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    From Inspection to Auditing: Audit and Markets as Linked...
    research summary posted May 4, 2012 by The Auditing Section, last edited May 25, 2012, tagged 01.0 Standard Setting, 01.02 Changes in Audit Standards 
    From Inspection to Auditing: Audit and Markets as Linked Ecologies
    Practical Implications:

    This study provides insight into the way the auditing market has evolved in Russia and how modern-day audits differ from Soviet-era  inspections. The author also focus on what services (i.e., consulting, tax) Russian businesses feel their auditors should provide, and how prestige is gained in the Russian audit markets. The results of this study should be of interest to accounting firms considering either initial entry into Russia or expanding current services in Russia.


    Mennicken, A. 2010. From Inspection to Auditing: Audit and Markets as Linked Ecologies. Accounting, Organizations and Society 35 (3): 334-359.

    International matters, business and politics, markets, auditing procedures, consulting firms, professionalization, auditing, Russia (federation), other management consulting services, marketing consulting services, administrative management and general management consulting services, neoliberalism, and Russia (federation) – economic conditions 1991-
    Purpose of the Study:

    This study examines the transition from Soviet government inspections to capitalist auditing in Russia over the period 1985 to 2005. The author discusses how auditors marketed their services – including consulting and tax advising services. Additionally, the study includes some discussion of what constitutes “audit quality” in Russia (e.g. firm size and similarities in approach with Big Four accounting firms). The author notes that in Russia, audits are merely “tolerated” while consulting and tax services are marketed as the “value added” services auditors can provide.

    Design/Method/ Approach:

    The author analyzed legal documents, accounting and audit journals, accounting and audit textbooks, newspapers and business magazines dating from 1985 to 2008. Additionally, the author carried out 48 in-depth interviews in Moscow between 2001 and 2002 with former Soviet financial inspectors, Russian auditors, state regulators, representatives of new professional associations, academics, and other professionals. In addition, the author observed employees of two large Russian audit firms (one for two months and the other for 2.5 months) and observed employees of the International Center for Accounting Reform for one month.

    • The audit profession in Russia has transitioned from Soviet-era inspections where they merely reported exceptions to external users to an environment where they focus more on adding value by providing reports directly to company management.
    • Modern day auditing in Russia consists of providing value added services to the client, such as consulting services and tax advice. However, the financial statement audit remains secondary to these services.
    • Rankings of audit firms by the popular business press in Russia are seen as a way to gain exposure, market services, and acquire new clients. These rankings are often dependent upon audit firm size and similarities to the Big Four international      accounting firms.
    Standard Setting
    Changes in Audit Standards
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