Unreliability to report
The Central Bank has been cleaning the banking sector for a year and a half already, and it has discovered several groups of dishonest auditors, who certified unreliable accountability of several banks at once. The banks lost their licenses afterwards. The Central Bank is convinced that insufficient regulation of the market is the cause of this. However, the Ministry of Finance has no intention of holding similar purges and suggests that the Central Bank go to courts. The Ministry of Economy promises to reform the auto-regulation mechanism, but experts are doubtful that this would help. <...>
The Central Bank is convinced that the auto-regulation in the sphere of audits does not function, and complains to the Ministry of Finance about the dishonest auditors. However, the Ministry does not agree that the situation is that tragic. The press service of the Ministry states: “If there is guilt, the auditor must be held liable, including the reputational liability, but the auditor’s work must not be evaluated only on the basis of the fact of their client’s activity”. They point out: “If the Central Bank is not satisfied with the auditor’s work, it may go to courts with the claim to rule the respective auditor’s opinion knowingly false”.
Alexander Bolomatov, Partner of the Law Firm "YUST", says: “It would be more effective to resort to the law enforcement agencies, because there is criminal liability for those bankers, who doctor their accountability, and if an auditor intentionally let an unreliable report go, it is practically collusion”.
However, at least the Ministry of Economic Development is on the side of the Central Bank concerning the distrust towards auto-regulated auditor organizations (AAO). Last autumn, the Ministry of Economic Development prepared a report on the insufficient effectiveness of the institution in all markets, where it functioned. Meanwhile, according to the press service, the Ministry has elaborated a draft of the concept of improvement of the auto-regulation mechanisms in the financial markets, which is planned for approval in April. The details of the new AAO concept were not disclosed, only mentioning that property liability of AAOs and their members will be improved, as will be the control and supervision over AAos. However, according to Maxim Tischenko, Director of the Evaluation Department of the Business System Development company, only creation of a list of “trusted” auditors, selected according to the charter capital, number and competence of the employees, check insurance would be able to promptly resolve the problem with bank auditors.
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