• Register
Return to: Home > News > Regulation > Accounting firms in political crossfire in Russia

Accounting firms in political crossfire in Russia

The US and EU-imposed sanctions on Russia are having a dramatic effect on the country's professional services industry, according to the International Accounting Bulletin's Russia Survey.

One year on from the first protests in Kiev that sparked the Ukraine crisis, trade and import restrictions remain in place. While the banking, oil and insurance industries were among the hardest-hit industries, the country's accounting industry is also struggling.

Firstly, the number of foreign businesses closing shop and moving back West has increased competition for business among firms.

Sergey Kharitonov, managing partner of Marillion, a Krestion International member firm, says such developments have changed the rules of the game. As companies depart the market, he explains, newly incoming Russian managers are keen to appoint domestic auditors, rather than renew existing contracts with foreign-based firm.

Skittishness among clients is confirmed by others in the mid-tier. Victoria Salamatina, head of audit and international liaison partner at HLB International firm Energy Consulting says: "Many clients are moving among audit firms, and mid-tier audit companies have been starting to provide audit services to former Big Four clients."

A threat to non-domestic players in the market, the trend is compounded by a spate of regulation aimed at limiting foreign influence in the Russian accountancy industry.

A recommendation was issued on 6 June by the Duma Financial Markets Committee, advising the lower Chamber of Parliament to introduce a limit the participation of firms "controlled or significantly influenced" by foreign entities or people.

Such regulation could have a deep impact on the standing of the Big Four in the Russian market, as they stand to not see large government contracts renewed.

"It's certainly something we've been keeping an eye on," said PwC Russia managing partner David Gray. "Until we see the legislation in detail and it is actually passed," adds Gray, it will be difficult to predict the impact."

 

Related articles:

Russia survey: Shifting landscape as tensions mount

Top Content

    MSI joins AGN and DFK in Global Connect

    A year after AGN International and DFK International launched Global Connect, multi-disciplinary association MSI has joined the group.

    read more

    Views from the Eurozone

    With Brexit looming, populist governments gaining footholds in a number of countries and movements such as the Yellow Jacket protests in France, 2018 was anything but a quite year for the eurozone. Here leaders report to the IAB on their markets.

    read more

    Eastern promise and how to find it

    With China rising as a global power, Jonathan Minter spoke with ShineWing’s Zhang Ke and Marco Carlei at the World Congress of Accountants 2018 in Sydney, to discuss the cultural challenges that occur when Chinese networks look beyond their border, and the dividends available for those who overcome them.

    read more

    The UK: uncertain waves rule Britannia

    The UK’s accountancy profession is currently in a period of much uncertainty. The Competition and Markets Authority (CMA) has released its review into the listed audit market which could cause the biggest shake-up the profession has seen in years, the Kingman Review has described the Financial Reporting Council (FRC) as not being fit for purpose and called for it to be replaced. All the while the country remains in a deadlock on Brexit negotiations.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.