Inadequate application

The Accounts Chamber seeks an audit of the Central Bank

The National Banking Council may authorize the Accounts Chamber to audit the financial and economic activities of the Bank of Russia . This was stated on Friday by the Chairman of the NBS, Finance Minister Alexei Kudrin, speaking in the Federation Council. Thus, for the first time in its history, the Accounts Chamber may receive the right to conduct an audit of the regulator of the Russian banking system.

Formally, an audit by auditors of the Accounts Chamber is not a violation of the rule on the independence of the Central Bank. By law, the Accounts Chamber can audit the activities of the Central Bank - by decision of the State Duma, which must be approved by the NBS. However, this opportunity has not been used so far. Last week, at its meeting, the NBS considered the audit by the Accounts Chamber of the Central Bank's activities for 2004-2006 inappropriate. This decision caused Sergei Stepashin’s department “regret and bewilderment.” “In light of the events of recent months that have affected the activities of the Bank of Russia, it would be logical to expect that the National Banking Council itself will enter the State Duma with a proposal to conduct such an audit by the Accounts Chamber of the Russian Federation in 2007. However, no initiative was shown on the part of the NBS,” says the official statement of the chamber.

Let us note that before, Sergei Stepashin’s department was already interested in the activities of the Bank of Russia. Thus, in November of this year, Mr. Stepashin sent a letter to President Putin, which spoke of the need to conduct an audit of the Central Bank to strengthen state financial control and ensure greater transparency of the bank. The Accounts Chamber also linked its desire to the murder of First Deputy Chairman of the Central Bank Andrei Kozlov in September. As you know, the main cause of crime is the professional activity of a banker.

The Accounts Chamber made the same request to Alexei Kudrin and Chairman of the State Duma Committee on Credit Institutions and Financial Markets Vladislav Reznik. “In accordance with current legislation, we asked the president, the government and the State Duma for permission to check the activities of the Central Bank of Russia, including the issuance of licenses to commercial banks,” Mr. Stepashin said in November.

On Friday, speaking in the Federation Council, Mr. Kudrin explained why the NBS decided to audit the Central Bank not in favor of the Accounts Chamber. According to him, the proposal received from one of the auditors of the chamber was related to the verification of certain types of expenses for the implementation of certain functions of the Central Bank. However, Mr. Kudrin says, the Central Bank budget is not divided by function, and it is impossible to determine “that such a function costs so much.” “After consulting, we came to the conclusion that the application was formulated inadequately,” noted the head of the Ministry of Finance. “I think that even Sergei Stepashin was not informed about this order.” However, according to him, “this does not mean that if the appeal is formulated correctly, we will refuse.” Sergei Stepashin did not accept the minister’s explanation, saying that “everything is according to the law,” and recalled the letter sent to the president.

In response, Mr. Kudrin said that the Ministry of Finance has not yet received instructions from the country’s leadership related to the inspection: “When there is a proposal that corresponds to the goals and capabilities of such an inspection, we, of course, will respond positively.” Let us note that the Accounts Chamber has never analyzed the activities of the Central Bank. The annual report of the auditing company conducting an audit of the Central Bank is sent to the State Duma and heard at meetings of the NBS. Four companies will participate in the competition for the right to conduct an audit of the Bank of Russia for 2006: Deloitte & Touche CIS, Ernst & Young Vneshaudit, Finexpertiza together with Rufaudit, PricewaterhouseCoopers Audit together with Financial and Accounting Consultants ". The auditor of the Central Bank's reporting for 2004 and 2005 was PricewaterhouseCoopers Audit together with FBK.

Natalia ROMANOVA