As a consequence of a law passed by the Russian government last December, and currently being implemented, Russia’s self-regulated audit institutes will have to merge creating some uncertainties with regard to the firms’ audit licences.
The new law will take effect on 1 January 2017 and sets new membership requirements for self-regulated Russian audit institutes. In order to continue operating, these institutes will need to have 10,000 members or 2,000 member firms to continue to operate.
There are currently five self-regulated audit institutes in Russia and due to the number of firms and auditors in the country they will have to merge to meet the requirements.
"These proposals don’t seem to make much sense," FinExpertiza partner Ilgiz Baymuratov said. "Most firms are still in a wait-and-see attitude."
Morison International’s member firm Joint-Stock Company 2K managing partner Tamara Kasyanova said the requirements are excessive and in a way favour a monopoly type of system.
"I think that five institutes is the optimum number, and if we want to decrease the number of these organisations we shouldn’t do it by the membership headcount, but by the quality of the services they provide," she added.
Sergey Kharitonov managing partner of Kreston’s member firm Marillion Audit Company lamented the uncertainty linked with the change of regulation, as audit firms need to be members of one of these institutes in order to have an audit licence.
He took the example of his firm who is a member of the Audit Chamber of Russia. "So far this institute does not have the the required quantity of members," he said. "The question is whether those organisations will still exist and for us there is a risk in terms of our rights to conduct audits."
International Accounting Bulletin understands that so far only the Moscow Chamber of Auditors and the Russian Collegium of Auditors have taken steps to merge together next year.
For more updates on Russia, read our latest country survey: Business as usual as sanctions fail to bite