In June, more than a dozen decisions were made to exclude audit companies from the register of SROs or suspend their activities

For the first time in the history of the Russian audit market, the Federal Treasury (FC) may exclude a player from the top 20 from a self-regulatory organization (SRO). Another large company will have to suspend operations for two months. According to market participants, this is fraught with loss of reputation and customers. They consider possible violations of 115-FZ as one of the reasons for the measures.

In June, the FC and its department for the city of Moscow made more than a dozen decisions on the exclusion of audit companies from the register of SROs or the suspension of their activities, follows from their protocols. In particular, the Moscow Department of the Treasury recommended excluding one of the major players – KSK Audit (according to RAEX, it ranks 14th in terms of revenue for 2022). “Finance Group” (ranks 17th) under the order of the Treasury must suspend activities for 60 days.

For comparison, in 2021, the Treasury and its Moscow branch issued a total of only ten decisions to exclude or suspend activities. There were no such decisions in 2022. Igor Buyan, a partner in the practice of audit services of the B1 group of companies, believes that the increase in audits is due to changes in the system.

Previously, the Treasury was required to audit each audit firm at least once every three years. During the pandemic, checks ceased and no disciplinary action could be taken. At the same time, during the years of the pandemic, the law changed, according to which the Treasury is obliged to inspect organizations with increased risk (inspecting publicly significant organizations) every year, he explains.

At the same time, the auditors say that the top-20 company is excluded from the SRO for the first time in the Russian audit market; the last time a major player was suspended was a few years ago.

According to the managing partner of KSK-Group, Elena Mezhuyeva, the protocol on exclusion was published by the Moscow department, which can only recommend this or that measure, the final decision remains with the Federal Treasury, which often reduces the penalty. In the event of an exception, the company plans to challenge the decision, she adds. Andrei Zvezdin, CEO of Finance Group, told Kommersant that he does not plan to challenge the decision.

Market participants believe that exclusions and suspensions of companies’ activities may be, in particular, related to violations of anti-money laundering legislation (115-FZ). “The Treasury undertook the heavy burden of checking the 115-FZ, nevertheless, the auditors did not understand what role we play in the “anti-money laundering” law,” says Pacioli CEO Olga Komissarova. Transactions are recorded in accounting some time after they actually occurred. In fact, an audit is a confirmation of this accounting. The FC did not answer Kommersant’s questions.

Ms. Mezhueva confirms that the recommendation to exclude the company from the SRO is due to discrepancies in the interpretations of the 115-FZ of the professional community and the Treasury. Client transactions that go abroad to unfriendly countries, such as Cyprus, are treated by the Treasury as suspicious, and auditors must report them to Rosfinmonitoring.

Meanwhile, the suspension of activities and exclusion from the SRO are fraught with serious consequences for the auditor. If a company suspends its activities, then it cannot enter into new contracts, but it can work according to the old ones, while an exception implies a complete stop, says Mr. Buyan. The suspension of activities may fall on the period of the contractual campaign, then the auditor will not be able to participate in tenders and sign contracts, adds Sergey Nikiforov, general director of FBK Povolzhye.

Ms. Komissarova warns that auditors’ expenses for successfully passing inspections will indeed increase: “For example, we are seriously considering adding additional units to the staff that will be responsible for interaction with regulatory authorities: the Federal Treasury, the Bank of Russia and SROs. And this, of course, will fall into our cost price.

Julia Poslavskaya