The register of auditors will be reduced – Newspaper Kommersant No. 35 (7480) dated 03/01/2023

The number of auditors providing services to public interest organizations may be significantly reduced. By tenders for the election of auditors next year, they will be required to enter the profile registers of the Federal Treasury or the Central Bank. Market participants explain that some companies do not meet the criteria or may refuse to be audited at all. Those who get on the registers will expand the business, but it will be difficult to increase its profitability.

As a Kommersant survey of market participants showed, the number of companies auditing publicly significant organizations (PGOs), including those in the financial market (OZOFR), may seriously decrease in the coming year. In 2024, only auditors included in the relevant registers of the Federal Treasury and the Bank of Russia will be able to audit the accounts of these organizations. Auditing companies from the Treasury register will be able to provide services to public corporations, state corporations, organizations with a state share of at least 25% and other legal entities required to disclose reports. Companies from the register of the Central Bank will have the right to audit banks, insurance organizations and other financial organizations, as well as organizations whose securities are admitted to organized trading.

Auditing companies will need to get into the registers in advance in order to comply with legal requirements at ongoing tenders. Now OZO audit about 1 thousand companies, OZOFR – 250 companies. According to market participants, taking into account the requirements for getting into the registries – at least three years of experience with public organizations and the number of full-time employees of at least five people for the Treasury register and at least 12 people for the Central Bank register – their number can be reduced to 200 and 40, respectively organizations.

At the same time, market participants note, small companies are losing interest in the audit business. Vladislav Karastelin, managing partner of Dokar-Consulting, explains that for many companies, auditing from the main activity is becoming more of an accompanying service, more and more players rely on consulting.

In particular, according to RAEKS Analytics, in 2021 audit revenues as a whole accounted for 35% (about 29 billion rubles), and from consulting – 65% (54 billion rubles). A year earlier, the ratio was in favor of the audit – 59% (about 24 billion rubles) against 41% (17 billion rubles). In addition, in 2022, the number of audit companies decreased by almost a third, to 2.4 thousand, including against the background of the entry into force of the requirements of the law “On Auditing” to have at least three full-time auditors (see “Kommersant” dated 13 July 2022). Pacioli CEO Olga Komissarova clarifies that the regulatory burden is increasing, in particular, the requirements from the Federal Treasury, Rosfinmonitoring and SROs are increasing, respectively, and labor costs are increasing, and the prices for audit services are decreasing, which makes companies think.

At the same time, according to the Ministry of Finance, at the end of 2021, the total number of socially significant organizations reached almost 3 thousand. According to Olga Nosova, the head of the SRO AAS, the number of socially significant organizations is likely to remain at about the same level, since the Russian economy is stable and there are no prerequisites to close businesses.

Under such conditions, market participants that are included in the registers will be able to expand their business. Independent expert Andrei Barkhota explains that the segment may become more profitable for them due to the flow of clients who were previously audited by companies that were not included in the register. However, market participants specify, companies from the registry will have advantages in the portfolio of audit orders, but their profitability will also depend on other parameters, including cost management.

According to Kommersant’s interlocutor in the audit market, there are two factors that can hinder the growth of profitability – changing the criteria for mandatory audits can reduce the number of clients, in addition, the government promises to introduce a tender for any audit, in which case companies can do dumping. Rusaudit CEO Evgeny Samoilov adds that a smaller number of players is easier to control, and the presence of checks by the Treasury and the Bank of Russia is an additional burden on the business, so the result in the form of additional profit is not guaranteed.

Julia Poslavskaya