Mandatory audit for foundations and small businesses will be canceled

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The State Duma’s Financial Market Committee recommended that the lower house of parliament adopt in the first reading a bill proposing to abolish the mandatory audit for small businesses.

The document was submitted for consideration by the State Duma in June 2020, and has not yet been considered.

The draft law proposes to increase the financial criteria for statutory audit provided for by federal law, respectively: in terms of revenue from 400 million to 800 million rubles; by the amount of assets of the balance sheet – from 60 million to 400 million rubles. This measure will make it possible to exempt small businesses from mandatory audit, that is, to reduce financial and administrative burdens on them, the explanatory note says.

In the same project there are changes for foundations and joint stock companies. Only JSCs whose securities are admitted to organized trading will be subject to mandatory audit. And the funds are only those whose assets and money receipts for the previous reporting year exceed 3 million rubles. Exceptions are state non-budgetary funds, a specialized endowment management organization and a fund with international status.

In addition, the bill provides for clarification of the definition of the Code of Professional Ethics of Auditors, which ensures full disclosure of the content of this document, as well as the establishment that the basis for the development of the Code of Professional Ethics of Auditors and the rules for the independence of auditors and audit organizations is the code of professional ethics adopted by the International Federation of Accountants.

The bill is generally supported by the Government, so there is a hope that it will be adopted soon.