Interview of “Progress-Audit” CJSC CEO Artur Kirakosyan to Mediamax Agency and Banks.am portal

- The year of 2010 has been quite active in terms of appearance of new players in the market of audit, which, as we can suppose, is related to introduction of compulsory audit for big companies. “Progress-Audit” was also founded this year. Does this mean that your company stakes exclusively on customers, subject to compulsory audit?

- Indeed, “Progress-Audit” was founded in 2010, however the mission of our company does not include solution of the tasks of a particular group, and the list of our customers is not limited to only big companies, which, according to the law, are subject to compulsory audit.

We have customers; in particular, funds, open joint stock companies, the proceeds of which from the activity they carry out and the balanced cost of assets do not exceed 1bln AMD. However they use audit services, basing on the decision of their trustees and owners.

- Today there is an opinion, according to which the government should approve a “shortlist” of authoritative audit companies, which will be entrusted work with big enterprises in order to avoid the chance that they might turn to services of affiliated audit companies. What can you say concerning this?

- I strongly believe that approval of a “shortlist” of authoritative audit companies is out of place, since in conditions of market relations, customers are the ones to decide the services of which company they want to use.

Moreover, the government is also the participant of that process, since many enterprises with state participation are subject to compulsory audit and in this case the state itself takes up the role of the customer.

- Don’t you think that the issue of regulation of compulsory audit sphere is in many respects hampered by absence of law literacy of managing subject, which often take audit activity as a variety of tax inspection?

- In our country there is a very low level of information on audit and audit services. It is limited to Yerevan, and at best - some big organizations, which function in regional centers. We realize very well that this type of service in Armenia does not have a history of even two decades; however the necessity of audit is obvious.

Unfortunately, there is a situation formed today, when audit service is confused with inspections of tax structures and the various services, provided by us, are perceived by certain companies as additional financial expenses.

- Next year companies with assets of 1bln AMD and more will also have to undergo compulsory audit following the results of 2010. According to the law on “Audit Activity”, the auditor has the right to evaluate the assets. Won’t this circumstance influence the objective selection of companies subject to compulsory audit? 

- This is a very important issue and it has been regulated legislatively. According to the law on “Audit Activity” audit companies have the right to evaluate the assets and the liabilities of organizations; however the audit company, which let’s say has realized evaluation of a particular organization’s assets, will not have the right to carry out its audit the same reporting year. So the sphere of audit companies’ interests is automatically limited.

Using the occasion I would like to touch upon the next issue. The fixed assets have a big percentage share in enterprises, in particular those are buildings, constructions, lands, the book cost of which is evaluated at lower rates, as compared to the real cost. Consequently, when these assets are estimated at their real cost, the list of organizations subject to compulsory audit will undergo significant changes.

- One can assume that in conditions of presence of international audit companies’ members in our country it is not easy for the newly-established companies to replenish their customer base. Which are the competitive advantages of your company?

- I believe that any considerate businessman, before running a new business, estimates the difficulties, which he/she will face while entering any formed sphere, and elaborates the program, which will secure a deserved place in the market for that business.

The main tasks, which our team faces today, are provision of quality services, formation of trust atmosphere and striving for long-term cooperation. In addition to what has been said, I want to note that we already have agreements on realizing audit for 2010 with companies, which ordered audit in 2009 fiscal year in our company.