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The government has revised its rules regarding the provision of audits to companies that have Russian shareholders, clarifying that UK auditors can still act for companies where this is the case.
As of 30 June 2023, UK companies that are part owned by a Russian shareholder are still permitted to be audited by a UK auditor, “irrespective of any auditing service that is provided directly or indirectly to the Russian shareholder or other form of member of the undertaking”.
Currently, the government says that where a part of a multinational group is ‘a person connected with Russia’ and another part is a company in the UK, providing auditing services from the UK to Russia is prohibited both directly and indirectly.
However, the effect on group audits is subject to three exceptions, including the latest update regarding Russian shareholders.
The first exception relates to a UK subsidiary undertaking of a Russian parent undertaking. A UK company in this situation is still permitted to be audited by a UK auditor in fulfilment of its legal obligations, irrespective of any auditing service that is provided indirectly to the Russian parent undertaking.
The other exception relates to the audit of a UK parent undertaking with a subsidiary undertaking that is ‘a person connected with Russia’, where the UK parent undertaking is a credit institution. In this situation, a UK auditor is permitted to provide services to that UK credit institution, for the purposes of the audit of the consolidated group accounts.
However, providing auditing services, directly or indirectly, to a Russian subsidiary of a UK parent undertaking that is not a credit institution, as defined in the regulations, is prohibited, meaning that the UK audit might be affected.
The department for business and trade said: “We are unable to comment on the individual circumstances of each audit firm and audit client affected and they should take their own legal advice as to whether their activity falls within scope of the sanctions.”
