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Alinga Consulting Group was founded in 1999 by a small, international team of professionals that had been working in the Russian market since 1992. As foreign investment has increased demand for professional accounting and audit services, and as growing companies now require outstaffing and HR documentation services, Alinga has kept pace with a range of solutions for business in Russia. As a member of such organizations as IGAF, AmCham Russia, AEB, and the Moscow Audit Chamber, Alinga takes customer service as seriously as it takes the accuracy of its services. The Rough Guide to RAS Audits and how Alinga Consulting Group can help By Galina Belikova, Director Audit and Tax Department     About the Author Galina Belikova, Director  Audit and Tax Department   Galina Belikova graduated from the All-Russian State Tax Academy with an economic degree, specializing in accounting and audit. She is also qualified as a lawyer, having graduated from the Moscow Academy of Finance and Law, with a specialization in jurisprudence.   Ms. Belikova is a certified auditor. In 2009 she received the DipIFR certificate as a specialist on International Financial Reporting.   Ms. Belikova has also held the rank of tax service adviser of the third order with the Russian Tax Office. Before joining the Alinga Team, Galina worked for such companies as Eleks-Polus (part of the carmaker LADA) and the audit firm Константа.     Also on our Site: IFRS vs. RAS Debt Refinancing: Tax and Accounting Issues in Russia The Post-Merger Integration Process: The "Russia" Factor Thin Capitalization And Controlled Debt: Taxation And Legal Issues   Alinga Consulting Group +7 (495) 988-21-91 consult@acg.ru     An audit to verify your company's financial records and statements according to Russian Accounting Standards (RAS) is highly valuable for many reasons.   RAS audits are the only way to truly know your company's tax risks. They are a statutory requirement to obtain the best terms on credit or external trade agreements. They are also needed to verify that your company is maintaining accurate and compliant records.   Audits must be run by independent audit firm, which will provide you with your own personal team of highly-qualified and licensed specialists to carry out your audit.   The value in using outside auditors is the objective view that they bring to the results. Outside auditors should have: zero interest in hiding information from company management; an outside view of the company's activity, problems, and operational efficiency of separate subdivisions; insight and experience from having conducted audits for companies from diverse sectors of the economy; no possibility to directly influence the financial situation of the company in any way with the results of the audit.   Some companies don't seek the services of an independent audit firm on the grounds that they conduct an internal audit, and that a second audit would be repetitive. However, in the majority of cases internal auditors fulfill a supervisory function and their activities are essentially targeted at protecting company assets and property. Just as importantly, these auditors cannot be called independent since the company can directly influence their work. While an outside auditor works closely with the company's internal auditors, they also evaluate the internal auditors’ work and provide a fresh perspective.   Also note that the costs for a statutory or voluntary audit, as well as audit-related services, can be included as an expense when calculating the profit tax base.   Statutory and Client-Initiated Audits   Certain companies are legally required to conduct audits. These include: joint stock companies, credit institutions, credit reference bureaus, insurance companies, commodity and stock markets, investment funds, state non-budgetary funds, and several other types of legal entities.   In addition, companies meeting either of the two following conditions must undergo statutory annual audits: 50 million rubles or more in sales during the prior financial year; 20 million rubles in assets as recorded on the balance sheet at the end of the prior financial year.   Some company charters also include a provision requiring an annual audit. In this case, shareholders have the right to request the audit report at a general meeting of shareholders after the audit is conducted.   Voluntary audits are also commonly conducted. A company's general director or financial director may desire more transparent data. An audit report may be requested by a bank, by investors, customs officials, or other interested parties.   Audits help a company detect weak spots in its organizational framework, paperwork flow, internal control, accounting procedures, and financial reports. An audit is highly recommended after a change of company CEO or chief accountant.   In Russia, an audit also especially focuses on checking the calculation of taxes and detecting any tax risks.   Audits result in two standard deliverables: an audit report, which is an official document meant for any interested third parties, and a management report that is meant only for the internal use of the company and which outlines all risks and violations detected during the course of the audit (both material and non-material violations), as well as recommendations for how to correct them.   Audit Alternatives   For those concerned about the cost of a full audit, there is also what is known as an "Review Engagement"   This offers a combination of analytical procedures that allows a company to quickly detect the main problems in the company's financial and operational activities.   A review engagement is characterized by: a limited amount of documents requested by the auditor; mostly analytical procedures and test checks of transactions; work completed quickly (which significantly lowers the cost).   It’s important to note however, that a review is obviously not as through as full audits – they may not catch all risks that actually exist, and may find risks that don't necessarily exist (due to the limited amount of documentation requested, etc.)   After the review, recommendations are presented in a short report. The client can optionally request a more official audit report if needed.   Despite the potential shortcomings, the review is a very popular method for companies to detect and correct material violations in a timely fashion.   Another option, if companies are concerned only about a few specific transactions, is to order an "Agreed-Upon Procedures Engagement."   This will audit those particular transactions, validating their documentation, how they were recorded, and other information.   Why Choose Alinga?   Alinga performs audits according to the definitions set out in the Federal Law "On Audit Activities," the Standards of Audit Activities of the Russian Federation, as well as according to our own strict standards of quality.   Alinga is a of the Moscow Audit Chamber member and subject to regular peer reviews of our quality standards.   Alinga is also a member of IGAF Worldwide, one of the largest associations of independent accounting firms in the world. In addition we are accredited with the PCAOB.   The following advantages set Alinga apart from other consulting companies:   We can provide full support for our clients, including conducting audits, representing your interests in court and before the tax authorities, and providing professional consultations on issues of accounting and legal issues. We take an individual approach to each client, looking at each client's particular situation, accounting policies, and other requirements and needs, no matter what type of company or what type of audit.  In order to optimize the auditing process, we offer two-stage audits. The first stage covers 6 or 9 months of the year, and the second stage covers the remainder of the year. This is optimal because it provides the client with the opportunity to mitigate risks before the end of the year.  Our experts conduct a pre-reporting inventory of the client’s assets before the annual financial reports are composed. This allows company management to be certain that inventory are fully and objectively performed and that all assets are properly accounted for.  Our audits come with free ongoing consultations throughout the year on Russian accounting and tax rules. This gives you access to professional advice on any tax or accounting issues and any legislative change that may affect your company. We can offer full-service audits, auditing not only your financial statements, but also your tax accounting at the same time. This packaging results in a better audit at a lower price. We can additionally package your RAS audit with an IFRS or GAAP audit at a significant discount. In addition to a full audit report, we also prepare a concise management report on the violations and risks that were detected and recommendations on how to fix the situation, with citations from legislation and a description of how the authorities and arbitration courts have viewed the matter in past cases. We can also prepare a shareholder summary of the official audit report or any other interested parties. This summarizes some of the most important points and risks that company leadership should be aware of. The summary report is issued in Russian or in English at the client’s request, free of charge. We can also issue the audit report of the annual financial statements according to RAS in English at the client’s request. As an Alinga client, you will also receive our monthly review of legislative changes, covering letters issued by the Ministry of Finance, the FMS, and other Russian authorities. You also have the opportunity to subscribe to our free newsletter, the Alinga Market Update, free of charge. This monthly electronic publication contains articles written by Alinga specialists on interesting and important topics, as well as a review of important business news. The legal department at Alinga provides legal support to all projects we are involved in, which significantly increases the reliability of our audit services. Discounts for off-season audits and multi-year audits. Request your audit to occur between April and October or request a multi-year contract and receive a discount. We employ highly qualified professionals who continue to educate themselves and follow the latest developments.   Your Audit Professionals   A RAS audit can be beneficial for any company in Russia. It can mitigate tax risks, improve your credit potential, and improve your company's information flow, accounting policy, and provide better information for management decisions.   Alinga can provide professional audit services, performed by highly qualified professionals, and scalable based on your needs and budget. Contact us to find out what we can do specifically for your company in Russia!