Lack of transparency at top of
Russia’s auditing profession

The Russian accounting industry is young and growing
quickly, and its upper echelons appear to lack

In the inaugural IAB Russia survey, the
PricewaterhouseCoopers member firm (PwC) was alone among the Big
Four in disclosing fee income and an estimate of staff numbers.
Senior industry figures who spoke to IAB said this was not
unusual. They agreed that PwC was the largest of the Big Four, but
could hazard only rough guesses on the ranking of the remaining

A comprehensive set of statistics on the Russian accounting
industry was released by the Russian Ministry of Finance on its
website earlier this year. The statistics provide a wealth of
information about the industry, but nowhere do they mention firm
names – the four largest firms are grouped together and often
compared to non-Big Four firms in Moscow.

The ministry data suggests that the audit organisations’ combined
income flow for 2006 was RUB32.78 billion ($1.3 billion). It claims
the four largest firms comprise 31 percent of this total. However,
PwC disclosed to IAB that its fee income for the year
ended December 2006 was RUB5.56 billion. If the ministry’s figures
are correct, that leaves an average of RUB1.53 billion for each of
the remainder of the Big Four, positioning them well behind BDO
Unicom, which recorded fee income of RUB2.2 billion. The sources
IAB consulted suggest this was unlikely and have
questioned the accuracy of the ministry’s figures.

The ministry document states the geographic spread of auditors in
Russia is 40 percent in Moscow, 8.1 percent in St Petersburg and
51.9 percent in the remaining regions. Nationwide, auditors make up
48.5 percent of the total staff in audit organisations.

The percentage of income from audit in Moscow firms was 40.7
percent, in St Petersburg 42.8 percent and in other regions 58.9

Ministry statistics state that the four largest firms employ 1.5
percent of Russia’s auditors and audit the financial statements of
just 1.1 percent of audit firm clients nationwide.


According to the government, the average number of employees at the
four largest firms was 1,009 – which contradicts IAB
research – compared to an average of 16 for other firms in Moscow.
The average number of auditors at the four largest firms was 92,
compared to eight at non-Big Four firms in Moscow. The average
number of audit clients for the top four was 196, compared to 20 in

According to the ministry, during 2006, 72,283 clients of audit
organisations had their financial statements audited. Of these,
27,722 were in Moscow, 6,209 were in St Petersburg and 38,352 were
in other regions.

The audit opinions issued included 57.6 percent that were
unconditionally positive, 40.9 percent had certain limitations, 1.1
percent were negative and 0.4 percent refused to express an
opinion. Audits were conducted for a number of reasons: 47.5
percent were for organisations whose financial performance measures
exceed the minimum value, 26 percent were on the grounds that the
organisations were public corporations, 9.9 percent were unitary
enterprises, 2.1 percent were lending agencies, 1.6 percent were
stock exchanges and investment funds, 1.4 percent were insurance
companies and fund associations, and 11.5 percent were other

Carolyn Canham