Russian Bill Proposes to Ban Foreign Audit Firms

A group of Russian lawmakers has introduced legislation that would prohibit foreign accounting firms from auditing Russian companies in which the government owns more than a 50 percent interest.

The bill would have an impact on the Russian affiliates of the Big Four firms, according to the Russian Legal Information Agency, which quoted a note from the three lawmakers explaining, “Foreign audit companies currently audit the majority of strategically important companies in Russia. The Big Four account for over 46 percent of the aggregate revenue in auditing.”

Proponents of the bill argue that Russian companies should not be dependent on foreign auditing firms, and they cite state security reasons for protecting the financial information of government-owned companies from foreign-owned firms.

The bill has the backing of the head of the nationalist-populist LDPR party caucus in the State Duma, Igor Lebedev, according to the Russian news service RT. Lebedev told the Russian newspaper Izvestia, “We must understand that state corporations are a serious and significant sector of our country’s economic life. Allowing foreign companies or companies with partial foreign ownership to audit them can be not safe. First of all, we must take into consideration that their actions can be harmful because of the modern political relations between Russia and the West.” The restrictions do not apply to privately owned companies, however.

One of the lawmakers who introduced the legislation claimed it was in accord with Russian President Vladimir Putin’s policies for ensuring Russian economic security. RT noted that China made a similar move earlier this year when it ordered all government-owned companies to end their ties with U.S. consulting firms amid accusations of cyber-espionage.