Is your business struggling to adapt to Ukraine’s tough business climate and constantly changing legislation?
Auditing companies say they can help by providing advice, support and prevention of potentially serious problems that could arise.
Apart from standard checks required for preparations ahead of initial public offerings and big corporate loans, Ukrainian auditing companies are providing numerous services to track down everything from compliance with mind-bending regulations, to wrongdoings by staff and potential problems with the authorities.
“By analogy with doctors, auditors are diagnosticians,” said Oleksandr Redko, head of the National Center for Accounting and Audit, a state training center for auditors.
Redko said internal audit assistance, tax risk assessment, inventory, management assessment and optimizing expenses are the most popular examples of off-beat auditing services ordered by Ukrainian firms. Experts say they are becoming increasingly popular.
While internal audit is normally conducted by special departments within the companies, in some cases it also could be done by external auditors.
Andriy Stepanov, partner of Deloitte & Touche, one of the Big Four international auditing giants, said enterprises sometimes asked professional auditors to help in creation of the internal audit services or outsourced work to them.
“The first kind of services is more common for the Ukrainian companies as internal audit is a new thing for them,” Stepanov said. “And the second one – for affiliates of the foreign companies that have internal audit departments in the central offices but not in the Ukrainian branches.”
In both cases an auditor’s inspection consists of planning, preparations, checking, and report to the client. The whole process may last from several weeks to several months and can lead to serious improvements for businesses, as well as big consequences for unruly employees, including sacking and lawsuits.
“I worked ones for internal auditing projects in Europe, and we found rather big cases of fraud in one company. Some people were fired after that, and court later ordered them to repay damages,” Stepanov said.
But such dramatic results are quite rare in Ukraine, he added, saying the internal auditors often act not as policemen but as consultants and advisors. Much depends on the internal culture of the company.
An internal audit is “rather aimed at prevention of embezzlements than at revealing them,” said Dmytro Oleksiyenko, head of Expert, an audit and consulting group.
Olha Sirenko, chief economist at a large construction company, said she highly respected the auditors that were checking the accounts of her firm, preparing them for submission to tax inspection.
“It is better for them [the auditors] to find something than for tax officers,” she said.
Oleksiyenko from Expert said tax consulting was one of the most popular auditing services that companies order at the moment. “It’s quite risky work, as knowing our tax inspectors, they will come and find something anyway,” he said.
Meanwhile, Oleksiyenko is sure auditors’ checks help the management at businesses and the accountants feel safer and “sleep better.”
Sirenko said the accountants of her firm established such good relations with auditors that they often call them to ask for advice.
But Redko believes auditors shouldn’t create too close relations with clients, as well as make any personal judgments. Auditors only give diagnosis but “don’t have to give treatment,” he added.
This rule goes for all the other auditing services: review of a company’s assets, accounting assessment, giving advice for cost optimization, or checking the human resource management for compliance.
“An auditor shouldn’t say if the management is good or bad. He may only state: there is a problem in management,” Redko said.
Sometimes directors already know the troubles existing in their company but use auditors’ reports to justify firing people, he added.
Redko called attempts to use auditors as the “avenging sword” is one more trap of this profession, adding that those efforts were becoming more and more frequent.
Oleksiyenko of Expert said companies’ staff received the auditors positively when the inspection was ordered by the management but “tremble” on seeing auditors sent by the firm’s owner.
Meanwhile, Redko said auditors can’t evoke any positive feelings.
“Why should you love us?” he asked. “We are checking you and can find your mistakes.”
Kyiv Post staff writer Oksana Grytsenko can be reached at [email protected].
