The Russian Duma has passed a second reading
of a federal law set to abolish compulsory audits for SMEs with
total assets of RUB60 million ($1.9million), up from RUB20million
or sales of less then RUB400million, up from RUB20million.
The passing of the law is in its final stages
and the proposed changes are said to come
into force in January 2011. In the latest
International Accounting Bulletin Russia survey firms said they are
already struggling with fierce competition, cases of poor audit
quality and a slowly recovering market. Reduced number of mandatory
audits is expected to affect firms as audit fees have been in sharp
decline in the past 18 months.
Jukis Consulting Group partner Alenichev
Viacheslav said the law will mostly hit small practices in rural
areas that specialize in audits for small and medium size
companies.
He said that currently the Auditing Chamber
Russia has about 8,000 members and
once the new law comes into force and the
small audit firms are out of the market the
number of members is set to decrees by about
60 percent. “About 50 percent of companies registered with the
Auditing Chamber Russia at the moment will have to leave the market
or consolidate among each other” Viacheslav added.
As the change in law will have destructive
consequences for small audit companies the
mid-tier firms are not expected to face great
challenges once the law is passed
