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Big Four Firms are Leaving Russia, But Audit Business was Already Limited

Soyoung Ho  Senior Editor, Accounting and Compliance Alert

· 5 minute read

Soyoung Ho  Senior Editor, Accounting and Compliance Alert

· 5 minute read

Large American accounting firms that have affiliates in Russia said they are leaving or severing ties because of unprovoked armed invasion of Ukraine in recent weeks.

But in terms of work related to audits of financial statements of U.S.-listed Russian companies, a search by Thomson Reuters on the PCAOB’s database of registered firms indicates that their presence was already limited in Moscow and shrinking over time.

Accounting firms that want to audit public companies and broker-dealers that are regulated by the U.S. SEC must register with the PCAOB, be inspected, and follow standards and rules set by the board.

Among the Big Four audit firms, three firms—Ernst & Young LLC, JSC KPMG, and AO Deloitte & Touche CIS—issued an audit report for at least one issuer, according to their most recent annual reports submitted to the PCAOB.

AO PricewaterhouseCoopers Audit did not issue an audit report but took a substantial role in the audit of at least one issuer.

In total, there are 16 audit firms in Russia that are registered with the PCAOB.

However, of those, only three—the three Big Four firms—had issuer clients; two participated in an audit of at least one issuer; and the rest, 11, had no issuer or broker-dealer audit activity.


According to the most recent inspection report—dated April 2021—Deloitte was the principal auditor for one audit client in 2019 and participated in the audit of 10 other clients.

The PCAOB inspection was conducted in 2019, and Deloitte’s presence had already been shrinking. In 2016, Deloitte was the lead auditor for two clients with another 19 in which it participated in the audit.

Smaller firms get inspected every three years.

The number of engagement partners also decreased from 2016 to 2019, going from 13 to nine.

According to Form AP—Auditor Reporting of Certain Audit Participants—filings, Deloitte audited Cian PLC and Mobile TeleSystems PJSC.


EY had three issuer audit clients and participated in 12 other audits. The inspection report is dated April 2019. Inspection was conducted in 2018.

In 2015, EY had four issuer audit clients and played a role in the audit of 18 others.

Form APs show audit clients as being QIWI PLC, Mechel PAO, and Luxoft Holding, Inc.


For KPMG, the latest inspection report is from December 2011, and it is for KPMG Limited in Russia.

At the time it had one issuer audit client and participated in two other audits.

Form AP, however, shows JSC KPMG in Moscow, and its issuer clients were Ozon Holdings PLC, Yandex N.V., and HeadHunter Group PLC.


PwC in Russia did not issue an audit report, and there is no Form AP.

Its most recent annual report notes that the firm participated in the audit of VEON Ltd.

Other Accounting Firms

Other U.S. firm affiliates that are registered with the PCAOB are Crowe Expertiza LLC, RSM Rus LLC, and UHY Yans-Audit. These firms had no reported issuer or broker-dealer audit activity.

The rest of the firms located in Russia in PCAOB database are: Audit Firm Femida Audit LLC, Interexpertiza LLC, Mazars Audit LLC, Finances M close company, FBK, LLC, Intercom-Audit, JSC 2K, Moore St Limited, and Unicon JSC.

Leave Russia Altogether?

In the meantime, an investor advocate questioned whether global network firms in Russia should even be registered with the PCAOB, given the sketchy history involving the Russian government.

“Around the turn of the century, a couple of individuals from the Moscow office of PwC requested a meeting with the SEC,” said former Lynn Turner, who was chief accountant of the SEC from 1998 to 2001. “There were allegations that unidentified people had broken into the PwC Moscow office, and into files containing information on publicly listed companies. The individuals requested protection for fear of their lives.”

Moreover, PwC offices were raided because of actions by President Vladimir Putin’s government against a Russian Oligarch. The Financial Times reported that PwC withdrew audit reports of Yukos oil company from 1995 to 2004 because new information that Russian prosecutors uncovered led the firm to believe that the information given by Yukos’s management may have been inaccurate.

“Some raised the question as to whether or not PwC had succumbed to pressure brought by the government against the firm and individuals,” Turner said.

“As a result, in light of current and past developments in Russia, this raises a question as to why the PCAOB would continue to permit Firms located in Russia to register with it and perform ‘independent’ audits,” he added. “The Russian invasion of the Ukraine is raising the question of whether or not investors could rely and trust a Russian audit…various [news reports] raise the specter the answer is no.”


This article originally appeared in the March 8, 2022 edition of Accounting & Compliance Alert, available on Checkpoint.

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