№1(12)(2013)

After publishing the article “A story of merger of two audit firms or One should take caution when drinking cognac with Kirsh” by L. N. Galchuk, Director of PE “AF Timlar-Audit”, we do a follow-up further development of the conflict.

"Independent AUDITOR” insisted that the situation was reviewed at the meeting of the Audit Chamber of Ukraine. The Disciplinary Commission of the Audit Chamber sat on 28 November 2012, and the order of the day was the issue of breach of professional ethics both by the director of PE "AF" Timlar-Audit " L. N. Galchuk, and the head of LLC "AAN" Seya-Kirsch-Audit "T.N. Zatserkovnaya

On December 3, 2012 we received a reply from the Audit Chamber, which read: "Audit Chamber of Ukraine advises editors of the journal to refrain from assessing relations between auditors (audit firms), covered in the journal, as editors' conclusions in a letter dated 18.05.2012 № 04, verified by the Audit Chamber, have not been confirmed. The Audit Chamber of Ukraine has no reason to bring "to responsibility auditors liable for improper performance of professional duties".

We have invited our colleague, Director of PE "AF "Timlar Audit" Larissa Galchuk, and asked her to comment on the decision of the Disciplinary Commission of the Audit Chamber, and also to describe the current situation in "Timlar-Audit".

Larisa Nikolayevna, 28 November 2012 the meeting of the Disciplinary Commission of the Audit Chamber, examined the violation of professional ethics both by the director of "AAN" Seya-Kirsch-Audit" T.N. Zatserkovnaya and yourself. Do you think that the Disciplinary Commission had reason to submit for consideration the question of you violating professional ethics?

- I think that the issue of violation of professional ethics both by myself and by T.N. Zatserkovnaya was raised justfully, because in a conflict situation both sides are always guilty to some extent.

Then what is your fault?

- I showed complete trust in people whom I did not know and who could not be trusted. I did a number of actions relating not only to me, but to my co-workers, customers, thus putting them in a difficult and unpleasant situation.

You were present at the meeting of the Disciplinary Commission of the Audit Chamber, during consideration of your breaching professional ethics?

- I was present at the meeting, asked to be heard and told the members of the Disciplinary Commission of the meeting of LLC "AAN "Seya-Kirsch-Audit" where it was announced that the decision to include me into participants of LLC "AAN "Seya-Kirsch-Audit" was canceled. I realized I had to tell it and that it would be a great pity if, for some reason, I failed to do so.

Why is it so important for you?

- Because the meeting was just a mockery of three prepared people over a defenseless person. Defenseless in the sense that all I had to do according to our agreement - transfer employees, renew the contracts, I had already done by that time. So I had no leverage to influence the situation or remedies. When people do that, their idea is that their actions will not go public because the person who is subjected to such actions, need a lot of mental and physical strength to make such information public.

And indeed, I gave a very brief account of the meeting in the court and did not tell about it to anyone even the closest people in as much detail as I did at the meeting of the Disciplinary Commission of the Audit Chamber.

The Disciplinary Commission found no violations of professional ethics either by yourself or by T.N. Zatserkovnaya. Do you consider whether the decision was just?

- I think that the conflict has gone far beyond the professional boundaries, so any judgment of our actions, or lack thereof will not change anything.

As for me, like I have already said, it was important for me to be heard. I was listened to, so there are no further complaints from my side.

Will it be just to say that following the meeting you are in a state of fight? What are you fighting for now??

- The week following the meeting and up to my final departure from LLC "AAN "Seya-Kirsch-Audit" I was certain that there will be efforts made to find a compromise and the solution will be found. I just could not imagine there could possibly be any other way.

When I realized that it was going to be another way round, I tried to defend my right to compensation for moral and material damage in court. But the court (primary and secondary jurisdiction) found no grounds for a ruling in my favor.

Through court again I had to settle the issue of my employment record with the date of my actual dismissal. Again, the court (in this case the courts of the first, second and third instances) saw no reason for resolving the issue in my favor. Therefore, today the struggle is mostly finished.

Do you consider yourself defeated??

- Yes, I do. But no way in the world would I want to trade places with winners.

How is "AF "Timlar Audit" doing these days? How long did it take to restore the firm?

- Today "AF" Timlar Audit "has fully resumed its activities. It required great effort, especially in the first six months after the departure from LLC "AAN "Seya-Kirsch-Audit".

However if you receive the proposal to merge in the future, will you even consider such proposal?

- Yes, of course. I'm ready for change, but having received a costly lesson I certainly will be very picky selecting partners and extra attentive to all the paperwork.

Do you still believe that a trust-based relationship guarantees a productive partnership in business?

- Yes, I still believe so, not only in business but in life generally. My trusting attitude to people has not changed. I am for honesty and trust. And I refuse to change.

Your story is an invaluable experience for our readers, as many of them work in the audit sphere. What would you advise them? Is it worth risking in this business for the sake of future prospects?

- Audit firms should work towards consolidation, it is the demand of time. Of course, it is necessary to properly execute the documents, you need to build relationships with people who deserve these relationships. And learn from other people’s mistakes.