You were there from the beginning when KPMG opened in Saint Petersburg, weren't you, Daniil? Can you tell us how it all started? What difficulties did you face? How were they overcome?
My career at KPMG began at the end of 1995. In general terms, I remember that we employed less than 30 people, and our office was on the Griboyedov Canal, opposite the Russian Museum's Benois Wing (later we moved to a building at the Mendeleyev Institute). We had two departments: Audit and Tax & Legal. Everyone at the time was driven by enthusiasm, drawing a lot on past experience as standard audit programmes had not been developed. In subsequent years, of course, the audit process has undergone considerable standardisation. The motto was "understanding the client's needs", and to this day a deep understanding of the client's industry is an advantage for firms providing audit and advisory services.
How were Audit and auditors perceived in the 1990s?
I think that in the 90s auditors were perceived mainly as tax consultants. At that time, most accounting and reporting department employees did not understand the value of the Auditor's Report. In terms of professional challenges, I remember that companies were wary of disclosing information on related-party settlements and investment liabilities, and there was no practice for making provisions. Since then, much has changed: I've been in the industry 12 years, and significant steps have definitely been made towards recognising and adopting international accounting standards and the need for audit.
What was your most interesting and successful engagement at KPMG?
I wouldn't like to single out any one engagement. I have very good memories of the majority of the engagements I took part in –the audits of Peterstar, Yarpivo, Stora, a management reporting engagement for the Hermitage, to name but a few. My experience of working at KPMG had a very strong impact on my personal and professional development in the most positive sense of the word.
You've been in the industry for 12 years –what companies have you worked for?
After KPMG, I joined Ilim Pulp Enterprise, where I've been since January 2001. So in my case only the name and structure of the company have changed: in 2007, our firm underwent reorganisation following the acquisition of a 50% interest in it by International Paper, a US company, and we are now known as Ilim Group.
You're now Director of Accounting and Reporting at Ilim Group. What made you choose this company?
I considered a number of career development options, both in Russia and abroad. The offer from Ilim Pulp was the most attractive. There were two reasons: firstly, having enough experience in consulting, I wanted to see how I would do at a manufacturing company; secondly, for personal reasons, I didn't want to leave Saint Petersburg.
What do you like most about your work?
Its dynamic nature. And, of course, it's nice to be able to have an influence on important decisions for the business and to propose/implement potential improvements to the company's accounting and reporting in the light of global trends. I haven't had any problems in moving from project work; at the moment I'm doing less operational work and more work on implementing large projects, including projects on raising finance, modifying the management accounting system, implementing SAP and setting up service centres.
International Paper, the world's biggest pulp-and-paper company, is a strategic partner of Ilim Group and holds a 50% interest in it. Are Western standards of doing business having an effect on the company? If so, how?
Naturally, Western standards are having a big effect on us. Following the purchase of a 50% interest in the company by International Paper, we adopted a raft of policies at the same time. Documenting business policies in a similar way to accounting policies was convenient for us, and it was easy for us to adapt to the new conditions. It should be said that at the time of acquisition Ilim as a company was a leader in terms of business organisation, and with the introduction of the new policies issues were hardly likely to arise other than in the event of significant reorganisation of the structure and functions of the company's business units.
Do you think businesses in Russia are becoming more "Europeanized" in general?
Large businesses –yes, they are gradually "Europeanizing". As for small and medium-sized businesses, I think they are under considerable bureaucratic and tax pressure, so we probably cannot talk about their discipline and transparency without using the adjective "partial". Unfortunately, quite a few sectors are currently experiencing problems relating to government regulation: the standards announced for doing business require companies to make significant investments and to maintain a significant level of operating costs. For large corporations, it's different: they have the funds to ensure the required transparency (even if the requirements for them are stricter). Minority players, by contrast, cannot manage without appropriate government support, which on one hand requires the current regulations (e.g. tax) to be simplified, and on the other requires tighter control over compliance.
The industry your company works in has a significant impact on the environment. Do you support "green initiatives"? Does the company have an environmental policy?
Ilim Group is an environmentally responsible business. All our felling is limited to government quotas, and we have something called the "permitted annual felling rate", which determines the volume of timber that may and should be felled to ensure "healthy" forest management overall. We do a lot of reforestation and planting work. As for pulp and paper production, an example of our care for the environment is the fact that in a number of cases our wastewater is of a better quality that the water we take in for our production needs. This year, we are continuing to implement large-scale production projects such as those at Bolshoy Bratsk and Bolshaya Koryazhma, and all our investments have a significant environmental component. In this respect, we are trying to follow international practice.
What kind of person makes a successful manager? What qualities are needed?
I would say qualities such as an ability to understand people and their motives and needs, an ability to make decisions quickly, and, of course, an ability to clearly convey their principles to their subordinates.
What were the firm's highlights of 2012?
In 2012, my team and I worked on a number of projects centralising various functions at Group level: accounting, HR record-keeping and sales support. We spent several years preparing these major projects, and it was last year that we implemented them. Now that the centralisation is complete, we plan to "fine-tune" the processes in 2013.
Do you keep in touch with your former KPMG colleagues?
Yes; I keep up with quite a few past and present KPMG employees. I remember my years with the firm with a great sense of gratitude.
Do you any wishes or advice for auditors just starting their career?
KPMG offers a unique opportunity for hands-on learning about specific aspects of how different businesses and industries operate, and with this in mind my advice to new auditors is as follows: put as much time and effort as you can into acquiring professional knowledge. You need to get the hang of KPMG's holistic approach to business analysis –it may come in use anywhere, and the better you learn how to apply it, the more valuable a professional you will be able to become.