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Auditor independence in economies in transition: a study of Russia

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  • Pat Sucher
  • Svetlana Bychkova

Abstract

The independence of auditors is regarded as key to their credibility as external verifiers of external financial statements. The requirement for external auditors to be independent of their clients when undertaking an audit is enshrined in the International Federation of Accountants' (IFAC) Code of Ethics and in the European Union's Eighth Directive. In the IFAC code this requirement is translated into various situations where observance of certain rules should ensure independence. As the countries of Central Europe and the former Soviet Union have drafted and implemented new laws on external audit, some of these auditor independence rules have been included in the new laws and codes of professional practice. Yet the rationale for the inclusion of these rules is not always clear, particularly given the different cultural and business contexts. In this paper, the authors have identified the auditor independence rule requirements that have been implemented into the laws and codes of practice in Russia. These requirements are then analysed against the economic, social and historic background in Russia, based to a large extent on interviews with auditors, enterprise management and users of financial statements, to generate questions about the efficacy of the auditor independence rules. This should provide relevant input to international and national bodies concerned with the drafting of rules relating to auditor independence in countries with different social and economic traditions.

Suggested Citation

  • Pat Sucher & Svetlana Bychkova, 2001. "Auditor independence in economies in transition: a study of Russia," European Accounting Review, Taylor & Francis Journals, vol. 10(4), pages 817-841.
    • Handle: RePEc:taf:euract:v:10:y:2001:i:4:p:817-841
    DOI: 10.1080/09638180120069142
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    References listed on IDEAS

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    1. Pat Sucher & Ivan Zelenka, 1998. "The development of the role of the audit in the Czech Republic," European Accounting Review, Taylor & Francis Journals, vol. 7(4), pages 723-751.
    2. Svetlana Bychkova, 1996. "The development and status of auditing in Russia," European Accounting Review, Taylor & Francis Journals, vol. 5(1), pages 77-90.
    3. Sikka, Prem & Willmott, Hugh, 1995. "The power of "independence": defending and extending the jurisdiction of accounting in the United Kingdom," Accounting, Organizations and Society, Elsevier, vol. 20(6), pages 547-581, August.
    4. Lavin, David, 1977. "Some effects of the perceived independence of the auditor," Accounting, Organizations and Society, Elsevier, vol. 2(3), pages 237-244, June.
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    Cited by:

    1. Mohammad Hudaib & Roszaini Haniffa, 2009. "Exploring auditor independence: an interpretive approach," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 22(2), pages 221-246, January.
    2. Metka Duhovnik, 2011. "Time to Endorse the ISAs for European Use: The Emerging Markets' Perspective," Accounting in Europe, Taylor & Francis Journals, vol. 8(2), pages 129-140.
    3. Mennicken, Andrea, 2010. "From inspection to auditing: audit and markets as linked ecologies," LSE Research Online Documents on Economics 27054, London School of Economics and Political Science, LSE Library.
    4. Iurii N. GUZOV, 2016. "History of auditing in Russia. Periodization and challenges of development," The Audit Financiar journal, Chamber of Financial Auditors of Romania, vol. 14(138), pages 651-651, June.
    5. Mennicken, Andrea, 2010. "From inspection to auditing: Audit and markets as linked ecologies," Accounting, Organizations and Society, Elsevier, vol. 35(3), pages 334-359, April.
    6. Ichiro Iwasaki, 2007. "Enterprise Reform And Corporate Governance In Russia: A Quantitative Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 21(5), pages 849-902, December.
    7. Kim, Oksana, 2016. "The IFRS Adoption Reform through the Lens of Neoinstitutionalism: The Case of the Russian Federation," The International Journal of Accounting, Elsevier, vol. 51(3), pages 345-362.
    8. Philip Law, 2008. "An empirical comparison of non-Big 4 and Big 4 auditors' perceptions of auditor independence," Managerial Auditing Journal, Emerald Group Publishing, vol. 23(9), pages 917-934, October.
    9. Hussein Khasharmeh & Abdelmohsen M. Desoky, 2018. "Does the Provision of Non-audit Services Affect Auditor Independence and Audit Quality? Evidence from Bahrain," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 14(1), pages 25-55.
    10. Edona Perjuci-Uka & Hysen Ismajli & Arber H. Hoti, 2012. "Opportunities and Challenges in the Implementation of Quality Assurance for Auditing in Kosovo," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 2(2), pages 106-118, April.

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