The invasion of Ukraine by Russia created changes in the network of Big Four Companies. Western Companies are leaving Russia due to the unprecedented scenario between Ukraine and Russia. The media says that Deloitte is in the transition of exit, PWC is also in the plan of exiting, and KPMG says that it is uncertain about the exit time. The exit process for corporate Companies takes one year. They spend the expenses for technology and branding in advance for one year. Technological support is lacking due to the Russia-Ukraine war. Russian based telecast Companies Sputnik and RT YouTube channels are being blocked by Google recently. Sputnik is the news agency, and RT is the television network. Following the YouTube cancellation of the service, TikTok also cancelled the telecast. The social media of these Companies are blocked in the EU. But are still active in the United States. Other companies such as Google’s parent company Alphabet, Microsoft, and Meta also control the Russian based media information. Twitter flashed the warning labels for media that spread the Russian news. Digital money Cryptocurrency helps the Ukraine Government to produce money through donations. Eleven cities in Russia engage 3,700 employees. This blog highlights the business and transition in Russia.
The clients of Russia:
The clients of KPMG in the Russian market are Gazprom bank and Lukoil, EY audits Rosneft, Evraz, VTB bank, PWC checks the audit of Sberbank, phosAgro, and Russian’s central bank. Deloitte deal with Polyus Russia’s gold producer. The Companies lack software backup as Microsoft suspended sales in Russia. The independent Russian firms continue to operate. The Big Four Firms in Russia receive revenues from the global network. The annual revenue of the Big four Firms is $167bn. After the Russian currency collapse, KPMG Russia reported 15bn roubles. The Russian Companies work for overseas companies. The revenue from Russian companies is small in numbers. Western clients and domestic clients together work in Russia. The exit from Russia also ends the sanctions from a small number of countries. The banking industry and immigration process fluctuate due to the war in Russia. Russians think that bargaining is a sign of weakness. They prefer direct communication. To start a small scale business in Russia or to work visa and residence permit are essential. The process to get intellectual property right is a complex one. The commercial courts of Russia have a specialised court for business issues. This specialised court deal with the intellectual property of the Companies. Businesses in Russia suffer because of monopolisation and government interference.
Why Big Four firm’s transition is not a clean break?
In a media report, KPMG said that it is incredibly difficult to move from Russia. The number of employees working in Russia is 4,500. Russia contributed to world trade through the energy and raw materials supply. The country banned around 200 products after the surge in economic status. The ban continues till the end of the 2022 year. Russian banks are stopped from the world’s main reserve. Oil imports are also facing trouble due to US and UK bans. The other products that affect global trade are industrial metals, wheat and wood. Russia is isolated from the global network. The major brand’s shell to apple is facing trouble in sales. The payment gateways are also working inside Russia and not outside Russia. Tinkoff and Sberbank told the customers that the payment system works only inside Russia. Russian population are making use of Union pay in the place of Visa and MasterCard. Union pay operates in 180 countries for physical transactions. And 200 countries for digital transactions. Deloitte is the last firm exiting Russia according to one report. The member firms will give the job to the Russian staff. Deloitte said that they support the employees in difficult times. Payment system, import, export, financial services and auditing firms are isolating the services from Russia. The transition is difficult to handle due to the huge number of employees and connected networks.
The Russian auditors will continue to work with the international Companies. The accounting Professor from Sheffield University referred to this process as “whitewashing”. The term conveys that it is the operational change and not political pressure. Jim Peterson’s former lawyer Arthur Andersen says that the impact is little. It is difficult for the Big Four Firms from Russia to join the international network. They operate as smaller firms. The legal aspect of breaking from an international network creates a mild impact on the international network. In 2007, PWC closed the Japanese arm. This Big firm with the experience again set up a different firm to attract the same clients. The client base and the business operation help the Audit firms to re-start. The closing process takes time due to the websites, server operations, IT backups, and logos off.
Advantages of working in a Big four firm:
• International client exposure help in handling international clients.
• A quality network is essential to serve international clients.
• Big Four firms offer myriads of training sessions and webinars to the employees. The rich experience is provided free of cost at the big four firms.
• Big four firms arrange events, charity, office lunches and opportunities for meeting different people. Big Four firms improve people skills.
• The promotion policies in the Big four firms are with rapid advancement. It encourages the competency skills of the employees.
Conclusion:
The growing inflation and invasion are creating stress for auditing firms in Russia. The Russian market is big and modern for the import regulations, localisation, opportunities, challenges, sanctions, trade financing and currency hedging. The specialized knowledge is essential for winning the downward-facing prices.
