Today, Russian generally accepted accounting principles are reforming in accordance with the international financial reporting standards. At the same, time the international standards of financial reporting are also changing. These standards were formed and developed in an era of industrial production and there have been significant changes in the business environment, models and value creation process since they had been formed. The increasing complexity of production processes and economic transactions has led to additional disclosure requirements. New laws, standards and requirements forced changes. The volume of financial reporting has been increased, new sustainability reporting and management commentary has appeared. Despite the increase in the information supplied, it is still inadequate, fragmented and disconnected. Scandals involving transparency of financial reporting, in the wake of the financial crisis, make it necessary to rethink the principles of financial reporting formation.

In our opinion, multidirectional interests of financial reports users are a difficulty in the way of unified principles. For example, creditors would like to know realizable value of a company’s assets, whilst the owners of a company usually are interested in return on capital employed and in valuation of assets at cost. Therefore, the starting point of our research is the analysis of the history of financial reporting in Russia and abroad. Based on it, we conclude that the principles of accountability were developed based on information needs of users who provide limited resources.

For a long time, the financial capital was the most critical recourse. However, current business conditions indicate the increasing role of human, social and natural capitals. This raises the need to reflect their contribution to the financial performance of the company. The absence of this information leads to bias and it does not allow making economic decisions based on comprehensive analysis. The International Financial Reporting Standards contain the tools to reflect, for example, environmental policy with the help of provisions. The contribution of each type of capital in the company's value and the financial results of its operations, both in the short and long term, also must be reflected in the report. Therefore, a mechanism should be found to assess human, social and natural capitals. As well as the format of financial reporting should be created, that allows disclosing this information.

The new integrated reporting format is intended to develop guidelines that address these challenges. An Integrated Report aims to display a company’s stewardship not only of financial capital, but also of the other capitals, their interdependence and how they contribute to the value of the company. It also focuses on an ability to create and sustain value in the future, not on past financial performance and financial risk. Today’s reporting is often said to be too compliance orientated, reducing the scope for organizations to exercise an appropriate amount of judgment. While a certain level of compliance orientation is necessary to ensure consistency and enable comparison, Integrated Reporting offers a principles-based approach that drives greater focus on factors that are material to particular sectors and organizations. It permits an organization to disclose its unique situation in clear and understandable language. However, the large number of estimates and forecasts leads to the subjectivity of accounting data and the complexity of their inspection. In our opinion, the reported data should be cleaned as much as possible from subjective estimation and allow its users to interpret it according to their interests.

It should be noted that in Russia, the scarcest resource continues to be the financial capital and the main purpose of the transition to international standards is access to international financial markets. The contribution of other types of capital in the creation and stability of the value of the company on a regular basis is not tracked. The new format of financial reporting will help Russian companies to realize importance of all types of capital employed and assess their contribution to the company’s value. Considering sufficient amount of natural and human recourses in Russia, an integrated reporting model may increase investment appeal of the country.

Financial reporting is crucial element of business transactions. Making an investment decision always involves transaction cost. Globalization, complexity of business and financial structures constantly increase them. However, transparent financial reporting could sufficiently reduce them. At the same time disclosing all relevant information will allow companies to get fair market value of their shares. That will bring stability to financial markets, the importance of which was clearly showed in the last financial crises.