Auditor independence in economies in transition: a study of Russia

Abstract

The independence of auditors is regarded as key to their credibility as external verifiers of external financial statements. The requirement for external auditors to be independent of their clients when undertaking an audit is enshrined in the International Federation of Accountants' (IFAC) Code of Ethics and in the European Union's Eighth Directive. In the IFAC code this requirement is translated into various situations where observance of certain rules should ensure independence. As the countries of Central Europe and the former Soviet Union have drafted and implemented new laws on external audit, some of these auditor independence rules have been included in the new laws and codes of professional practice. Yet the rationale for the inclusion of these rules is not always clear, particularly given the different cultural and business contexts. In this paper, the authors have identified the auditor independence rule requirements that have been implemented into the laws and codes of practice in Russia. These requirements are then analysed against the economic, social and historic background in Russia, based to a large extent on interviews with auditors, enterprise management and users of financial statements, to generate questions about the efficacy of the auditor independence rules. This should provide relevant input to international and national bodies concerned with the drafting of rules relating to auditor independence in countries with different social and economic traditions.

From inspection to auditing: Audit and markets as linked ecologies

“…Bychkova, 1996;Enthoven et al, 1998;Sucher & Bychkova, 2001). 31 Yet, within these structures, work and jurisdiction of the Russian auditing profession remained largely undefined.…”

“…Bychkova, 1996;Enthoven, Sokolov, Bychkova, Kovalev & Semenova, 1998;Kosmala, 2007;Kosmala MacLullich & Sucher, 2004;Mennicken, 2008;Samsonova, 2009;Sucher & Bychkova, 2001;Sucher, Moizer & Zelenka, 1998). Yet, little attention has been devoted so far to analysing the linkages that have formed between ideas and instruments of audit, and wider processes of local and global market creation, and how such processes may or may not contribute to the changing of relations between government, authority and expertise (Rose, 1993).…”

Human capital, age and job stability: Evidence from Spanish certified auditors (1976–1988)

“…By focusing on the individual auditor as a unit of analysis, our study adds to prior research examining the emergence of the profession in continental European countries from a macro-perspective (e.g. professional associations or the profession at large; see Russia: Sucher and Bychkova, 2001;Slovakia: Daniel et al, 2001).…”

Former Audit Partners on Audit Committees: Implications for Russian Corporate Governance

“…In their analysis of auditor independence in Russia, Sucher and Bychkova (2001) suggest auditor independence is key to financial statement credibility.…”