Yerevan /Mediamax/. Interview of “TM Audit” General Director, Expert of International Federation of Accountants## (IFAC) Tatul Movsisyan to Mediamax Agency and Banks.am Portal

- “TM Audit” has been working in the market of audit services for over 10 years. What formation stages of the company’s development can you single out?

- The Company was established in 1997. The same year it received a license for audit activity. I would divide the 11-year period of our activity into three stages.

In 1997-2000, the Company was not working actively, since the main part of our employees was involved in the process of reforming the accounting system, a process, which was very important for our country.

In particular, with our active participation, the law “On Accounting”, the RA Accounting Standards, the account plans for the bookkeeping of financial-economic activity of organizations, the packages of financial statements, documents of primary accounting and the standard forms for registration books for accounting were elaborated.

As a result of large-scale changes in the accounting system, the implementation of educational programs and staff retraining courses became a bare necessity. Our employees realized retraining courses in many companies, higher and special educational institutions, in which a few thousand learners participated.

Active public work within the framework of the Association of Accountants and Auditors of Armenia was also realized.

As a result, “due to” the company, our specialists made their contribution to the process of a new accounting system formation, gained serious experience, knowledge and became well-known.

The years of 2000-2004 became a stage of formation for us. The company took up provision of high-quality specialized services to many international and local organizations and companies. In particular, we had as customers regional and local structures, implementing programs of the World Bank, the USAID, The Ministry of Economic Cooperation of Germany, as well as large companies, such as the “Armenian Airlines”, “Zvartnots” International Airport, “Yerevan Jewelry Plant”, “Nairit”, “Aray”, “Tashir Invest Group”, “MIKA-Cement”, “Elite Group”, “Armimpexconcern”.

If before that the Company was famous for its specialists, in the mentioned period “TM Audit” became well-known as one of the leading audit-consulting companies in Armenia.

At the level of experts, we continued participating in the assessment of projects, which touched upon legal acts of the sector. In the course of those years, we became authors and co-authors of over 20 books, which are still used in higher educational institutions as manuals, and represent reference book for specialists.

Our employees entered the staff of the governing body of the Association of Accountants and Auditors of Armenia, were included in the staff of the Armenian Accountants’ Certification Committee and the Auditors’ Qualification Committee of the Armenian Ministry of Finance and Economy.

Starting from 2005, active cooperation with prominent international structures and organizations, which were carrying out investment activities in Armenia, was initiated. In particular, our Company turned out the winner of any tender, announced by the Headquarters of the Office of European Bank for Reconstruction and Development (EBRD). Here we talk about the financial analysis of investment programs (financial due diligence), realized by EBRD in the authorized capital stock of Armenian companies, as well as realization of audit of financial statements of those companies. Within the framework of the cooperation with EBRD, such services were provided to “Shen-Concern”, “Tamara Fruit”, “Hitex Plastic”, “Liqvor”, “Star Divide”, “NatFood”, “Alfa-Farm”, “Dili” Companies.

Recently, we also concluded the audit of financial statements of “ArmenTel” Company for the year of 2007.

The spectrum of the services we provide was also expanded. The company started realizing accounting of many organizations, providing consulting services in the process of reissue of financial statements, prepared according to the Standards of RA Accounting (SRAA) according to International Financial Reporting Standards (IFRS) and the U.S. Generally Accepted Accounting Principles (US GAAP).

- Recently, the Central Bank made a decision that the Companies, which are already conferred CB ratings “B-” and higher, starting from 2009, should provide financial statements, approved by one of the companies of the “big six”. We would like to hear your comment on the fact.

- Of course, it was expedient for the Central Bank of Armenia to define a “short-list” of the auditors, as it is done by the World Bank or the EBRD. However, these structures regularly (generally, twice a year) carry out check-ups in the leading audit companies, as a result of which they reveal the companies, which meet all the necessary criteria. As the practice shows, in certain cases, as a result of qualification, the “short-list” included “Armenian” companies as well.

I think that the Central Bank of Armenia should have established equal conditions for all participants of the market and define the “short-list” following the result of the qualification. As a result of the fact that the preference is only given to the “big six”, without realization of a qualification process, “Armenian” companies are “suffocated”, since their main customer base is in the sphere of the Central Bank’s regulation.

- Participants of the financial market more and more often put forward the issue of the necessity to implement international bookkeeping standards in Armenia. How do the matters stand in the given direction?

- This problem has ripened a long time ago, and it requires urgent solution. Starting from 2001, because of absence of funding, the work, carried out in the given direction, was interrupted. As a result, today the Standards of RA Accounting (SRAA) do not meet the international standards. And the foreign investors need comprehensible and distinct financial statements, which is not secured in case of SRAA. This is why the organizations hire consultants (we have been fulfilling such orders for already 6 years) for the financial statements, prepared according to SRAA to be reissued according to the International Financial Reporting Standards (IFRS), or according to U.S. Generally Accepted Accounting Principles (US GAAP)

A bare necessity to translate and use IFRS instead of SRAA has appeared. The necessary work is carried out and the problem is again in “funding”. I believe that soon it will receive its solution.