PwC is set to investigate Gazprom’s relationship with gas trader Itera in a move that has attracted criticism from minority shareholders.
The Big Five firm is Gazprom’s auditor and signed off accounts that failed to identify Itera – which benefits by millions of dollars through favourable treatment by Gazprom – as a ‘related party’.
The accountants, based at Strathclyde, Essex and other universities, wrote this week to the ICAEW, expressing ‘concerns’.
This followed a Gazprom board meeting last Wednesday at which representatives of investors, who commissioned a separate study of the Gazprom-Itera links by Deloitte & Touche, protested at a management ruling blocking such an independent audit.
Minority investors’ representative Boris Fyodorov, former Russian deputy prime minister, said he did not doubt PwC’s professionalism, but it was ‘proper’ an inquiry be conducted by a third party ‘whose conclusion would settle the debate and eliminate doubts’.
Fyodorov said investors could resort to legal action to compel management to cooperate with the Deloitte & Touche audit, permitted by Gazprom’s statutes.
John Heywood, a PwC partner, said the terms of reference for the Gazprom-Itera inquiry had not yet been agreed. ‘We would not take on any assignment where we thought we would have a conflict of interest,’ he added.
The Gazprom board’s decision to commission the new study came in response to a campaign by Fyodorov and others.
Itera, whose owners are unknown, has benefited from gas transport deals and production licences received from Gazprom.
- The Big Five have agreed jointly to enforce an international accounting standard for hyperinflationary economies in Russia, which could see more companies dragged into the red, the Moscow Times has reported.
IAS29: Financial reporting in hyper-inflationary economies, requires companies to present financial statements in a measuring unit that is current at the balance sheet date and to state comparative amounts for prior periods in the chosen measuring unit. Any gain or loss on the net monetary position arising from the restatement of these amounts should then be included in net income and separately disclosed.
‘We have verbally agreed that Russian companies should treat IAS as the basis,’ Barry Eden, a partner at Arthur Andersen, told the Moscow Times.
Eden also warned that companies not accounting for the inflation in their annual reports would be subject to adverse opinion from accountants.