The President's May decree opens up a lot of opportunities for the institution of audit

25 december 2018

The President's May decree opens up a lot of opportunities for the development of technology and price audits. The new opportunities for the audit industry were a key topic at a roundtable devoted to looking back at the year and resetting the technology and price audit system.

Alla Saltykova, the curator of the work group with the Expert Council under the Government of the Russian Federation on Improving the Efficiency of Major Investment Projects with the State Participation, reminded the participants in the discussion that under the May decree of the President the Government had passed a resolution to make major investments in infrastructure projects. "Investment projects to be implemented over the next 6 years will definitely require audits to ensure quality at each stage of the implementation," Ms Saltykova explained.

In addition, the expert is of the opinion that the competences of technology and price auditors will be required to implement the comprehensive plan for expanding the transport infrastructure and the national projects and specifically the "Safe and High-Quality Motorways" project that is going to have more effect in the regions. In order to take advantage of the new opportunities, auditors need to develop their competences in strategic analysis, industry specialization and digital technologies. 

"Financial and economic analysis of the demand for a given project is the area that can allow both business and the public sector to do a lot of optimization. However, we don't yet have enough expertise in this kind of analysis," Ms Saltykova added. "Quite often projects get launched based on conventional wisdom about investments. People have an idea about how a project will function once completed. One project that's already being implemented and in which an important part is played by digitization is the central ring road. It includes an automated toll collection system. And the solutions included in the project documentation have to do with all the features of the project and not just the construction issues."

The roundtable participants noted that auditors needed broad competences and independence from other parties in order to work effectively on major innovative projects.

"An auditor can be independent only if they are not being paid by either the customer or the contractor, they must be paid by the insurance company that assumes responsibility for the final outcome, because the auditor must check the project documentation for compliance with applicable regulations and rid the industry of lying," added Ilya Ponomarev, Head of the Commission for the Development of Methodological Recommendations and Improvement of the Regulatory Framework in the Field of Technology and Price Audits with the Public Council of the Ministry of Construction of Russia.

In order to improve the quality and transparency of audits, the professional community has developed a standard for independent technology and price audits. The document defines what an audit is and sets audit goals for each stage of the life cycle of an investment project.

"Auditors are universal soldiers and as such they must meet special requirements so the goal behind the standard was to create common principles, approaches and analysis procedures,"said Elena Milovidova, Executive Director of the National Association of Technology and Price Auditors. "Specifically, as part of our work on the standard we developed a standardized audit specification because at the moment each customer has a different assignment and often times that results in problems with ensuring an audit is conducted correctly."

The standard also outlines the professional and ethical principles that auditors must follow and the constraints that must be met to ensure the independence of an auditor. In addition, the document sets requirements for what information must be included in audit reports. Under the document, the information included in audit reports must be relevant, reliable, material and verifiable. In the opinion of market players this must make it harder for unprofessional auditors to operate in the market.

The document has successfully undergone all the necessary public hearings and has been recommended for registration with the Federal Agency on Technical Regulating and Metrology.