Financial reporting considerations related to the Russia-Ukraine War

  • IFRS - Deloitte Image

Mar 17, 2022

The geopolitical situation in Eastern Europe intensified on February 24, 2022, with Russia’s invasion of Ukraine. The war between the two countries continues to evolve as military activity proceeds and additional sanctions are imposed. In addition to the human toll and impact of the events on entities that have operations in Russia, Ukraine, or neighboring countries (e.g. Belarus) or that conduct business with their counterparties, the war is increasingly affecting economic and global financial markets and exacerbating ongoing economic challenges, including issues such as rising inflation and global supply-chain disruption.

Because of its broader impact on these macroeconomic conditions, many entities globally may need to consider the effect of the war on certain accounting and financial reporting matters. The degree to which entities are or will be affected by them largely depends on the nature and duration of uncertain and unpredictable events, such as further military action, additional sanctions, and reactions to ongoing developments by global financial markets.

Political events and sanctions are continually changing and differ across the globe. Whilst this alert does not address such activities specifically, it is intended to raise awareness of some of the key impacts of the Russia-Ukraine war that entities need to consider. These include:

  • Interruptions or stoppage of production in affected areas and neighboring countries.
  • Damage or loss of inventories and other assets.
  • Closure of roads and facilities in affected areas.
  • Supply-chain and travel disruptions in Eastern Europe.
  • Volatility in commodity prices and currencies.
  • Disruption in banking systems and capital markets.
  • Reductions in sales and earnings of business in affected areas.
  • Increased costs and expenditures.
  • Cyberattacks.

Review our Global firm's IFRS in Focus — Financial reporting considerations related to the Russia-Ukraine War.

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