Vladimir Kuznetsov, at Russia Blog, writes about the rise of home-grown auditing firms in Russia:
In our day-to-day operations our clients find it very practical to use a Russian firm, rather then spend more money to hire one of the Big Four. I have been working for a number of years with a couple of these Russian firms (e.g. BKR-Interkom-Audit) which do an excellent job and satisfy all the international auditing standards.
My guess is that we are now witnessing a gradual shift from the Big Four foreign accounting firms to domestic auditors. As one Russian business owner recently complained to me: “Well I asked one of the big guys [to do our auditing], and we need to stand in line for about three months, pay a lot and them wait another three months for the results. This is no good.”
In the light of the recent investigations of PricewaterhouseCoopers activities in Russia, I’m not all that surprised. I suspect that the Big Four firms activities in Russia for the forseeable future will be restricted to the larger firms who, with an international outlook, need the international credibility that a Big Four audit provides.
Vladimir Kuznetsov, by the way, writes the “Equity Financing in Russia” blog.
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{ 4 comments }
Tim Newman 03.13.07 at 10:01 pm
The problem I have found with using somebody like PWC is that their advice seems to consist of little more than reading the tax code back to you.
For instance, there is a piece of tax legislation here which by law you must follow, but most smaller foreign companies don’t bother to do so. Everybody knows the little trick they use to get round it, it is an open secret, blatantly obvious. The Russian tax authorities, so far, turn a blind eye (although this is slowly changing).
PWC’s advice is, probably correctly, to pay the tax and not use the little trick - even though it is easy to get away with it. When asked whether this particular part of the tax code is ever enforced, they will simply advise that you must adhere to all parts of the tax laws. In practice, nobody does. Far better to use a local company who pulls you to one side, lowers his voice, and says “I never told you this, but…”
Doing business in Russia is murky. PWC’s black and white world often doesn’t help you much.
Blair Sheridan 03.14.07 at 3:39 am
Tim,
What you say is, no doubt, true, as I have found similar cases in Ukraine.
Another consideration in that, in my experience, the Big Four audits tend to cost about 4 times as much as one run by a local company. For the most part, they draw their auditors from the same pool, too, so you’re essentially paying for oversight by an overstretched Western manager (who may not be a genius,) and for the “prestige.” I used a local company, the work of which was found by our London internal auditors to have been of a very good standard.
Blair
La Russophobe 03.14.07 at 4:13 pm
Gosh, what an outrage! PWC won’t give you advice on how to break the law! What a pack of incompetent foreigners!
Yeesh. No wonder Russia is such a mess.
Heribert Schindler 03.14.07 at 8:24 pm
The job of such a company is not to advise anybody how to break the law but to advice how far the law can be bent without breaking it. This is what consulting and auditing is all about.
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