One of the largest audit companies in Russia, the BDO Unicon group, will cease to be a part of the BDO Global network, Vladislav Pogulyaev, CEO of BDO Unicon, told Vedomosti. According to him, this was due to a potential conflict of interest: BDO Global became the global auditor of the German IT company SAP, while the Russian BDO Unicon is a technology partner of SAP in Russia. In this situation, the principle of independence of the auditor may be violated, Pogulyaev explained.
Cooperation with BDO will continue, but in a different format, says Pogulyaev: Unicon will not be a member of the network, but will receive the status of a member of the global alliance. This will preserve all the advantages of participation in the international network, namely the right to use intellectual resources: methodology and a global knowledge base, special audit IT applications, Pogulyaev lists. The BDO network itself will no longer be able to receive from mutual projects the same amount of payments and rewards from the transfer of clients to Russia. This meets the requirements of independence, he added.
According to the general director of BDO Unicon, this decision fits into the logic of the latest government initiatives to regulate the audit services market, although in the current conditions the BDO Unicon group complied with the legal requirements. “The Russian and global offices of BDO were looking for a way to continue interaction in the future, taking into account the current legislative trends aimed at restricting the work of foreign auditors, import substitution and countering international sanctions, since BDO has been present in Russia for 20 years,” said Pogulyaev. He stressed that the company belongs to Russian shareholders who have participated in its development for over 30 years. The legal name will also change: instead of BDO Unicon, the group will return to the historical name Unicon with an indication of membership in the global alliance BDO. The company has already changed its legal name from BDO Unicon AO to Unicon AO, according to SPARK data. The stake on its own trademark and legal independence from the international network while maintaining global partnerships is becoming a strategic landmark, Pogulyaev noted. According to him, the changes will take effect from October 1.
In April, the government decided to restrict the access of foreign auditors and their Russian subsidiaries to information from domestic companies by issuing Resolution No. 622 “On Restrictions on the Submission of Information and Documentation to an Auditing Organization to an Individual Auditor”. The restriction included banks, specialized depositories and insurance companies, non-state pension funds and management companies that invest in pension savings, microfinance companies, clearing firms, and retail chains.
BDO Global is an alliance of companies around the world that are independent legal entities providing audit and consulting services. At the end of 2020, BDO’s global network remains consistently 5th globally behind the Big Four in revenue, according to the International Accounting Bulletin’s annual survey. At the end of 2020, revenue increased by 7.8% and exceeded $ 10.3 billion. Audit and related services (42% of revenue) remain the key area of BDO’s activities. BDO is present in 167 countries, with offices in the Americas (53%) making the main contribution to the business.
In Russia, the BDO network began operating in 2003 under the name BDO Unicon. The company ranks 5th after the big four in the rating of the largest RAEX audit groups at the end of 2020. The revenue of the Russian office from audit and consulting in 2020 amounted to 5.3 billion rubles, down 3.6% compared to the previous year. The Russian office of the group consists of several legal entities (audit, consulting), in each of which the shareholders are natural persons – Russian citizens.
The restructuring of the business is hardly dictated solely by a conflict of interest, says Pavel Ikkert, Managing Partner of Ikkert & Partners Law Firm. According to him, the reason could also be the restrictions imposed on foreign audit companies. The changes are unlikely to affect the credibility of the company, says Olga Nosova, CEO of the self-regulatory association of auditors Sodruzhestvo. Clients who know BDO Unicon auditors will continue to cooperate with them.