Auditors will classify information about employees due to sanctions risks
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Against the backdrop of fears of imposing sanctions, participants in the audit market are asking regulators to allow not to disclose the personal data of signatories of reports of sanctioned organizations. In their opinion, this will protect the market and will allow further auditing of companies from friendly countries. Lawyers see no obstacles to the implementation of the initiative, but warn of serious risks for clients.
As it became known to Kommersant, in mid-May, the Self-Regulatory Organization of Auditors (SRO) Association Sodruzhestvo sent a letter to the Central Bank and the Ministry of Finance with a request to classify the names of the signatories of the audit report of the consolidated financial statements as sensitive information and not disclose them, limiting themselves to indicating the audit company.
We are talking about the reporting of sub-sanctioned companies and concerns the head of the audit organization or a person authorized by him and the head of the audit, follows from the document. According to market participants, regulators are studying the proposal. The Ministry of Finance and the Central Bank did not respond to requests.
Ilya Zharsky, managing partner of the Veta expert group, believes that the initiative arose in connection with the desire to “reinsure the risks”, since by working with sub-sanctioned companies, auditors run the risk of being included in future sanctions lists of individuals.
The Central Bank has already introduced similar concessions for credit institutions. Thus, the regulator allowed banks not to disclose in their financial statements information about members of management bodies and other officials of a credit institution and structures controlled by it (see “Kommersant” dated March 18, 2022).
Auditors believe that such a move will help protect their business. According to Igor Buyan, a partner in the practice of audit services of the B1 group of companies, if the auditors fall under sanctions, this is fraught with the freezing of all assets abroad, in particular real estate and bank accounts, and difficulties in obtaining a visa. At the same time, due to sanctions, the auditor may be deprived of CPA and ACCA certificates (international degrees of qualification of a financial officer.— “b”) or suspend their operation, which is often necessary to provide services not only to clients from Western jurisdictions, but also to companies located in friendly countries, he adds. In the largest audit organizations, including the former Russian offices of the Big Four, Kommersant did not answer.
At the same time, lawyers believe that the initiative may carry serious risks for clients.
The publication of the names of persons who conduct the audit is one way to control the existence of a conflict of interest, says Dmitry Kletochkin, partner at the law firm Rustam Kurmaev and Partners. The absence of such data in the conclusions can give rise to abuse by auditors, which contradicts the entire concept of auditing, adds Ilya Zharsky.
However, according to Ru.Courts partner Ilya Kavinsky, taking into account the certification of audit activities in general and the accepted reporting within companies, in the event of disputes in which the reporting and the audit report can be evidence, it will not be difficult to establish who specifically conducted the audit.
Director General of Univers-Audit Dmitry Limarenko emphasizes that the refusal to disclose information does not relieve the auditor of responsibility. If he makes a mistake during the audit, the SRO and the treasury will be able to easily determine the signatory of the conclusion based on the internal documents of the audit organization, he assures.
Formally, there are no obstacles to making appropriate amendments, lawyers admit.
It is easy to change the legislation (a whole set of laws) so that the full name of the head of the audit organization can be hidden, Mr. Kletochkin notes.
According to Mr. Zharsky, in order to implement the initiative, amendments to Federal Law 307 “On Auditing” are needed, namely to Art. 6 “Audit report”, clause 3.2, which says: “The audit report is signed by the head of the audit organization or a person authorized by him and the head of the audit conducted, indicating the surnames, names and patronymics, as well as the entry numbers in the register of auditors and JSC.”
Nevertheless, the managing partner of KSK GROUP, Elena Mezhueva, warns that such decisions will run counter to the position on strengthening the personal responsibility of the auditor, which is written in the order of the Ministry of Finance on the directions for the development of audit activities until 2024.
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