[Skip to Content]

Register to receive the OMFIF Daily Update and trial the OMFIF membership dashboard for a month.

* Required Fields

Member Area Login

Forgotten Password?

Forgotten password


Mis-stated accounts and financial stability

by Natalia Stanick

Mis-stated accounts and financial stability


Since becoming governor of the Central Bank of Russia in June 2013, Elvira Nabiullina has undertaken the challenging task of lowering inflation with the view, among other things, of forming the conditions for well-balanced and stable economic growth. In parallel, the governor has been widely recognised for her efforts in extinguishing the worst cases of financial malpractice in Russia.

In its regulatory capacity and under the stewardship of Nabiullina, the Bank of Russia (CBR) ensures accurate reporting by supervised institutions. The results of independent auditing are widely used in decision-making and regulatory oversight by the CBR, and improving the quality of auditing is given high priority by the authorities. Without the development of institutions’ internal auditing functions, supervised by the CBR, it is impossible to assure the stable functioning of the financial market. In general, credit organisations in Russia already maintain proficient internal auditing departments. These have successfully directed programmes such as investigating abuses, supporting external audits and oversight bodies, and independent evaluations of internal control and risk management systems.

The provision of quality auditing serves as a foundation for market participants’ investment decisions. However, the Bank remains concerned with the problem of mis-stated accounts. There are irregularities where external auditors have communicated the unmodified (and occasionally unqualified) statements of institutions which are supervised by the Bank.

In 2016, licences were revoked from 97 credit institutions; 68 of them were declared bankrupt; 59 of them had audit opinions on the reliability of the annual accounts. For non-bank institutions in the same period, the CBR withdrew the licences of 17 private pension fund organisations. Eight of these organisations had presented an unmodified audit opinion on their annual financial statements. This is an extension of the measures implemented by Nabiullina to combat malpractice in Russia’s financial institutions. Since entering office, she has overseen the closure of more than 300 negligent and unstable banks. Further checks and balances must be applied to the quality of audits for publicly listed companies. Public companies affect the interests of a wide range of investors, and therefore impact the investment climate of the entire country.

Natalia Stanick is Adviser to the Chief Auditor at the Bank of Russia.