Auditors do not hold on to clients – Newspaper Kommersant No. 197 (7398) dated 10/24/2022
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Large auditors want to reduce the number of clients subject to statutory audits. As a result, according to market participants, the demand for unscrupulous services, dumping and excessive regulatory pressure will decrease. But the business of small companies, primarily regional ones, will suffer.
Last week, as part of the development of an “action plan for the concept of developing auditing activities, the Ministry of Finance began to collect market opinions” on improving the scope of statutory auditing. The collection will continue until the end of November.
As a survey of market participants has shown, major auditors are in favor of reducing the mandatory audit with the abolition of cost criteria. So, according to the general director of Rusaudit Evgeny Samoilov, this is the fastest and most practical solution. Sergey Nikiforov, General Director of FBK Povolzhye, adds that in the new economic realities, cost criteria become an unnecessary burden for domestic business. An interlocutor from among the auditors adds that “the provision of low-quality audit services creates regulatory risks for the industry and attracts excessive attention from the Central Bank.”
Cost Criteria — financial indicators of the company, on which the need to conduct a mandatory audit depends. These include annual income (more than 800 million rubles) and assets (from 400 million rubles).
Mandatory audit is an annual audit of the accounting (financial) statements. It is subject to credit and insurance organizations (COs and COs), mutual insurance companies, professional participants in the securities market, funds, as well as companies whose annual income exceeds 800 million rubles, etc.
According to Mr. Samoilov, of the current clients subject to statutory audit requirements, up to 50% of the companies acquiring audit for show account, which is 15-20% of the market with a total volume of 30 billion rubles. He explains that cost criteria today lead to a situation where audits are not needed by some companies, as a result of which such clients pretend to order an audit, and auditors pretend that they are conducting it.
Judging by the average price of the audit report of SRO members, the share of companies that imitate the provision of services is now about 50-60% of the market, Mr. Samoilov points out. “This puts pressure on prices in the market as a whole,” he explains. “For companies that do not need an audit, it is easier to do it formally for 100-200 thousand rubles, while the price for a quality audit starts on average from 500 thousand . rub.”. Svetlana Romanova, President of Pacioli Auditing Company, clarifies that the cost of an audit is the number of hours the auditor works multiplied by the rate, which cannot be less than 3,000 rubles. in hour. According to her, such work takes at least a week for a group of auditors, if all procedures and standards are followed.
Market participants believe that the reduction of companies subject to mandatory audit will have a positive impact on the market. Mr. Samoilov notes that if the cost criteria are canceled, artificial demand will disappear and a significant number of companies that imitate audit services will leave, and companies that are interested in developing the market will remain.
Sergey Nikiforov adds that such a change could lead to higher quality and higher market margins. “All this will create conditions for the development of those companies that can ensure their competitiveness, as well as for overcoming the most severe personnel crisis in the audit market,” he continues. As a result, the market for the remaining audit companies will demand the experience, necessary competencies and qualifications of auditors, which requires adequate payment for both the services of audit organizations and the work of their employees, the expert sums up.
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