placed in accordance with the national standard, i.e. the territorial belonging of the organization is taken into account. In addition, IFRS financial statements are available for companies with international economic relations.

A potential foreign partner can be checked offline and online. Basic information is available online, depending on the primary data source. Offline reports contains expanded information due to the manual work of the expert. The report can include additional information on affiliated persons, litigation in the Russian Federation, enforcement proceedings in the Russian Federation, certificates and declarations received in Russia and check for entry into the sanctions lists of Russia, the USA, EU, Great Britain and other countries.

In the recent years, the global economy has been a subject to a number of sanctions restrictions that have made international trade more difficult for many companies. One of the key elements of sanctions policy is commodity sanctions – bans or restrictions on the export and import of certain categories of goods. These measures can be imposed both by the certain states and international organizations. To avoid financial and reputational risks, all participants of the supply chain are obliged to check goods for compliance with sanctions lists.

Commodity sanctions are measures aimed at restricting the circulation of specific goods among countries or economic entities that are subjects to sanctions. Such measures may be introduced for foreign policy purposes to put pressure on certain countries or companies, as well as to prevent violations of international norms, for example in the area of security or human rights.

Commodity sanctions often affect strategically important categories of goods, including:

Sanctions may include either a complete ban on transactions with certain goods or the introduction of quotas or licenses for their export or import. Violation of these restrictions may result in serious consequences, such as fines, accounts blocking, cargo delays at customs, additional logistics costs, secondary sanctions, seizure of products, and even administrative or criminal prosecution.

Modern sanctions regimes that restrict trade in certain goods are an important instrument of international policy. The main initiators and beneficiaries of such measures are the United States, the European Union and Great Britain. Along with them, China, the Republic of Korea, Canada, Australia and other countries maintain their own systems of export control and sanctions restrictions. These measures are regulated by national laws.

In response to external sanctions, Russia introduced its own special economic measures (SEM), including a ban on the import of certain categories of goods from countries supporting sanctions and restrictions on the export of strategically important resources.

One of the key tools for adapting to sanctions restrictions has become parallel import, which allows goods to be imported without the consent of the copyright holder, bypassing sanctions barriers. This mechanism helps to fill the gap in products on the domestic market, maintaining economic stability in the context of global trade restrictions.

Commodity sanctions can seriously affect business processes:

It is extremely important for business to promptly monitor changes in the sanctions lists and avoid transactions that may violate sanctions restrictions. However, performing this task manually is associated with a number of difficulties.

Legislation on commodity sanctions is complex and varied. The analysis of sanctioned goods is often labor-intensive and requires significant time resources, since there are no uniform sources, classifiers and standards. For example, in the United States, commodity restrictions can be published both in the text of laws without indicating product codes, and in separate appendices to regulations specifying product codes and names. In other countries, like Japan, sanctions may be published exclusively in national languages.

When checking goods for sanctions, companies face difficulties related to:

All this makes the process of monitoring sanctions extremely complex and requires significant resources.

All necessary data is collected and structured in a single space in Globas with Sanctions Compliance module. This allows companies to promptly check goods and counterparties for sanctions restrictions, avoiding potential risks and simplifying compliance procedures when conducting foreign economic activities.

For companies engaged in foreign economic activity, it is especially important to have an IT solution for checking counterparties and goods for compliance with sanctions requirements.

Sanctions Compliance, Globas module, offers an effective solution that allows to minimize risks when making international transactions.

Globas contains the world's largest database of sanctioned goods - both among participants in the information market in the Russian Federation and abroad.

We analyzed hundreds of sanctions and counter-sanctions documents from a dozen countries: Russia, the USA, the European Union, Great Britain, Switzerland, etc.; translated them into Russian; highlighted the most important things and presented information in a concise and convenient form.

Sanctioned Goods section will help to speed up the verification of export-import restrictions and save you from having to manually parse through Resolutions and Decrees.

Globas solution differs fundamentally by analysis of a wide range of sources and the maximum list of countries that impose sanctions and counter-sanctions. The search is conducted not only by goods and services, but also by technical descriptions of chemical elements, and the search result is presented in a structured and concise form. The list of sanctioned goods is updated promptly as the lists in the primary sources are updated.

Checking for commodities sanctions is available in Globas for users of Sanctions Compliance. The module allows to check not only goods, but also Russian and foreign counterparties, individuals, as well as water and air transport according to the consolidated sanctions list, including the 50% Rule.

We also offer flexible API integration solutions to suit your business and unique audit requirements, with the ability to customize queries to meet your individual needs.