Academic journal article Journal of Accountancy

The Postcoup Soviet Union: Greater Role for CPAs

Academic journal article Journal of Accountancy

The Postcoup Soviet Union: Greater Role for CPAs

Article excerpt

The rapid transfiguration of what was formerly the Union of Soviet Socialist Republics presents American CPAs with great opportunities, according to William T. Potvin, managing partner of DRT Inaudit (Moscow), a joint venture between DRT International and Inaudit, the recently privatized Soviet state accounting body.

Doors appear to be opening for U.S. CPAs and consultants to do much more work in the Soviet Union and its constituent republics. Most of the major international accounting firms are now represented in one form or another in the Russian republic, with anywhere from 2 to 40 people. "Things have been growing very dramatically and will continue to grow very dramatically," said Potvin, who before his mission to Moscow was a senior management consulting partner with Deloitte & Touche, the U.S. member firm of DRT International.

In the past, Potvin said, attempts to operate in the Soviet Union provoked "abject frustration" due to the peculiarities of the Soviet accounting system (which is not based on accounting for profit and loss), but a United Nation's task force has drafted a model for a new chart of accounts that allows for a P&L-oriented accounting style much closer to international accounting standards.

The new system is expected to be implemented over the next two years, first for joint ventures and then for Soviet enterprises. "I think if anything, recent events are going to accelerate that implementation," Potvin predicted.

Inaudit itself was privatized over the last year, although it remains the largest Soviet auditing organization, with offices from St. Petersburg to Tashkent. Moreover, many smaller, independent Soviet auditing organizations have sprung up in the past year, part of the burgeoning private marketplace. "The Soviet groups generally are not serving the international market," observed Potvin. "They have a little way to go before they're quite ready for that."

He noted, however, that Europeans are increasingly positioning themselves to take advantage of these opportunities. "The European Community this year is committing 400 million ecu--about $500 million--to pay European companies, accountants and consultants to provide technical assistance to the Soviets, and next year the number is probably going to double."

Challenges ahead. Of course, great difficulties will remain for some time for both Europeans and Americans planning to enter the Soviet market. For one thing, Potvin said he wouldn't describe the state of business computerization in the Soviet Union as low: "I would more or less characterize it as non-existent. …

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