Preliminary selection of audit companies to be engaged in bank (branch) audits by the Bank of Russia Board of Directors

The Bank of Russia launches the preliminary selection of audit companies to be commissioned by the Bank of Russia Board of Directors to audit credit institutions (their branches) (hereinafter, the preliminary selection). The selection is conducted in line with Clauses 1.1, 1.3 and 2.3 of Bank of Russia Regulation No. 442-P, dated 30 November 2014, ‘On the Procedure for Selecting Audit Organisations to Conduct Inspections of Credit Institutions (Their Branches) at the Instruction of the Bank of Russia Board of Directors’ (as amended) (hereinafter, Bank of Russia Regulation No. 442-P).

The preliminary selection is open for an audit organisation incorporated under the Russian law (a Russian audit organisation) subject to the following conditions:

it is a member of a self-regulatory organisation of auditors according to Article 3 of Federal Law No. 307-FZ, dated 30 December 2008, ‘On Audit Activities’ (hereinafter, the Federal Law ‘On Audit Activities’);

it has an unblemished business reputation;

during the five years prior to the preliminary selection, it had a working experience of bank audits as set forth by Article 42 of the Federal Law ‘On Banks and Banking Activities’ (as amended by Federal Law No. 17-FZ, dated 3 February 1996) (hereinafter, the Federal Law ‘On Banks and Banking Activities’);

during the three years prior to the preliminary selection, the record of the company did not contain any instances of effective court rulings on satisfying customer claims against the audit company (auditors employed by such audit company) filed in connection with the quality of auditing (audit services);

during the three years prior to the preliminary selection, the record of the company did not contain any instances of disciplinary measures applied against it or its auditors according to Parts 1 and 6 of Article 20 of the Federal Law ‘On Audit Activities’ (excluding disciplinary or other measures stipulated by Clauses 1-3 and 6 of Part 1 and Clauses 1 and 2 of Part 6 of Article 20 of the Federal Law ‘On Audit Activities’ in case of the timely and full execution by the audit company of the decision on the application of respective disciplinary measures against it);

the company insures the liability for breaching an auditing service agreement and (or) for damaging a third-party’s property as a result of auditing;

during the five years prior to the preliminary selection, the company’s audit opinions did not contain any instances of unqualified audit opinion regarding the reliability of accounting (financial) statements of an audited credit institution, however, afterwards there were established instances of material unreliability of reporting data in the specified accounting (financial) statements for a respective period which caused the revocation of the credit institution’s banking licence stipulated by Article 20 of the Federal Law ‘On Banks and Banking Activities’ or for the application of bankruptcy prevention measures to the credit institution stipulated by Article 189.10 of Federal Law No. 127-FZ, dated 26 October 2002, ‘On Insolvency (Bankruptcy)’ (before 23 December 2017 — by Article 4 of Federal Law No. 40-FZ, dated 25 February 1999, ‘On the Insolvency (Bankruptcy) of Credit Institutions’).

The preliminary selection is also open for an audit organisation incorporated under a foreign law (a foreign audit organisation) subject to the following conditions:

during the five years preceding the year of the preliminary selection, it had a working experience of bank audits;

during the three years prior to the preliminary selection, the record of the company did not contain any instances of effective court rulings on satisfying customer claims against the audit company (auditors employed by such audit company) filed in connection with the quality of auditing (audit services);

it operates under the agreement on professional liability insurance;

during the five years prior to the preliminary selection, the company’s audit opinions did not contain any instances of unqualified audit opinion regarding the reliability of accounting (financial) statements of an audited credit institution located in the Russian Federation and (or) its subsidiary credit institution, branch created in a foreign state, however, afterwards there were established instances of material unreliability of reporting data in the specified accounting (financial) statements for a respective period which caused the revocation of the credit institution’s banking permit (licence) or for the application of bankruptcy prevention measures to the credit institution stipulated by the home country’s legislation of the credit institution.

Firms should draw up their applications for the preliminary selection as required by Annex 1 to Bank of Russia Regulation No. 442-P with due regard to the requirements stipulated by Clauses 1.6 and 2.4 of Bank of Russia Regulation No. 442-P. Firms should observe the requirements established by Clause 1.6 of Bank of Russia Regulation No. 442-P when compiling information attached to the application for the preliminary selection, as well as documents confirming the timely and full execution by the audit company of decisions on the application of disciplinary measures against it stipulated by Clauses 1-3 and 6 of Part 1 and Clauses 1 and 2 of Part 6 of Article 20 of the Federal Law ‘On Audit Activities’ which were applied during the three years prior to the preliminary selection (if any).

Firms should submit their applications for the preliminary selection within 45 business days after this information notice of the preliminary selection is published in the Bank of Russia Bulletin (posted on the Bank of Russia website).

Audit firms should send their applications for the preliminary selection in hard or soft copy (on detachable machine-readable data storage devices) to the Bank of Russia at: 12 Neglinnaya Street, Moscow 107016 (with the inscription ‘For preliminary selection of companies to conduct inspections of credit institutions’) by registered mail with receipt notification or deliver them to the Document Dispatch Division of the Bank of Russia Administrative Department (at: 3 Sandunovsky Lane, Moscow; from 9.00am to 5.30pm on Monday through Thursday, or by 4.15pm on Friday, lunch from 0.00pm to 1.00pm) in a sealed envelope.

The envelope shall bear the full and short official name (if any) of the auditor.

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