In the Soviet and tsarist Russia such thing as audit was not. The audit history begins in 1989, when according to the Decree of the Council of Ministers, was organized the first audit firm and held the first Soviet audit. The following document appeared in 1994 – decree of the President, who claimed “Provisional rules of auditor activity in the Russian Federation”. Later these rules were transformed in the first in the history of Russia”, Federal Law dated 07.08.2011 No. 119-FZ “On auditing activity”, which established the principles of auditing, including the issue of licensing. It was an evolutionary movement.
The revolutionary movement upward occurred in 2008, when it adopted a new Federal law of 30.12.2008 № 307-FZ “On auditing activity”, which repealed the licensing of auditor activity. This law introduced changes of a revolutionary character – set Russian audit on the rails of self-regulation.
Recent milestone changes in legislation on audit activity were the changes relating to the consolidation of SROs (thresholds increase the number of their members).
Thus, we can observe a gradual development of the audit.
The number of auditors
Today we must observe a descending line of development of audit on fine indicators (audit firm, auditors).
On the chart you can see that the number of how audit firms and auditors is reduced. If the maximum peak of issuing diplomas was about 37 500 units, but now the number of auditors is not more than 22,000.
The number of audit firms is also reduced. As a result, we arrive at the conclusion that Russia will remain one self-regulating organization of auditors. Most likely, this is not an accident but a well planned government movement to leave one SRO and to control it on the market.
I think the reasons are obvious to all. The state is the main owner, investor and controller on the market. The auditor works in the interests of owners and investors. It is the state that will determine all the rules on the audit market.
6 key challenges audit
Quality control auditing
By itself, the quality control of auditing activities is not a problem is a necessary condition of the successful functioning of audit in Russia.
However, some experts note the existence of a dual problem of quality control. It comes to inspections by the SRO and Rosfinnadzor on line OSHS.
Double control for the market – a heavy burden. It needs to be balanced and weighed. It is necessary to divide spheres of control between SRO and Rosfinnadzor. The SRO should check the organization of internal control in the company, and the Rosfinnadzor – the implementation of these internal requirements.
According to most experts, the footage is a key problem of the audit market. The number of certified auditors has been steadily declining. Into the profession are not new footage, because a few manage to go through a complicated certification process.
Stagnation in the industry
The situation in industry should be considered within the overall economic trends. Audit indirectly from its customers, the state of the economy, development of investment in the country. In General, at this point in the economy there is a certain stagnation. She got in and audit the industry – some players leave the market, others observed a decrease of revenues and a decline in the client base.
High state regulation of the market
It is obvious that self-regulation does not fully regulate the industry. The regulation deals with one who is most interested, i.e. the investor. In Russia the largest investor – state, and which regulates the market in accordance with its goals and objectives.
High market concentration
Most companies (large and medium) concentrated in the Central regions, in Moscow. If we talk about market concentration, we take an overwhelming share of the company’s “Big four”, which is a problem for the market (although many don’t see it). In my opinion, this problem gives impetus to the development of the audit market.
Dumping problems remain obvious, but they are local in nature. Mostly artificial lowering of prices occurs in the field of public procurement. Importantly, those who practice dumping, remain in yesterday. For such money it is impossible to provide quality services, regardless of marketing conditions is not justified.
The latest example is the tender for the mandatory annual audit of JSC VTB Bank for 2015 – 2019. At the maximum price of 31 million rubles was won by OOO “Ernst & young” at the price of slightly more than 1 million. of Course, such a dumping, especially from “Big four”, are unacceptable – it is not clear to the market and is contrary to standard auditing.