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Accounting, Organizations and Society
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From inspection to auditing: Audit and markets as linked ecologies


3 Andrea Mennicken *

4 London School of Economics and Political Science, Department of Accounting and Centre for Analysis of Risk and Regulation, Houghton Street, London WC2A 2AE, UK

a r t i c l e i n f o a b s t r a c t
1 7

9 This paper studies the roles that images and ideas of market creation played in the re-artic- 11
ulation of relations between government, audit expertise and professional organisation in 12
post-Soviet Russia. It examines the change from state-led inspection to market-oriented 13
auditing between 1985 and 2005, and analyses this in terms of the notion of ‘‘linked ecol- 14
ogies”. The paper queries the relationship between audit and neoliberal modes of govern- 15
ing (Miller, P., & Rose, N. (1990). Governing economic life. Economy and Society, 19(1), 1–31, 16
Miller, P., & Rose, N. (2008). Governing the present: Administering economic, Social and per- 17
sonal life. Cambridge: Polity Press, Power, M. (1997). The audit society: Rituals of verification.
Oxford: Oxford University Press). It argues that we should be careful not to see audit as an
unproblematic expression of neoliberalism. Investigating the dynamics and conflicts
accompanying attempts to establish auditing as a site for governmental reform, this paper 21
examines the manifold ways in which the meaning of markets and the roles of auditing in 22
them can be unsettled, reinvented and transformed. The paper analyses how auditing was 23
made marketable, and investigates how projects of post-Soviet audit development came to 24
be carried forward, shifted and changed through new ‘‘enterprising selves” and their newly 25
founded audit and consulting firms. The paper concludes with a more general discussion of 26

the implication of these findings for our understanding of the dynamics of professionalisa- 27
tion, and the changing of relations between politics and expertise. 28
Ó 2009 Published by Elsevier Ltd. 29


31 Audit in transition Ministry of Finance.2 Over the last 10 years, Russia’s audit 43
firms have achieved remarkable growth rates. In 2001, the 44
33 1989 – That was the nascent stage of Russian audit. The auditing business grew by approximately 60% in terms of 45
34 task that we set at that time was to master that busi- revenue (excluding the then Big Five companies).3 In 2007, 46
35 ness and lay the groundwork for commercial success the total revenue of Russia’s 150 largest audit groups 47
36 doing it. So the challenge we faced was to create the (excluding the Big Four) increased by 37.4%, and reached a 48

37 market for our services and then prove to this market total of approximately 37 billion Roubles.4 This paper anal- 49
38 that it cannot exist and develop without us. (Andrey yses the rise and expansion of auditing in post-Soviet Russia, 50
39 Dubinsky, CEO, BDO Unicon, Russia)1
40 Since the collapse of the Soviet Union, auditing has become
41 one of Russia’s most successful business sectors. In January

See ‘‘Svedeniya o raspredelenii auditorov, auditorskikh organizatsiy i
42 2008, more than 6400 audit firms were registered with the
individual’nykh auditorov po federal’nym okrugam” [Information about the
spread of auditors, audit organisations and individual auditors across
federal regions], issued by the Russian Ministry of Finance on 25.01.2008.
audit2007.pdf (accessed in November 2008).
See business journal Ekspert, No. 14, 08.04.2002.
* Tel.: +44 (0)2078494641; fax: +44 (0)2079557420. See article ‘‘Business audit in Russia” which was published in the
E-mail address: journal Kommersant and translated by GAAP.RU on 22.10.2008. Cf.
See (accessed in May 2007). (accessed in November 2008).

0361-3682/$ - see front matter Ó 2009 Published by Elsevier Ltd.

Please cite this article in press as: Mennicken, A. From inspection to auditing: Audit and markets as linked ecologies. Accounting, Organiza-
tions and Society (2009), doi:10.1016/j.aos.2009.07.007

AOS 682 No. of Pages 26, Model 3G
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2 A. Mennicken / Accounting, Organizations and Society xxx (2009) xxx–xxx

51 and draws particular attention to the complex relationships multiple elements that are neither fully constrained nor 97
52 that were formed between auditing practice and the ideas fully independent”. An ecology is characterised by ‘‘its set 98
53 and instruments of marketisation. Investigating the dynam- of actors, its set of locations and the relation it involves be- 99
54 ics and conflicts accompanying attempts to establish audit- tween these” (Abbott, 2005b, p. 245). According to Abbott, 100
55 ing as a site for a reform of modes of governing, this paper the particular social structures and locations of an ecology 101
56 examines the manifold ways in which the meaning of mar- are not pre-existing positions: ‘‘It is the process of con- 102
57 kets and the roles of auditing in them can be unsettled, rein- structing the relations between actors and locations that 103
58 vented and transformed. in fact constitutes and delimits both actors and locations. 104
59 Utilising a linked ecologies approach (Abbott, 1999, Analytically and empirically, the relational process is prior” 105
60 2005b; Fourcade, 2006; Fourcade & Khurana, Forthcom- (Abbott, 2005b, p. 248). A linked ecologies approach thus 106
61 ing; Ong, 2005; Star, 1995; Star & Griesemer, 1989; Wise, underscores that audit and markets, and the boundaries 107
62 1988), this paper queries the relationship between audit that come to be formed around them, only exist in relation 108

63 and neoliberal modes of governing (Miller & Rose, 1990, to other arenas of economic, political and social activity 109
64 2008; Power, 1997; Rose, 1993, 1999). It argues that we (for this point see also Burchell, Clubb, & Hopwood, 110

65 should be careful not to see audit as an unproblematic 1985; Gendron, Cooper, & Townley, 2007; Miller & O’Leary, 111
66 expression of neoliberal government. Following Power 1994; Power, 1997; Radcliffe, 1998; Robson, 1991; Robson, 112
67 (1994, 1997), the paper agrees that audit is more than Humphrey, Khalifa, & Jones, 2007). The relationship be- 113
68 a series of mundane techniques. Auditing should also be tween audit and markets, to borrow from Barry, Osborne, 114
69 understood as an idea, ‘‘a pervasive logic which has a life and Rose (1996, p. 13), is ‘‘not automatically one of func- 115
70 over and above specific practices” (Power, 1994, p. 3). tionality or cooptation.” Instead of a single source of 116

71 Yet, the logic of audit is itself far from unproblematic, change, such as problematisations of Soviet planning, it is 117
72 stable and readily defined. Nor is it exclusively wedded the multiplicity of different factors that are to be attended 118
73 to neoliberalism (Kipnis, 2008; Strathern, 2000). We to, the ‘‘assemblage”, ‘‘network” or ‘‘field” of actors, 119
74 should be careful not to overstate the transformative instruments and ideas involved in post-Soviet audit and 120
75 power of audit. In post-Soviet Russia, the rise of ideas market reform (Callon, Millo, & Muniesa, 2007; Chua, 121
76 of Western-oriented auditing did not automatically lead 1995; DiMaggio & Powell, 1983; Gendron et al., 2007; La- 122
to an end to the earlier Soviet inspection practice. The
Russian business of auditing has, at least partially, been
built into the very same structures that reformers argued
tour, 2005; Miller, 1991, 2008; Miller & O’Leary, 1994;
Ong & Collier, 2005; Power, 1997; Quattrone & Hopper,
2005; Robson et al., 2007; Suddaby, Cooper, & Greenwood,
80 needed to be changed. Further, we need to recognise the 2007). 126
81 multiple nature of neoliberalism itself. A variety of phe- A linked ecologies approach emphasises change, inter- 127
82 nomena can become embraced under the label of neolib- nal dynamics and the overlapping and interpenetrating of 128
83 eralism (see e.g. Burawoy et al., 2000; Harvey, 2005; Ong, previously distinct worlds. Rather than focusing on the 129
84 Q2 2006).5 With the help of a linked ecologies approach, this ways in which different arenas, networks or fields give rise 130

85 paper seeks to draw attention to the multiple and refracted to the emergence of a particular accounting technology – 131
86 nature of neoliberalism, and connected ideas of post-Soviet such as value-added accounting or discounted cash flow 132
87 audit and market creation. Focussing on the ‘‘multiplicity analysis (Burchell et al., 1985; Miller, 1991) – attention is 133
88 of voices” (O’Malley, Weir & Shearing, 1997) within the focused on the ways in which arenas and fields themselves 134
89 project of post-Soviet audit reform itself, the paper aims come to be interlinked and reworked. Emphasis is placed 135

90 not only to enhance our understanding of the specificities on the modes and processes of mediation and co-produc- 136
91 of Russian audit expertise. It also seeks more generally to tion between different arenas or fields (see also Miller & 137
92 contribute to our understanding of how neoliberal modes O’Leary, 2007; Wise, 1988).6 138
93 of governing are played out and contested in non-Western In the case studied, markets for audit were actively cre- 139
94 contexts. ated, crafted and shaped, not only by the Russian govern- 140
95 Following Abbott (2005b, p. 248), ‘‘linked ecologies” ment, but also by the newly founded audit firms and 141

96 have to be understood ‘‘in terms of interactions between their representational instruments. Emphasis was shifted 142
from auditing as an abstract mechanism designed to help 143
develop markets, to the marketisation of audit organisa- 144
Following Harvey (2005, p. 2), this paper defines neoliberalism in the tions. Auditing itself came to be marketised and seen as a 145
first instance as ‘‘a theory of political economic practices that proposes that
human well-being can best be advanced by liberating individual entrepre-
platform for entrepreneurial self-realisation. The new audit 146

neurial freedoms and skills within an institutional framework characterized entrepreneurs themselves, in cooperation with the govern- 147
by strong private property rights, free markets, and free trade.” As a
technology of government (Ong, 2006; Rose, 1993, 1999), neoliberalism
seeks to reconfigure ‘‘relationships between governing and the governed, In this respect, a linked ecologies approach can also help overcome
power and knowledge, and sovereignty and territoriality” (Ong, 2006, p. 3). some of the limitations that have been ascribed to the concept of fields in
Yet, it cannot be reduced to ‘‘a uniform global condition” (ibid., p. 14). As institutional analysis (DiMaggio & Powell, 1983; Suddaby et al., 2007;
Ong points out, ‘‘neoliberal forms are often in tension with local cultural Wooten & Hoffman, 2008). Ecological analysis helps to see fields no longer
sensibilities and national identity” (ibid., p. 12). Neoliberal reform agendas, ‘‘as containers for the community of organisations”, but as a ‘‘relational
such as marketisation policies in post-Soviet Russia, create spaces for space”, an ‘‘intertwined constellation of actors who hold differing perspec-
experimentation with market reforms, which are not seldom accompanied tives and competing logics” (Wooten & Hoffman, 2008, pp. 138–140). As
by local resistance, exceptions and mutations (Burawoy, 2001; Burawoy Abbott points out, it is in many ways a much loser and empirical model and
et al., 2000; Burawoy & Verdery, 1999; Hoffman, 2006; Kipnis, 2008; Sigley, an attempt ‘‘to find regularity in a social world first imagined as utterly
2006). fluid” (Abbott, 2005a, p. 6).

Please cite this article in press as: Mennicken, A. From inspection to auditing: Audit and markets as linked ecologies. Accounting, Organiza-
tions and Society (2009), doi:10.1016/j.aos.2009.07.007

1999. Wise. and how such pro- cesses may or may not contribute to the changing of rela- 221 222 223 TE 177 tors. Western. This implies that the move from socialist forward. Bychkova. socia. and wider processes of local and global market creation. Ong (2005. Sucher. 2009. created the markets they sought to rule. Mukherjee. 1996. Gendron et al. It seeks to make room for the complexities ing the specificities of new audit practices in Eastern Eur. and helps scrutinise the changing interplays ing is neither a one-way process of change. Star & Griesemer. The transition from inspection to audit. little attention has been de. indeterminacy and complexity of knowledge production. 224 178 study. their properties and surroundings that it seeks to tions between government. 204 158 2007. It makes us aware that the objectives as clearly defined as is often suggested by main. old relations. ‘‘relocated 227 181 constructivist ecological analyses. and Russian audit 244 UN 7 As Akera (2007) put it. Kelemen & Kostera. economic progressiveness and regulatory beyond the demand from firms and investors for mecha.007 . the notion of (linked) ecologies makes it possible to incorporate the various advances in constructivist scholarship into the 8 sociological study of the occupations and professions. 2005. 198 152 tion attempts. & Semenova. Capital mar. previously state-administered accounting and audit ex. Within science and Particularly in the early 1990s. 1989. we should be careful not to take such 196 150 tions and dynamics between Soviet and post-Soviet. nisms of corporate control and accountability. Star (1995). Sucher & Bychkova. audit development and mar. 2005). In so doing. Uche. demand. and & Bruszt. Miller & O’Leary (2000) propagated by Western economic advisers (Jeffrey Sachs. global and local audit definitions and marketisa. 195 149 ecologies approach draws attention to such changing rela. shifted and changed at government level. AOS 682 No. wrote about eco-systems in value reporting. old discourses at face value and to assume that they are trans. 2001. such processes list inspection and imagined new audit worlds (Burawoy & 205 159 of defining and redefining are likely to be the site of signif. investigating the roles of Andrei Shleifer) and multilateral institutions.aos. rationalities of competition. There were many fac. authority and expertise (Rose. 233 RR 187 determinations of audit and market ecologies. 2007). & Zelenka. 2006. Sian. 230 184 der. In voted so far to analysing the linkages that have formed be. of Pages 26. The reforms0 were and neoliberalisms in East-Asia.” This paper seeks to redress this relative over. a linked ecologies approach is neither functionalist. 1971) and is very closely related to perts become. & Vishny. Lieberman. 242 tors could articulate their control demands. 1998. founded audit and consulting firms. These measures sought to minimise contingency. sight by considering how linkages between audit. Yet. markets 231 185 Ong & Collier. 2001. 2006. 1999. 2004. Organiza- tions and Society (2009). 1998). and con. World Bank technical analysts in the organising and composing of financial information and OECD (Boycko. Gomez.g. Hannan & Freeman. 2001). Ocampo 211 165 different and sometimes competing programmes of post. Russia submitted itself to a range of technology studies.g. 220 174 175 176 contrast to Hannan and Freeman’s population ecology ap- proach. Neu. planted unchanged. 243 kets were virtually absent. 2005).7 and modes of governing were established. 2007. 1995. & Rahuja. Kosmala MacLullich & Sucher. such as the IMF. A linked spired by Western discourses of neoliberalism and pro. 218 172 approaches that. are grounded in a complex reworking of 203 157 us aware (see e. 215 169 lise somewhat ambiguous and ill-defined Western con. added AM] market governed by the 228 EC 182 out in the context of science and technology studies (Aker. Star & Ruhleder. 219 173 organisational theory (e.2009. Accounting. Graham. as Rose (1993. Kosmala. to explore linkages between knowledge and its various contexts. for instance. Star & Griesemer. 2006) used the notion of ‘‘ecologies of expertise” Western-oriented accounting and audit reform aimed at making financial and ‘‘eco-system” to draw attention to ‘‘situated entanglements” of markets reporting more useful for economic decision-making. accountability and consumer 229 183 a. which have been carried within [an imagined. challenged and 232 186 A linked ecologies approach highlights the multiple changed. 1996. 2002). 200 154 market relevance of auditing is not fixed. marketisation and 2007. and direct state intervention and included the removal of price controls. Stark 206 F 160 icant struggles. 1989. have been put forward in Moizer. nor are its 199 153 between auditing and markets. Star. doi:10. Soviet and post-Soviet. Nellis. A. OECD. Curtis & Turley. 208 OO 162 once. From inspection to auditing: Audit and markets as linked ecologies. where outcomes are only provisional. It has to be actively built and rebuilt. In privatisation. Although Russia’s reformers were largely in. and it prob. neoliberal reform measures. Hammond. 1988) and anthropology (Ong.. nor should it be stream audit theories. 2005). Verdery. 217 171 auditing.07. 202 156 studies of changes in Western audit practices have made tinue to undergo.. The transformations that the Russian 201 155 presumed. 214 PR 168 and paradoxes that derive from attempts to spread and uti. Hughes. and at 236 190 inspection to market-oriented auditing cannot be concep. Bychkova. Bogomolov. Robson et al. 2008.. 1998). IMF et al. 240 194 effectiveness. 2007. Model 3G 28 July 2009 Disk Used ARTICLE IN PRESS A. commonly referred to as ‘shock therapy’ 2001) and Akera (2007) have used an ecological metaphor to attend to the (Arbatov. Samsonova. 1995. Kovalev. gressiveness8. 197 151 and new.1016/j. There have been few studies of what happens when 225 179 the early Chicago School in sociology (Abbott. the cutting of government spending. And as and other Eastern European societies underwent. p. Mennicken. & Heincke. Anders A Åslund. and proposals for a anthropology. 226 180 man. flows. And in accounting. Stark.g. 1963. Enthoven. nor does it make a priori strong assumptions about the ac- D tween ideas and instruments of audit. ope and Russia (see e. and with what effects. 210 164 complex and dynamic account of the relations between 2000. the level of new ‘‘enterprising selves” and their newly 237 191 tualised as a period of change from one stage to the next. 2002. 212 166 Soviet governmental reform. 241 oriented auditing was brought into existence before inves. The remainder of the paper investigates how projects of 234 188 lematises the trajectories of their change (see also Ong & post-Soviet market and audit development were carried 235 189 Collier. 207 161 where they can be challenged and changed more than A few studies have described and analysed the emer. Mennicken / Accounting. Clayton. Please cite this article in press as: Mennicken. Goff. Shleifer. & Arnold. gence of Western-oriented accounting professionalism(s) 209 163 A linked ecologies approach asks us to develop a more in developing and post-colonial economies (Annisette. Abbott’s definition of linked ecologies draws on 1993). 213 167 ket creation. 1989). Karlova. 1991. Star & Ruhle. and there is an emerging body of literature examin. it is distinct from population ecology 2008. 238 192 organised around certain predefined notions of market tors driving the development of audit expertise that went 239 CO 193 rationality. Jeppesen. Organizations and Society xxx (2009) xxx–xxx 3 148 ment. 1995. past and present. 285) has put it. 1998. 2006. 2001. Sokolov. 216 170 cepts of neoliberal government.

07. The next section provides a brief outline et al. 2006.1016/j. their multiplicity. politics and tives of new professional associations. 2007). 307 247 to rule. news. something to be actively ordered and organised. and they helped to better understand the diverse 358 301 organisational management. 2001). AOS 682 No. 344 287 tion activities. 357 300 market creation – technologies of ranking. translated and reworked. and display their multiple and re. documents. Suddaby. & Cooper. papers (Vedomosti. made it possible to link the collected interviews and other 356 299 staged. Russian auditors. market ideals changed national firms.. commercial audit firms. professional. and several periods of participant 354 297 tices and inspection technologies were not entirely observation (Spradley. Hinings. 340 283 of auditing itself. towards 315 255 Section 2 traces the beginnings of audit development in instruments and activities of internationalisation and mi. 1999. with tools that business magazines (Ekspert. From inspection to auditing: Audit and markets as linked ecologies. Organiza- tions and Society (2009). The 351 294 the production of public visibility and the creation of document analysis was complemented with 48 in-depth 352 UN 295 new systems of audit representation and intra-occupa. ways in which ideas of audit and market-oriented develop. in the 325 268 responsibility”. 310 250 rather than an abstract mechanism of economic Greenwood. 363 Please cite this article in press as: Mennicken. 1990). Mennicken / Accounting. particularly large inter. and were an important source 349 292 instruments. Finansovaya gazeta. 312 252 These changing interplays and shifts are now examined Cooper. created and shaped the markets they sought reminder that professional firms. pp. A. So. Participant observations 355 298 changed or replaced. Greenwood & Suddaby. Western audit and consulting firms (par. It is argued that we need to redirect attention 314 254 of research methods and the empirical materials collected. 353 296 tional differentiations. Audit had to be turned into an economic As representatives and creators of ‘‘programmatic 345 288 business before audit itself could take place. 346 289 ideas came to be merged with Western marketing and con. Kommersant. Robson et al. Profil’) were 343 286 were not necessarily directly related to audit and inspec. 1999. p. Yet. 323 263 Rose (1999. 1980). analysed. We observe a shift from programmes pro. tween 2001 and 2002. point in understanding the specificities of post-Soviet audit 348 291 ticularly the then Big Six). 319 OO 259 chev’s calls for Perestroika [Restructuring] in the late logical studies of audit and audit cultures to appreciate 320 260 1980s. and audit knowledge” (Radcliffe. interviews were conducted with former Soviet financial 361 304 standing of the dynamics of audit professionalisation and inspectors. adopted that can be understood as bricolage where differ. This 318 258 were articulated at government level following Gorba. Hanlon. of Pages 26. Accounting. 150). Kommersant daily. they were rewrapped and re. Auditorskie Vedomosti). became involved in discourses aimed 264 at transforming the Soviet ‘‘ethos of government” – ‘‘from PR 265 one of bureaucracy to one of business. interviews (Wengraf. economise ing and participant observation methods.007 . 4–6). It describes and analyses how pro. 1995. interrelated. Section 4 analyses how post-Soviet audit. rather. academics. 332 275 It is shown how commercial auditing and state-indepen. 311 251 coordination. 327 270 and examine how market and audit ideals came to be ent sets of representations are assembled and different 328 271 272 273 shifted. Soviet and post-Soviet accounting and audit 338 281 moting audit as a state-independent institution of control journals (Bukhgalterskii uchet. to quote transformed and subverted in day-to-day practices. with the help of Western ideas and instruments of materials to the contexts within which they were pro. p. repre. professionalisation and regulatory processes (see also 309 249 tation. together with their marketing reform and market creation. & McDougald. representa. Besides legal 337 280 tory efficiency.aos. & Puxty. 333 276 dent audit firms came to be advanced as vehicles able to fracted nature. Different methods were utilised to facilitate a multi-layered understanding of the 329 330 331 TE 274 foundation of state-independent. doi:10. gazeta. the study involved archival research. Auditing. Robson. issues connected to processes of marketisation and post. It is shown how the market rel. from one of plan. 359 302 Section 5 concludes the paper with a discussion of the ment were articulated. in-depth interview. Soviet audit reform. auditing and markets was articulated and produced. Greenwood. Izvestiya. 2006. analysis covers the period from 1985 to 2008. audit and market creation are played out. legal. 334 277 transform the ailing Soviet inspection apparatus. opera. It shows how Western-oriented audit reform pro. Model 3G 28 July 2009 Disk Used ARTICLE IN PRESS 4 A. 338). and reworked. Alongside these changes.. 339 282 and oversight. Markets came to be viewed as a space for experimen. 335 278 tionalise goals of market-oriented reform. became important reference points in the in the analysis of the ways in which the significance of 350 293 erection of boundaries between the present and the past. Section 3 analyses attempts to operationalise the ab- stract market and audit reform programmes through the D methods of investigation are employed to develop an in- depth understanding of the field. from one of command and con- 267 trol to one of choice. away from questions of professional association. The document 336 EC 279 mechanisms of state administration and increase regula. The subsequent sections scrutinise these context of this study. Nezavisimaya 341 RR 284 ing was made marketable. 362 305 the changing relations between markets. The paper revisits Cooper and Robson’s (2006) 306 246 government. The 360 303 more general implications of these findings for our under. In the collection of the empirical materials. Organizations and Society xxx (2009) xxx–xxx 245 entrepreneurs and their audit firms. 322 262 from a planned to a market economy. carried out in Moscow be. cro-differentiation to recognise the diverse ways in which 317 F 257 grammes and discourses of market-oriented audit reform audit expertise is organised. former Soviet calculative prac. suggests the need for more comparative and micro-socio. 1998. state regulators. and to better understand how ideas of 321 261 posals were inextricably linked to Russia’s wider transition neoliberalism. in cooperation with expertise. Willmott. Moscow Times) and 342 285 evance of auditing had to be actively built.2009. a qualitative research approach was 326 269 neoliberal ‘‘dreams and schemes” (Miller & Rose. are increasingly important in accounting 308 248 too. 316 256 post-Soviet Russia. self-regulation and individual Following Denzin and Lincoln (2000. to programmes seeking the marketisation viet and post-Soviet accounting and audit textbooks. Dezalay & Sugarman. Methods and materials 324 266 ning to one of competition. Suddaby 313 253 in five main steps. 2007. branding and duced. 1994. staged and legitimised. academic and other documents provided a good starting 347 CO 290 sulting expertise.

454 396 audit development was constituted by the Soviet govern. In the late 1980s. command and control. p. 432 F 376 the original Russian term has been added in brackets next The idea of auditing was born with Perestroika in the 433 377 to the English translation. the move from state financial inspection to state. the emergence of auditing in Russia can be seen as 427 371 Reform (for one month). Inter alia. Between 1987 and 1988. priva- tisation. audit prise. 445 389 market-oriented development. 460 tempts were heading. for the first time. 441 385 came to constitute much more than a reaction to financial but these were statistics. OECD & EBRD. 1991.1016/j. Organizations and Society xxx (2009) xxx–xxx 5 364 sentatives of large Western accounting firms. And we 436 380 controversial. 423 367 International Centre for Accounting Reform in Russia). and other international organ. and commercial operations are performed for a leadership of the Soviet Ministry of Finance (Antonov. We had bookkeepers. FBK. the decree states: of auditing without it being clear where the reform at. The joint enterprise may have an (such as audit risk models and audit sampling procedures). 11 March 2002. enhance efficiency. AOS 682 No. the term ‘‘audit” of a clear-cut break. Audits of joint enterprises’ financial. Lieberman et al. IBRD. 467 408 auditing commission [auditorskaya kommissiya] that 409 is formed in the procedure specified in the articles of 410 incorporation.2009. Model 3G 28 July 2009 Disk Used ARTICLE IN PRESS A. 464 CO 405 with information relating to the operations of the enter- tween socialist inspection and market-oriented auditing. Accounting. state-independent [khozraschetny] businesses also emerged. 446 447 448 TE Socialist forms of rule had been called into question. late 1980s. we had accounts. in 1990. that we now first turn. important reference points in working out distinctions be.07. in 1991Rufaudit. quotes taken from Russian language interviews dance with Western market ideals. 1989. auditing was introduced as part of broader re- form programmes aimed at economic liberalisation. 440 384 for dealing with economic and social transition. came to be put forward to redefine the roles of the 451 394 methods of governance state. no accountants or financial directors. tions questioning not only old practices of Soviet financial 424 368 ticipant observations were carried out in two large Russian inspection but much more widely the Soviet regime of cen. p. of Pages 26. financial controls were no longer exclu. but 438 382 idea of audit was born with Perestroika in the late 1980s. In theory all that 439 383 The Soviet government advanced audit as an institution PR existed. the partici- what distinguished auditing from old Soviet inspection 462 403 pants in the joint enterprise are to be provided. Organiza- tions and Society (2009). reduce bureaucracy and extend 452 rationalities of market-oriented exchange and accountabil. The financial controls of joint ventures were to be of employees and revenues (see article in journal Profil’.) joint venture enterprises that operated in the Soviet Union had to undergo audits by Inaudit. 425 369 audit firms (for two months and two and a half months tral planning. In Russia. p. 11). and it is to these early 390 391 392 beginnings of post-Soviet audit development. managers of joint ventures were allowed to choose their auditors them- 416 sively carried out through the control apparatus of the selves (Geron. the profits and calculated taxes. Unicon. In 1989. in a combination of different demands and problematisa. 453 EC 395 An important official point of departure for Russian ity (see e. Most interviews were conducted closely linked to the ‘‘transformation of regulatory styles” 428 372 in Russian and transcribed in Cyrillic. Here. eco- UN 9 The first Soviet audit firm was founded in September 1987.007 . This system 443 387 Russia’s government and economy could be re-organised didn’t require the work of auditors. (Quoted Soviet state was still its exclusive stockholder. as well as information came not only to constitute Western audit technologies 466 407 on profits and losses. but we did have 444 388 according to Western constructs of global capitalism and inspectors [revizory]. Self-sustaining. Here. A. multilateral auditing organisation. and in 1992 Rusaudit and Topaudit.. tion [reviziya] to commercial auditing [audit] had its roots 422 366 isations (Association for Certified Chartered Accountants. It was seen as a way through which reality. [. 48 and 49 of 13 independent commercial auditing did not take the form 457 399 January 1987). Please cite this article in press as: Mennicken. 1995).] We had financial reports. this monopoly was dissolved and 415 From this point on.9 This change from state-led inspec. 465 406 prise and the status of its assets. The government controlled 437 381 viet audit and processes of market creation. From inspection to auditing: Audit and markets as linked ecologies. In 2002. Before that. 421 365 organisations (World Bank). IMF. with the approval of regulations Yet. again and again. payable by the inspected entity to the 80). not really economic facts. As the Deputy Director 430 374 and documents were translated into English by the author. 455 397 ment in January 1987. at times did we have? We had a planned economy. . D In Russia. For the purpose of and attempts to reinvent post-Soviet government in accor.g. it didn’t really mean very much. 450 393 From state administration to market-economic ing. and 449 new market-oriented modes of governing. 420 carried out for a fee. of one of today’s biggest Russian audit firms comments: 431 375 Where the translation of a specific term was ambiguous. perspectives and voices attached to post-So- had government controls. Par. all 414 from Boguslavsky & Smirnov. 429 373 this paper. During this time. In 442 386 control deficiencies. was founded. The meaning of the word audit and 461 402 In order to exercise their oversight rights. In March 1988. under the 411 nomic. the first private Russian audit 417 state. 418 auditing organisations entered the picture of financial reg- these firms belonged to the top ten Russian audit firms in terms of number 419 ulation. but the 413 organization [auditorskaya organizatsiya]. but it wasn’t called the economics of an enter. With the emergence of market economic OO 434 378 The paper assembles multiple visions of auditing and structures auditing also emerged. and the repositioning of the (post-)Soviet state. Mennicken / Accounting. 1989. 1991. 456 398 for joint venture operations (Decrees No. in the practices had to be worked out. . what 435 379 marketisation to navigate through the different. Danilevsky. state financial 458 RR 400 [audit] was used in a legal context to replace the term of inspection practices began to be reframed under the label 459 401 financial revision [reviziya]. and the intertwinement of audit with wider programmes of gov- ernmental reform. doi:10. And 463 404 procedure specified in the articles of incorporation. 1989). Paraphrasing Power 426 370 respectively) and the International Centre for Accounting (1995). 194.aos. The firm was 412 fee by a Soviet self-financed [khozraschetny] auditing founded as a shareholding company [aktsionernye obshestvo]. for example. including audit.

Gorbachev and his advisors problematised the se.] Socialist [financial] 533 483 bination of old and new. Problematising Soviet command and control 544 545 TE 497 tal control organs. pp. Mennicken / Accounting. academics and Soviet audit practitioners saw in rooted in ideals of central planning. we observe ‘‘the OO ment to consolidate socialist forms of social life. 1991). [. 1987. financial inspections [reviziya] support the 525 474 list inspection) came to be placed in the context of consolidation of socialist lawfulness and state 526 475 market-oriented business activities. Western auditing was 537 PR 488 revisions [reviziya]10. Kramarovsky. Further. 567 chev. building sion and exploitation. Audit and markets discipline. Organiza- tions and Society (2009). 1988. a re. Government inspections were an integral part of Soviet governmentality 520 469 officials. 576 Please cite this article in press as: Mennicken. democratisation. vere centralisation of the Soviet management system – 565 UN 518 ism (Chumachenko. of Pages 26. 1991). financial controls. more 574 ‘‘audit” to signal the Western re-orientation of the formerly state-led freedom was to be granted to managers. 550 503 For example. for example. 536 487 During Soviet socialism. The main objectives of the state financial 498 inspections were to ensure that assets were not misused. whether forms had been correctly maximal publicity. doi:10.g. 563 516 of the Soviet state portrayed financial inspections as an p. 548 501 set out by the government. The inspectors had to follow a detailed annual omy. argued for the broadening of the rights 569 It should be noted that the term ‘‘revision” has been. form had begun. 564 517 important instrument to facilitate the realisation of social. 1965. State financial ‘‘strictly posing tasks and allotted budget sums” (Gorba. 1985. 553 506 place and whether the documentation of production cycles 1987). p. Accounting. Mitrofanov. 1986. which was aimed at moving gradually (as 555 508 1965). Centralised economic management was to be re. 556 509 tailed plan. with actors manoeuvring through control is directed towards the liquidation of oppres. 560 CO 513 an integral part of the Soviet planning apparatus. 1987. 542 493 1987a. On 11 March 1985 Mikhail Gorbachev was elected 547 500 were prepared in accordance with the rules and procedures General Secretary of the Communist Party of the Soviet Un. political freedom and 557 510 state inspection plan which set out control objectives. 535 485 new market-oriented institutions (such as auditing) not 486 on. exploitation. openness and debate] came to be cor. whether stamps and signatures were in the right nerstones of Gorbachev’s reform policies (Gorbachev. From the beginning. contradictory con- In a socialist society. Suyts. 534 484 a multiplicity of different legitimating principles. ‘‘genuine eco. as mechanisms 477 of control and coordination. p. 530 F 480 sion-to-be came to inhabit multiple. 175). Kramarovsky. p. refers to general processes of checking. in Latin. Mitrofanov. As Stark (1996) would put it. 554 RR 507 was complete (see e. 1965). p.aos. 1987. far as proved necessary) in the direction of a market econ. In accordance with these ideologically motivated defini. 46). 531 481 texts. surveillance. states: 524 473 na. A. self-responsibility and self-administration 571 (see e. ‘‘regulated down to the last detail.” 566 519 Krasnov. pp.07. in particular with respect to the observance of 9). ‘‘from primarily administrative to primarily economic 562 515 demics and other actors involved in the political governance management methods at every level” (Gorbachev. At the 27th Congress of the CPSU in February 549 EC 502 detailed. and they received their orders either from the Soviet Ministry of State Control. auditing as an activity that serves the interests of ‘‘monop. they were form programme was adopted which promoted a shift 561 514 also part of Soviet communist ideology. 1985. He and other Perestroika proponents. Mitrofanov. inspection work itself was subject to a de. nomic incentives” were to be introduced (ibid. The Great Soviet Encyclopaedia 522 471 features distinguishing it from socialist state inspection [Bolshaya Sovetskaya Entsiklopediya] (Vvedensky. Soviet inspectors olist capital” and deepens class divisions (Garetovskii. it was checked whether bookkeeping rules had Perestroika [economic restructuring] and Glasnost [policy of 551 504 been properly applied.1016/j. in 1988. still described 541 492 state-set costing plans (Chumachenko. 1991. 1987. and allowable failure rates (Chumachenko. The auditing profes. being. 1989. control fulfils the role of an instru. Åslund. 527 476 were viewed as inextricably interlinked. Christiansen & Loft. the branch ministries or other. In post-Soviet Russia. 90). 552 505 filled out. widely used in the conduct of financial audits in German-speaking countries. Model 3G 28 July 2009 Disk Used ARTICLE IN PRESS 6 A. 1970. so-called tions of socialist state inspection. such as Denmark of competition. aca. 1970. 543 494 495 496 worked as state servants. 49). Gorbachev. 1987a). Party officials. which mutually condition In Krasnov’s (1987. 1955. . as he put it. 2001). this picture began to 546 499 that outputs were not misappropriated and that accounts change. command 521 470 the commercial nature of auditing one of the most defining and control and social equity. Gorbachev called for radical reforms in the economy. the enhancement 570 well as a number of other continental European countries. 568 10 like Aganbegyan. An immense struggle for economic and political re. & Dubrovi. Krasnov. 1987. ‘‘Revidere”. Akhmetbekov. p. a recom- private property does not exist.g. 573 revisio]. But this did not mean that old control we read: 529 479 inspection practices ceased to exist. local governmen- D 1988. 14) study of the history of socialist 528 478 and reinforce each other. audit (in contrast to socia- In the USSR. 559 512 Danilevsky. but with the ruins of the past. were set up as an integral part of viewed as a means of control that was inherently linked 538 489 the planning apparatus of the Soviet state. 33). 572 Russian word ‘‘reviziya” have both been derived from Latin [revidere. The organisation to capitalism – private enrichment.. 575 system of financial control. the term ‘‘reviziya” has been replaced with the term organised ‘‘in the interests of enterprises” (ibid. time more Western-friendly thinking in foreign policy (Åslund. Kramarovsky. 1987a. 5–13. . where 532 482 interweaving of multiple justificatory principles”. 540 491 fulfilment. highly formalised checks of procedural compliance. A Soviet financial dictionary.2009. But financial inspections were not only At the Central Committee Plenum in June 1987. The controls consisted mainly of ion (CPSU).). openness. 558 511 frames. 1992). AOS 682 No. and still is. 523 472 (Danilevsky. 3–16). Organizations and Society xxx (2009) xxx–xxx 468 but also the commercial nature of audit itself. 1985. inequality 539 490 of the controls was centred on the objective of financial plan and individual responsibilisation (Kramarovsky. p. From inspection to auditing: Audit and markets as linked ecologies. In the late 1980s and early 1990s. 1970. The Germanic word ‘‘Revision” and the (Aganbegyan.007 . as and economic autonomy of enterprises. the Ministry of Finance.

. for example. five years before Gorbachev was elected 12 General Secretary of the CPSU. self-financing started cautiously. 636 583 and methods of managing associations. A. and reform needs had been articulated then particularly journal Bukhgalterskii uchet: December 1985. the inspection apparatus (e. Organizations and Society xxx (2009) xxx–xxx 7 577 and measures were to be invented making profit a concern. openly discussed and criticised. academics). 30 June 1987. . titles such as ‘‘Enhancing the effectiveness of departmental 678 UN 626 ciations. Gorbachev. as well as by the 668 616 and with less pressure to conform to Marxist-Leninist ideol- people within it. but over the years. 1988. 679 627 tions continue to show serious deficiencies. 1985. . Other publications were headed with 677 625 controls of the financial and economic activities of asso. 651 599 new significance in the early years of the Gorbachev era.. tions are carried out to meet [their own] plan require. the articles 642 OO 590 upravlenie]. which (Zhurko. 34). 674 622 agement [organy upravleniya]”. 635 582 departments are required to resolutely change forms prises. economic independence and planning autonomy (Aganbegyan. published nine arti. 675 623 the work of the existing inspection institutions profoundly: sky. In and guaranteeing the preservation of socialist property. and reconfirming the need for reform. and in 1988. preventing mismanagement 631 579 more ‘‘initiative and creative endeavour” (ibid. 672 620 improvement of control and inspection work in the minis- CO cles in the journal Bukhgalterskii uchet carrying titles such 673 621 tries. 671 619 tion that set out. AOS 682 No.007 . p. journal Bukhgalterskii uchet began to publish a series of arti.04. departments and other offices carrying out perestroika of control and inspection work”.1016/j. These contributions were written by parties outside 667 RR 615 for the first time. . . 658 606 ing the earlier approval of regulations for joint venture ments and are of a quite formal [ritualistic] nature. ‘‘Improving control and inspection work” (Danilev. enter. Model 3G 28 July 2009 Disk Used ARTICLE IN PRESS A. the journal published more and 661 609 more widely allowable and promotable.].] (Danilevsky. also the system mental re-organisation of financial inspection and control. . ‘‘Cadres of a new type” and ‘‘About the 680 628 ministries. 648 PR 596 a self-sustaining basis (meaning without state subsidies) trol and inspection apparatuses do not contain a deep 649 597 and profit orientation (Corten. controls”. .07. but criticising the existing inspection practices and calling for 666 614 under the Perestroika movement it had become possible. June 1986. departments and other offices of governmental man- as ‘‘Financial control and the economy” (Danilevsky. doi:10. ‘‘Measures for the nie] of the Soviet Ministry of Finance. The discussions commenced as far back as April 1981. of articles that were published on this topic during that time. 639 587 tions and scope for the adoption of economic ratuses. 653 601 ‘‘khozraschet” was (re-)introduced to provide enterprises ough understanding of the particularities of the ways of 654 602 603 604 with more accountability. p. 1989. In many cases the controls and inspec- 655 656 657 TE 605 nances and production independently. The term has analysis of the economic situation of the controlled 650 598 existed in the Russian language since the 1920s. 63). 638 586 agement and control]. for example. enterprises. according to the title. 1990). The debate 640 F 588 accounting procedures [khozraschet]. Please cite this article in press as: Mennicken. p.12 681 629 inspections and controls are still not very effective and The criticisms within these articles focused on deficien. 1997).2009.] Ministries. of Pages 26. Restrained criticisms the journal contained at least two or three contributions 665 613 had already been formulated in the 1960s and 1970s. Organisations were encouraged to plan their fi- D documentation [dokumentooborota] and the specificity of the financial and economic activities of the controlled enterprises [. ‘‘The perestroika of the manage. which does not allow them to come to a thor. but gained enterprises and associations [. (Article 4. cles discussing the current situation of the inspection appa. and encouraged by 641 589 [samofinansirovanie] and self-management [samo. the journal published an arti. [They are required] to change from Subsequent to the resolution. Mennicken / Accounting. follow. 669 617 ogy. 1992. the Law on Co-operatives was adopted. Gorbachev. June 1988. who was at that time the head of the major 670 618 when the Council of Ministers of the USSR issued a resolu- financial control division [kontrol’no-revizionnoe upravle. The articles represent only a small fraction of the total number 1991. only to a very limited extent meet the requirements of 630 578 encouraging ‘‘self-government” [samoupravlenie] and enhancing state discipline. he had already received full membership of The articles quoted above were published in the following issues of the the Politburo. The nost’] of accounts”.aos. reform. the mechanism of controls]. to provide the necessary condi. Between 1985 and 1990. From inspection to auditing: Audit and markets as linked ecologies. ally spend only a very limited amount of time [on the 652 600 Under the Perestroika movement. formal character and do not exhibit the required 634 581 [. The inspectors usu. 633 ficial. 682 cies in the educational and training programmes of finan. In 1980.g. state committees and other state positive influence on the work of the associations. Accounting. organisations and institutions as they should do.]. 644 592 ment of the national economy”) cle that openly problematised the ‘‘administrative focus” of 645 the inspections and their lack of economic analysis: 646 593 With the term ‘‘khozraschet” government officials referred 647 594 to economic methods of governance and management. more articles. 1987b) and ‘‘Financial control: what it should become” 676 624 The Council of Ministers of the USSR notes that the [. 595 economic cost accounting. enterprises 584 and organisations. and within the circles of the Young Communist League (Komsomol) (Åslund. Yuri Danilevsky. the major Soviet accounting 637 585 administrative to primarily economic methods [of man. organisations and other institu. 632 580 the reform programme we can read: The inspections and controls are not seldom of a super. October 1986. November 1985. ‘‘Improving controls for the reliability [dostover.11 The resolution criticised 1987a). Resolution N7283-XI. emphasising the indispensability of a funda- EC 662 610 During this phase of Perestroika politics. 663 611 of state financial inspection [reviziya] came to be problema- Between 1985 and 1990. almost every monthly issue of 664 612 tised. Supreme became stronger in their critique and reform requests. the operation of a business on Many of the reports [akty] that are prepared by the con. . 683 11 See resolution [postanovlenie] N 325 of the Council of Ministers of the USSR from 02.1981. 24) 660 608 made forms of private entrepreneurship for the first time In the subsequent years. Organiza- tions and Society (2009). to discuss these issues in a wider forum. 659 607 operations. Gorbachev’s Perestroika politics (1985–1991). In 643 591 Soviet. 1987).

A. [. Danilevsky. of Pages 26. In comparison to other occupations. ‘‘Economic methods” of inspection their autonomy. Zhurko. Audit. 3. audit firms 775 RR 723 tive planning measures. To put these criticisms into perspective. . p. of Bukhgalterskii uchet). A thoughtful 755 702 lacked coordination and suffered from duplication of ef. . financial and organise market relations. the Ministry of Finance sent control. . Seen as a central element in accordance with principles and images of market ratio. Some articles addressed The transition towards a market economy poses new 740 687 the superficiality of state controls and pointed out the requirements to the control over financial-economic 741 688 low morale of inspectors in the workplace (e. to the envisaged market reforms. adoption of these services in our country could have a 756 703 fort. 1 to 5 and 10. effi. ment of the management of industry in our developing 758 705 which were not very well connected with each other. the department was subject to con. Mennicken / Accounting. 1991. . It analyses the mu. the internal fragmentation of the control 1990). doi:10.2009. The next section takes a 774 722 a focus on correct weight. 791 comprehensive account of the control and inspection problems that were nounced in the Russian newspaper Nezavisimaya gazeta: 792 discussed in the journal Bukhgalterskii uchet between 1937 and 1987. 750 OO 698 ova. p. .] We have to 794 Please cite this article in press as: Mennicken. in the Soviet Union. 777 725 issues No. Since the late auditing. The market economy. 1989.13 This was partly the case. [. nomic and legal rights and freedom. 744 691 the lack of internal quality controls (Kundrotas. 1995b). they also make the work for enterprises easier. lishment as ‘‘linked ecologies” (Abbott. Completely new forms of control should accompany the 752 699 the inspection apparatus was well known for its bulkiness market economy. In addition. 1. pp. one form of those [new controls] is 753 700 and fragmented management structures. It is shown 778 726 1990. and particularly 764 765 TE 713 ernment. 787 735 apparatus. . economic and user. Organiza- tions and Society (2009). 8.14 financial control [audit]. and market-oriented reform demands. [. Others talked about the scarcity of financial and hu- dent] audit controls make the work of state institutions 743 690 man resources to fulfil inspection tasks. 782 730 mechanism for accelerating processes of governmental ularly the then Big Six. shareholding forms of property. . 779 727 commercial auditing came to be seen as an important ref. 1990. Kramarovsky. [. 1985). 1991. 776 724 ciency and profit and loss calculation (see in particular tual intertwinement of audit and markets and their estab. 14 For a more detailed analysis of these issues see Chumachenko (1985) We [the government] have to return to our people eco. moving financial control away from accounting and self-governance. Rather.aos. 785 733 promote ‘‘economic thinking” and market-oriented devel. 1991. Organizations and Society xxx (2009) xxx–xxx 684 cial inspectors. the former head of the inspection division of 762 709 trols of the relevant branch ministries. Shpig. Shafir.g. 4) 769 717 oriented reforms undertaken elsewhere. On the one hand. F 696 they were relatively lowly paid and not considered to be An article published in an earlier issue of the journal states: 749 751 697 well educated (Bailey. . No. 793 and Krasnov (1987). 1987b. and to promote regimes of economic cost 773 721 were to be developed. 1986. it is impor- an enterprise. an. 40) 748 695 ularly high status. quantity and other administra. 38–39) 761 708 1974). 2005b). (Bukhgalterskii uchet. In this context.] It is necessary to learn quickly 759 706 accounting department of an enterprise. 757 PR 704 were embedded in a variety of different state structures. it was frequently pointed out that the apparatus make up one of the strands of big business. strengthen the accountability of enterprises. which provides a of the Supreme Council of the Russian Soviet Republic. 760 707 subject to a series of different controls (see e. reformers argued Western auditing came to be seen as a necessary response 770 EC 718 for the need to make state financial inspections ‘‘more eco.1016/j. Western that auditing was not only called upon to build markets. Wes- CO viewed as an indispensable element of its effectiveness. 1991. It should help stimulate market-oriented lated within the new market ideals.g. 788 736 change and contribute to the dissolution of the Soviet state 737 monopoly over financial control (Danilevsky.007 . 742 689 1985). . Boris Yeltsin.07. 784 732 in Western market infrastructures. Zhurko. 1988.] Audits are important to signal the healthiness of 745 692 1989). and more relevant to the inter. 781 729 tern commercial auditing came to be regarded as a possible Looking at the West and large Western audit firms. 747 694 inspectors (similar to bookkeepers) did not enjoy a partic- 1991. not only outside but also within the inspection completely disappeared. The market-oriented nature of auditing itself came to be 780 728 erence point (Danilevsky. . This did not mean that old inspection practices 786 UN 734 opment. audit services 754 701 1930s. the Soviet Ministry of Finance. No. On the other hand. read: 739 686 tions on enterprise management. In addition. .and] audit firms help to build up 746 693 tant to understand that. activities of different enterprises. It was called upon to 771 719 nomic”. to enhance 772 720 ests of enterprises. [. auditing itself was to be structured 783 731 modernisation and downsizing. call for the need to 766 714 lers that came in to check that the payments and revenues establish a system of [state] independent. Accounting. AOS 682 No. writes: 763 710 711 712 the Gosbank (the Soviet Central Bank) would send out its own inspectors to ensure that the prices employed by the accountants were in accordance with those fixed by the gov- D The development of market relations. less bureaucratic. (Bukhgalterskii uchet. oriented. to make it state-independent.] In developed countries. because financial controls huge social and organisational impact on the improve. in his function as Chairman 790 13 See in particular the article by Kramarovsky (1987b). they came to be re-articu. 1 and 4. or found fault with easier. was and intensively more about Western audit expertise. and the limited impact of inspec. to an emphasis on quality. From inspection to auditing: Audit and markets as linked ecologies. external 767 715 were made in line with the overall finance plan. closer look at this nexus between auditing. auditing should help nality. . [. and issues No. Solov’ev. In the accounting journal Bukhgalterskii uchet we 738 685 and inspection systems. partic. for instance. 768 716 Following the criticisms and stimulated by the market. Model 3G 28 July 2009 Disk Used ARTICLE IN PRESS 8 A. No. 1990. 1995a. (Bukhgalterskii uchet. Campbell. 1988.] [State-indepen. 1973. audit firms and neoliberal reform demands 789 In April 1991.

861 815 immediate transition to unfettered markets. Conditions of competition within OO 808 and Yeltsin ‘‘championed immediate transformation of 855 809 Russian socialism into laissez-faire capitalism” (ibid. and multilateral institutions. As Dani. 887 841 tion. Lieberman et al. Accounting. and the government 860 PR 814 and government spending was cut sharply: ‘‘The goal was is given the possibility to ensure control over the reli. Following the Western recommendations.. Mennicken / Accounting. Sheremet & Suyts. 2001. Johnson. 2001 [1995]... so it was believed. A.007 . the large Q3 889 UN 15 The neoliberal reform programme outlined by Western economic advisers. Åslund and Shleifer. 1998).04. 02. of Pages 26. hastening to disown the communist 1991. liberalisation p. 866 820 aspired to become (Bogomolov. 879 833 auditing. Englewood Cliffs: Prentice Hall]. integrated approach. 1995. 882 836 pendent institutional infrastructure supporting the estab- emet & Suyts.aos. the departmental inspectorates. 1976: Auditing. qualified partner (auditor) who is independent from 859 813 doors to foreign trade and capital flows were thrown open. thereby allow. the auditing business allow economically for quality 856 810 1). on 2 January 1992. EC 874 828 Russian admirers. 1988. p.1991) themselves were to be organised along principles and 844 images of market rationality. To enhance their effective.. 1995a. and extent. launched the so-called ‘‘shock Framework. Burr Ridge: Business Publications]. fiscal austerity and swift privatisation (IMF et al. Organizations and Society xxx (2009) xxx–xxx 9 795 develop conditions for a return of Russia to the system regulations and standards (Danilevsky. John Wiley. Simultaneously. On the one hand. Boone. 850 803 inspection apparatus. 1994: Auditing Standards and Procedures Manual 1994. p. the liberalisation of trade and large. 864 818 of Western Europe and the United States became important State-independent. 854 raschetny] interests. 16 such as the OECD. (Nezavisimaya et al. 849 802 cratised. As Pomer (2001.07. & Benis. privatisation and liberalisation outlined by the World Bank Arens and Loebbecke’s textbook [Arens & Loebbecke. including its unwieldy petition. 873 827 reformers. bringing advice avidly assimilated by young commercial relations between the auditors and the con. A steady stream of economists arrived principles of financial control. World Bank. 2). IMF 842 796 of the world market and world culture. auditing should help prevent asset upon to promote and legitimate the rise of commercially 886 840 stripping. p. 2001 [1995].” The supposedly successful capitalist societies its governmental budget resources. 285). 1991. As a mechanism of Western discourses on audit functionality were called 885 839 independent control. Please cite this article in press as: Mennicken. recommended the rapid liberal.2009. 2003. 878 832 thinking about financial control and regulation. Many of these proselytes became 830 even more orthodox than their new ideological heroes. enterprises have the possibility to choose a 858 812 planning was terminated – most price controls were lifted. 1991. Such beliefs. Pickles 821 822 & Smith. World Bank and IMF.. 1993: Audit (then acting Russian prime minister). also translated in 1995]. Tsyplenkov. one of the first Russian commercial audit firms isation of foreign trade. 888 Terekhov. Western of capital market efficiency” and ‘‘evaluation and forecast. p. the called ‘‘Washington Consensus”. 1991. by pres. 881 835 auditing came to be seen as an element of market-inde- ing of consequences of economic decision-making” (Sher. trolled enterprises and other organisations. 1991: Auditing. p. It was informed by the so. 1996. statist economic system. on 2 January 1992. into a dynamic. auditing activities 843 797 gazeta. p. a translation of Carmichael and therapy” programme promoting laissez-faire capitalism through the Benis’s ‘‘Auditing Standards and Procedures Manual” appeared [Carmichael sudden removal of price controls. an and IMF in the late 1980s to rescue states in economic crisis (Harvey. p. 1996). through which ‘‘reliable [dostoverny] financial infor.16 Further. 53): D tified as the main instruments through which market-ori- ented reform objectives could be realised: 867 868 869 TE 823 Gorbachev’s intent to transition to the market was met The development of a web of audit firms can lay down 870 824 by the West with beguiling offers to share knowledge the beginning of a genuine establishment of economic 871 825 and experience. auditing came to be located out- mation” could be produced allowing for ‘‘the enhancement 880 834 side and inside markets. based on contractual. were won over. Organiza- tions and Society (2009). 53). (Danilevsky. 847 800 liefs that processes of radical marketisation. p. 884 CO 838 between enterprises and investors. 11).15 Audit firms came to be advanced as entities through which 876 the old Soviet control system could be ‘‘adapted to the 877 831 The market reform programmes induced new ways of requirements of a the market economy” (Itkin. to a great 883 837 lishment of market relations amongst enterprises. 1991. Sachs & Warner. AOS 682 No. Gorbachev acknowledged that ‘‘there is no The activities of auditors should be guided by legisla. Solov’ev. including RR 20). On the other hand. & 852 805 Ickes. neoliberal reform policies aimed at fiscal economics professors Terekhov and Sokolov translated the fifth edition of stabilisation. self-financed commercial audit firms 865 819 reference points for what post-communist Russian society [khozraschetnye auditorskie organizatsii] came to be iden. and ensure compliance with new market-oriented 1995b. 1994. In 1993. IMF et al. Chicago School neoliberalism was in vogue. competitive capitalist levsky (1991. In addition. Fischer. Lane. 845 798 Particularly between 1989 and 1992. London: scale privatisation (Arbatov. 857 811 idential decree. 1991. Yegor Gaidar Sokolov translated the ‘‘Audit Framework” by Adams [Adams. 1996). 853 807 alternative to shifting to the market” (Pomer. 872 826 from abroad. 6) 875 829 faith. p. ‘‘Kontakt” (later FBK) initiated the translation of Robertson’s audit textbook 1991. 2001. 6) writes: 851 804 economy (Gaidar. [Robertson. In 1995. in the carrying out of inspections [revizii] and controls. such as Sachs. 2001. 2005). 1994). financial inspections had to be de. tion and private [sobstvenny] and economic [khoz. were rooted in highly idealised Western accounts.1016/j. To quote Bogomolov (2001. 4) recalls. improve the presentation of financial informa- organised audit expertise (Danilevsky. 846 799 Soviet transformation policies came to be grounded in be- tached from ‘‘the apparatuses of political rule” (Rose. 1995. Financial audit experts were to be relocated within 848 801 and privatisation could transform Russia’s highly bureau- (imagined) markets ‘‘governed by the rationalities of com. Model 3G 28 July 2009 Disk Used ARTICLE IN PRESS A. London: ACCA]. 1993. accountability and consumer demand”. World F 806 Bank. ability [dostovernost’] of financial statements and the 862 816 ing the market to guide the economy without government correctness of tax calculations without having to spend 863 817 interference. In the same year. 2001). From inspection to auditing: Audit and markets as linked ecologies. for example. 2002. doi:10. Soviet and later post- ness. coordination of the economy by central In turn. Åslund.

984 18 A new Banking Law. However. . stated that the Moreover. As Power (1997. 943 900 ces in Moscow in 1989. the that. 42) would put it. the law itself is only one factor ‘‘lawfulness” [zakonnost’]. competition 976 CO and laissez-faire. at we worked with their questions. Mennicken / Accounting. the big firms. as it the old command and control regime and state authority. Arthur Ander- der the label of auditing. along with newly mercial operations carried out by joint ventures and other 951 908 founded Russian audit firms. Also the Enterprise Law and the revised they may have appeared.. the big firms ‘‘dem. rather than market accountability 982 UN does not explain the rise of auditing. The presence and economic success of the auditors and the auditor would do the controls [for 936 893 then Big Six strengthened beliefs that the establishment of them]. 967 925 sidering what the exact implications of such a change would The practical meaning of audits. technology. . For this. . Please cite this article in press as: Mennicken. 983 conditions of its emergence. the actual working of auditing still needed to be fig. 2005. 990 as a partner for a Big Four audit firm in Moscow and was responsible for the tion and neoliberal reform ideas. 1998). 988 cial auditing organisations. 986 independent audit organisation. A former state financial inspector. 979 required that joint venture partners underwent an audit. and Deloitte and Touche F the reform attempts were heading.07. We cannot speak of one unitary 987 Law on Co-operatives. thus. p. The law itself ernmental oversight. doi:10. ate such an apparatus through audit firms. Auditing was seen as an instrument that could 937 894 private audit firms constituted an appropriate response to be employed to delegate control. 965 923 market-oriented operations through commercial audits the procedures were more like.2009.] And. 962 920 Ministry of Finance19 illustrates. but without it being clear where 944 901 sen and KPMG followed in 1990. including political changes. the term ‘‘auditing” was primarily used to 949 906 their Western parent companies (Cooper et al. In 948 905 into Russia. Neither the actual work- ing of audit. And it 938 895 the political and economic reform demands.] More like the 966 EC 924 rather than the old system of state inspection – without con.007 . 968 926 be: tinct from governmental inspections. conducted also audits for co- entities with mixed or exclusively private funding. nor its technologies were problematised. [. An understanding of the demands. inspection apparatus within the state structures. characterises the business of 971 RR 929 foundation of enterprises with capital from capitalist auditing. began to be reframed un. When we heard the word ‘‘audit” for the first time we 958 916 917 918 ured out. ideals of market-coordinated action. exactly. Amongst other things. when this interview was conducted. namely the control of com. It was more like. so why shouldn’t we have the same? 942 899 to be organised. – [. 1991). . still had to be worked 969 927 Because the government [.17 La- demarcate a new control area. AOS 682 No. introduced audits as a means of external financial control and required these to be conducted by commer- neoliberal or market logic (Harvey. and what made them dis. if a part of a lack of first-hand experience in Western auditing and 973 931 of the state control apparatus would have controlled resistance accompanying the reform attempts. a range of different ideas and 992 methodology. 981 among many that contributed to Russian audit development. in the sense as we understand it today. . as most of them needed a Western audit for the beginning. issued in 1990. had the appearance of a fashion.] At that time it was quite fash. In the name of ‘‘the mar. 963 921 first. to cre. juridical enforcement and gov. From inspection to auditing: Audit and markets as linked ecologies. whether in the East or the West. at first. instead of setting up a control. On the other hand. was Deputy Director 955 912 forced beliefs that the old Soviet inspection apparatus of one of the Big Four audit firms in Moscow.aos. inspections you carried out before? – Yes. 985 financial statements of commercial banks were to be checked by an ketisation themselves were not as homogeneous as. Reform activities were 945 902 launched their Russian offices in 1992. the interviewee worked rationales that can become connected to audit. . On the one 974 932 these organisations. adopted in December 1990. Organiza- tions and Society (2009). 1998). we have to look at the wider and consumer rights. 915 Yet. [. and even further. we asked ourselves what we should look at [when carrying out audits]. who in 954 911 and the introduction of new forms of private property rein- 2002. marketisa. Rather. obviously. Economic reformers what we did during these times. as Power (1997) shows. coalescing auditing with ideas of 980 traditional state inspections. the neoliberal ideas and programmes of mar. and they set an example of how auditing ought that exists. from 1990 onwards. without these ideas being anchored 947 904 ing firms had followed new Western joint venture partners firmly in agreed. Hinings.1016/j. 950 907 ter. remembers: 956 913 needed to be replaced with a system of commercial auditing 957 914 run by private audit firms. . hand. within and outside government. The procurators [inspectorates] would assign 935 892 Brown. rather 952 909 operatives and banks. that wasn’t an audit 964 922 deemed it to be more appropriate to control commercial. yes. A.g. at the time of this interview. As D were confronted with a series of new questions. Ernst and Young established their first offi- Soviet inspection practices. . Ong. This problem arose partly out of the general obscurity 970 928 enterprises with foreign capital. it would have looked very strange. we have to acknowledge the multiple visions and 989 19 In 2002. Subsequent to the based on a range of ideas about what Western auditing in 946 903 joint venture regulations in 1987. p. In the eyes of was just fashionable. Model 3G 28 July 2009 Disk Used ARTICLE IN PRESS 10 A. there were still many 977 voices.] allowed the foundation of out. . The major 959 960 961 TE 919 the following remark of a former employee of the Soviet control organ at that time was the Ministry of Finance. Shpig & Lazurenko. . 9). uncontroversial definitions of auditing. 940 897 onstrated the need for professional services” (Pyatenko. It arose also out 972 930 countries.18 The activities of the Big Six. auditing had become attached to neoliberal reform 975 933 ionable to set up audit firms. the international account- OO Russia might look like. instead of the Old inspection ideals. problematisations of state financial control and the opening of Russia to the West. Organizations and Society xxx (2009) xxx–xxx 890 international accounting firms had opened their first offices meaning and roles of this institution [of auditing] did 934 891 in Russia in the late 1980s (Cooper. the PR than to denote changes in actual inspection practice and 953 910 opening up of the Soviet Union for foreign direct investment. & not exist. the advent of auditing. seeking to restore 978 17 The joint venture law from 1987 stimulated the rise of auditing. Accounting. Greenwood. of Pages 26. In the West 941 898 1998. Coopers and Lybrand. 991 development of internationally oriented accounting and audit ket” and neoliberalism. the efficacy of auditing was a priori assumed. state controls. 2006). 939 896 the Russian reformers and new auditors. lived on (see e.

007 . and new audit firms respectively. auditors sought to reinvent themselves as market actors 1082 1024 ing attempts to transform post-socialist inspection in the through references to managerial efficiency. 1044 many reformers believed that new market institutions 21 In the context of this paper. and audit 1073 1015 2001. 1997 [1977]. Auditing itself came to be implied in 1061 1003 chev. It shows how 1081 1023 shifts. Boy. translated and shifted into sub-pro. It also asks us to investigate how the tions to compete with and learn from. Discourses and systems of 1049 1998). Model 3G 28 July 2009 Disk Used ARTICLE IN PRESS A. auditing came to be linked to audit firm 1090 RR 1032 modes of mediation through which societal concerns be. 1070 1012 as planned. gain public visibility and build up new systems of audit representation. 1998. as the following 1059 1001 understood as freedom to self-organisation. chures etc. For this. and which help position audit 1047 cko et al. so it 1097 1039 grammes. professional or 1089 1031 (1988. 1992). business before audit itself could take place. we need to make more room for such multiple sulting expertise. if as systems of signifying practices and symbolic systems (Hall. advertisements. draws attention to the ‘‘particular unprofessional.20 Western marketing instruments (client 1075 1017 views and interpretations that came to be attached to audit questionnaires. and pluralisation. audit firm branding. and competition (Dani. 1063 F 1005 of economic calculation. rationing. marketisa. 2001). but did not automatically lead to greater position themselves and from which they can speak to each other and 1051 degrees of accountability. Russian audit entrepreneurs and their firms ac. bro. and not as something that was added on to audit.21 The next section describes and analyses how auditors 1078 1079 1080 TE 1022 work). to be worked out. 1987. 1999). From inspection to auditing: Audit and markets as linked ecologies. when many of the reforms did not turn out of scrutiny. 1987. built and rebuilt. Ecological analysis. This paper 1048 come about (Burawoy & Verdery. via 1087 1029 tween audit reform programmes and different instruments audit firm ratings. idealised discourses about marketisa- tion and auditing alone cannot help us explain how audit- ing. systems of audit representation are defined 1045 (including auditing) would arise almost automatically. Gorbachev. sought to rule. or changes in inspection technology.aos. through which audit meanings are produced. seeks to unravel nition came to be carried forward at the level of audit firms 1086 1028 the manifold connections that came to be established be. abstract. of Pages 26. audit firm ratings. Hirschman. 1085 EC 1027 approach. neoliberalism and marketisation came to be identifiable pathways of change. Yet differently from the West. 1068 1010 Hirschman. (1998) aptly point out. 1076 1018 and processes of marketisation. In this 1091 1033 come projected into the very local concerns of a particular context. Please cite this article in press as: Mennicken. The reforms carved space for new forms of private representation construct places from which auditors and audit firms can 1050 entrepreneurship. and neoliberalism respectively. particularly before the UN 1042 Changing relations between politics and expertise Enron scandal (see e. but tasks of audit still had to be defined. Hirschman. Accounting. were not wondering how to transit 1054 996 tion. large Western professional services firms (particu. Organizations and Society xxx (2009) xxx–xxx 11 993 instruments can get mobilised. counter-programmes. In the case of Russia. Thus. size. with tools that are not necessarily di. 1074 1016 approach. and differences 1064 1006 levsky. free riding and ruthlessness (Burawoy. came to be defined to ‘‘the market”. ket-oriented reform programmes did not result in clearly 1058 1000 stract level. client care and competitiveness. dynamics and tensions accompany. At gov. A.g. 1062 1004 of audit organisation. responsibility. but see also Kurunmäki & Miller. ‘‘the market” came also to be seen as merely tively participated in the construction of the markets they 1071 PR 1013 opening up possibilities for bare profit seeking. 2007).2009. seen as strongholds of Western audit and marketing exper.) came to be used to erect boundaries between 1077 1019 1020 1021 Further. p. time when auditing was introduced. They were more concerned about how to 1055 997 as opposite to planning and bureaucratic coordination. 1991. demands for auditing had been articulated. Pickles & Smith. Rather. we have to look cessfulness. 1999. 1995). Later. 2003. individual sections show. doi:10. between socialist inspection and market-oriented auditing 1065 OO 1007 2006). at survive with the resources at hand and how to cope with 1056 998 the same time market-oriented reform policies themselves the high degrees of institutional uncertainty. contradictions. Notions of good or bad. Yet... IMF et al. they came to be interpreted in terms ernment level. came to work (or not D the present and the past. Åslund. AOS 682 No. is not only a specificity of auditing in post-Soviet Russia. argues that symbolic systems play an important role in creating possibil- ities of what auditing is and who auditors are. see also Rose. as Stark and Bruszt 1053 995 2005. mar. 1990. Nor can they add to our understanding of the many actively tried to make audit marketable. 1041 legitimation of claims to audit expertise. rectly related to calculative proficiency or actual degrees 1069 1011 1991). 77) has put it. 1997) 1046 institutions of the old system were destroyed (see e. Projects 1084 1026 at the messy translation of the ideals. Following a linked ecologies ideas came to be merged with Western marketing and con. particularly in the early 1990s.. 1083 1025 light of Western market ideals. 1088 1030 and ideals of marketisation. 1066 1008 ‘‘the market” came to be regarded as a disciplining and The market relevance of auditing had to be actively 1067 1009 ‘‘civilizing” mechanism (Gaidar. At the beginning of Russia’s transition to capitalism. Jeppesen. with structures at their disposal through which. 1052 994 sis on different aspects of neoliberal government (Aldridge. economic suc. which put different empha. including accountants and auditors. and their positioning in the emerging audit market (e. 1092 1034 domain” of activity. They came to be 1095 1037 market and audit reform requests came to be re-articu. as Wise ing instruments). 1094 1036 gave rise to audit.1016/j.g. 1096 CO 1038 lated at local level. and corporate influence. as put forward in this paper. ecological analysis asks us larly the then Big Six and other large mid-tier accounting 1093 1035 not only to analyse the governmental programmes that firms) came to function as role models. A linked ecologies aimed at increasing professional status and external recog. they opened up spaces for experimentation 1060 1002 responsibilisation and increased accountability (Gorba. transparency and individual larger publics. as market organisa. Klein & Pomer. and attached to 1040 technologies involved in the day-to-day construction and 20 This. At the level such spaces of experimentation and pluralisation. In so doing. Organiza- tions and Society (2009). in Russia discourses about consulting emerged at the same 1043 In post-Soviet Russia. Audit had to be turned into an economic 1072 1014 nistic enrichment. At an ab. 1995. Mennicken / Accounting. of course. opportu. 1057 999 required a lot of organisation and re-regulation. tise. in the 1980s and early 1990s. the anticipated transition did not firms and auditors as market actors in envisaged audit markets.07.g. 1992. Robson et al. People. client questionnaires and other market. Discourses seeking to redefine and market auditing in consulting terms also took place in the West.

01. 64). Suyts et al. state-indepen. Auditorskie Vedomosti No. Mennicken / Accounting. of Pages 26. which needed to be ac- tively created. Audit services were 1136 1105 Q4 ity and to add credibility to financial reports. and 1155 1121 [.aos. the num.10. payment and settlement entrepreneurs and their founded audit firms to make audit 1158 1124 documents. Cf.g. p. Finansovaya Gazeta No.22 Auditing redefined as commercial. ca.1996.07. 24 Sherement and Suyts (2001 [1995]). audits became 1130 1099 market could be remodelled. Shapiguzov. and Starovoytova (2002). 1132 1101 The meaning of markets and the roles of auditing in dent audit firms.24 1134 PR 1103 away from textbook ideals seeing auditing as a mechanism Groups of audit experts and audit organisations officially 1135 1104 to reduce information asymmetry.2009. at least parts of the emerging Russian audit vices. In 1991. In 1146 1996. These requirements were specified in a governmental resolution from 7. to be seen as ‘‘entrepreneurial activity” [predprinima. 2001.09. auditorskikh organizatsiy i individual’nykh auditorov po federal’nym okrugam” [Information F about the spread of auditors. Accounting. 1997. to be officially relocated within commercial. charitable funds. to enhance accountabil. Following Western textbooks (Arens and they do not conflict with the legal framework of the Russian Federation”. Only a few had formerly worked as state financial inspectors. AOS 682 No. Organizations and Society xxx (2009) xxx–xxx Table 1 Number of registered and licensed audit firms in Russia. doi:10. and 1147 1114 Until 1993. b Source (1996–2001): Reports on audit development and audit firm licensing issued by the Russian Ministry of Finance. 1355). non-governmental controls of ent attempts began to be undertaken by the new audit 1157 1123 accounting (financial) reports. 1145 1113 Making audit marketable ber of audit firms amounted to more than 2000 (ibid. Organiza- tions and Society (2009). 1133 1102 them. auditing itself remained a largely unregu.). ‘‘to increase the trustworthiness of financial information”. Figures from 1999–2001 provide information about licensed and ‘‘actually operating” [deystvuyushchie] audit firms. Some had worked in science labs as mathematicians. mercial attributes. they describe auditing as a device ‘‘to overcome information backgrounds. Auditing itself came 1137 1106 was redefined as platform for corporate development. crafted and shaped. ca. 43. 1. 3 Million USD) (Enthoven et al. 2. According to the Russian business journal Profil’ in March 2002 more than 20% of all businesses had to 22 See e.2008 and 01. ca.23 Audits came 1131 1100 to the West. had only received their university degrees some years ago. . to both the new audit producers and consumers it 1150 1117 for the first time laid out a definition of auditing. by the audit firms them- D increased rapidly. A few years later. which Yet.01. A. audit organisations and individual auditors across federal regions]. p. this situation was changed. was reworked. c Source (2007–2008): ‘‘Svedeniya o raspredelenii auditorov. With tel’skaya deyatel’nost’]. 1152 1119 of economic and financial control that was to be reformed. at the early beginnings of Rus- sian audit development. . Adams (1995).ru/ru/accounting/audit/basics/programs/ (accessed in March 2009). issued by the Russian Ministry of Finance on 25. 18. Figures from 2007 and 2008 relate to registered audit firms only. tradable good. Russian Federationa 3289b 4329b 4708b 6600b 7500b 7100c 6400c a Figures from 1996 and 1997 give information about issued audit firm licenses. stock exchanges. tax declarations and other financial obliga- CO 1125 tions and requirements of economic entities and the 1126 provision of other auditing services. undergo mandatory audits (Profil’. Between 1991 and 1996. p. 5. Differ. 22. and auditee organisations were free 1139 1108 this. the number of new audit firms 1141 1110 1111 but as a space for experimentation. 78). Auditorskie Vedomosti No. Model 3G 28 July 2009 Disk Used ARTICLE IN PRESS 12 A. published in Finansovaya Gazeta No. by 2001 this number had increased to 7500 (see Table 1 1148 EC 1115 lated business.minfin. ca. 06. thus. Please cite this article in press as: Mennicken. modernised and connected mandatory for a large number of companies.2000. and many sions” and ‘‘to enhance capital market efficiency”.. was still not entirely clear what distinguished auditing 1151 1118 cially granted audit firms a key position within the system from former inspection activities apart from the new com. 1140 1109 seen as an abstract mechanism of economic coordination. banks. 23. 1996 1997 1999 2000 2001 2007 2008 Approximate number of registered and licensed audit firms in the ca. some asymmetries”. Relations 1154 between auditor and auditee had to be figured out.1016/j.007 . small partnerships as well as sole traders. 1156 1122 involving independent. investment institutions.1999. p. 25 Loebbecke (1995). provided that the Moscow State University. Finansovaya Gazeta No. 11 March 2002. Attention came to be shifted methods and contents of the checks they carried out.25 1149 1116 government adopted Temporary Rules on Auditing. p. also market ideals changed.1994 (No. 36. ca. OO 1098 was hoped. 1998. What one could or should demand from 1153 RR 1120 The Temporary Rules defined auditing as: mandatory audit services still had to be specified.01. Markets were no longer to choose among a host of newly established audit suppliers. 4. 9) 23 Audits became mandatory for unlimited joint-stock companies. which were free to decide on the forms. (2001).000 minimum monthly salaries (ca. 1138 1107 sulting activities and entrepreneurial self-realisation. Danilevsky. 1128 The adoption of the Temporary Rules constituted an insurance companies. (Quoted from Dani- 1127 levsky. minimum monthly salaries (ca. and offi. 87).] entrepreneurial activity of auditors (audit firms) evaluation criteria for ‘‘good” auditing to be defined. http://www1. 7 Million USD) or total assets in excess of UN 200. had an engineering or background.000 1129 important further step in the marketisation of audit ser. an auditing conference was held 1142 1143 TE 1112 selves and their representational instruments. 1144 pated (Terekhov. Sheremet and Suyts See Article 13 of the Temporary Rules: ‘‘Auditors and audit firms have the (2001 [1995]) wrote one of the first Russian audit textbooks for students at right to define methods and forms of audit controls themselves.12. ca. Robertson (1993)) and principal agenct The auditors interviewed in this study came from a variety of different theory. con. 2001. more than 3000 audit firms operated in Russia. ‘‘to evaluate and forecast the consequences of different economic deci. Remizov. in Moscow in which more than 180 audit firms partici. p. 1994. Subsequent to the Temporary Rules. From inspection to auditing: Audit and markets as linked ecologies. were put into competing positions.2007. joint ventures and companies with a turnover of more than 500. Others had taken MBA degrees abroad. In 1994. The below). which since 2002 need to have at least five nationally certified auditors amongst their staff.

’ If an auditor does 1248 1190 and representational instruments. 1235 1177 publicising and general promotion of auditing and audit ment of the company about these shortcomings.07. enhance public credibility and trustworthiness. white collars. thus. distinguish or. AOS 682 No. establish new grids who heal. Mennicken / Accounting. first of all. ground. enced by many as being ‘‘out of control”. during 1262 1205 to restage old aspirations of organisational efficiency and. tween auditing and other respected. 1249 1191 post-Soviet audit re-branding and re-presentation are putation of taxes right. essarily convinced that auditing constituted a valuable. That is a big difference. 2006. 1241 1183 reinforce ideas of market-guided auditor choice. They just take your money and give you 1228 1170 Attempts aimed at making audit reputable (and thereby F a certification that you are healthy and that you are 1229 1171 marketable). 1258 1201 neurial inventiveness and re-emphasise customer orienta. so that we don’t face 1247 1189 through the new audit entrepreneurs. New forms of market representation were invented An auditor – that’s not just a person who comes to 1239 1181 to make auditing and audit firms publicly known. Organizations and Society xxx (2009) xxx–xxx 13 1159 reputable and marketable. 1273 1216 calculative practices and inspection technologies are en. representation and 1219 1160 emerging post-Soviet audit market. to position themselves in the and instruments of market creation. At least equally important were activities comes with the objective to find out whether there 1234 1176 and instruments of marketing and branding aimed at the are any shortcomings. Professional standards were largely absent 1256 1199 to leave stigmas of socialist inspection behind. another auditor the next time. and distinguish ‘‘real” from ‘‘quack” experienced. Western-oriented audit firm) 1231 OO 1173 methodologies and traditional mechanisms of professional An auditor comes to a firm to express his opinion. defend continuity in audit methodology. and dem. (Senior Auditor of PR 1237 1179 widely ‘‘presentable” and ‘‘communicable” came to the another large Russian audit firm) 1238 1180 fore. audit firm rankings. In this context. 1259 1202 tion. inter 1272 1215 see that this does not necessarily imply that former Soviet alia. It is shown how notions of auditing In the early 1990s auditing had been introduced and put on 1253 1196 as instrument of verification and market-control came to a market footing. The following passages examine how auditing and market D the management of a company would not understand this. He 1233 1175 certificates). were not only rooted in the develop. They know what they are doing. proactive impression management 1270 1213 ideals in terms of inter-organisational competition and and communication of their worth. began to emphasise the metaphorical similarity be. – to communicate.2009. 1220 1161 identity in accordance with market ideals. In order to expand their 1264 1207 Third. (Director of a large Russian audit 1230 1172 ment of a new knowledge base. and analyse the relevance 1267 1210 of audit firm rankings in newspapers and popular business op new technical skills and a new knowledge base. changing representations of relations between another large Russian audit firm) 1252 1194 subject and object of auditing. of Soviet inspection continued to live on and were often at. We observe the re-invoking of market their public re-staging. But you also have people who just wear 1227 1169 professionals.007 . 1222 1164 tion – public advertisements. it is shown how imageries of auditors as ilized spaces ‘‘where anything goes”. And they don’t care. From inspection to auditing: Audit and markets as linked ecologies. Soviet times neither bookkeeping nor inspection enjoyed 1263 1206 to some extend. In this context. He 1232 1174 regulation (e. individual auditors and their firms. they are 1226 1168 of classification. they 1268 1211 magazines for the construction and legitimation of new also needed to find ways and instruments allowing for 1269 1212 claims to expertise. between auditor and audi- 1195 tee. 1254 1197 be shifted and remoulded by auditors and audit firms seek. In so doing. mark differences between So. tions. they expect advice. if present. Second. they did not only need to devel- UN 1209 structions of market credibility. too. as wild and unciv. ethical codes and does not come with the objective to punish or fine. A. their audit firms problems with the tax authorities. doi:10. 1243 1185 1186 1187 came to be intertwined and reframed with ideas and instruments of consulting. we turn to the embedding and re-articulation of businesses.g. ideals of auditing the support [podderzheniye] of a true and fair view. Russian 1276 auditors too began to describe their activities in terms of 1277 Please cite this article in press as: Mennicken. Activities and instruments aimed at making auditing means that we don’t penalise. As was pointed out earlier. 201). and he will inform the manage. people 1240 1182 struct status hierarchies between small and large firms. established occupa. professional standards. They think: ‘If we hire auditors and pay them money. legitimate entrepre. audit firms. You have doctors 1225 1167 viet and post-Soviet audit practices. Accounting. of Pages 26. Three instances of not help the enterprise to get the accounting and com. are investigated. rarely enforced. expect him also to tell them how things should be done. they rather are re.aos. came to be experi. Furthermore. sell and legitimate audits and you have firms who just call themselves 1224 1166 claims to new competence. express an opinion on the financial statements. not going to die soon. As with the US-American management consulting 1275 1218 wrapped and restaged – with the help of Western ideas profession in the 1930s (McKenna. and redefine their organisational management. con. the new auditors needed to counteract the old stereotypes 1266 and imageries. 1265 1208 market-oriented audit ideals in inter-organisational con. (Audit Manager of 1251 EC 1193 First. [If you] say that an audit is about 1242 1184 onstrate competitiveness. a high status or good reputation. 1274 1217 tirely changed or replaced. 1261 CO 1204 ences between the present and the past. 1255 RR 1198 ing to reinvent themselves as ‘‘doctors who heal” in order worthy activity. the enterprise would choose 1250 1192 analysed. press Here [in Russia] you find firms who really perform 1223 1165 articles etc. management and marketing.1016/j. Markets. they ought to tell us how all this 1244 1245 1246 TE 1188 ideals came to be carried forward. but potential audit clients were not nec. which 1236 1178 firms. shifted and changed [the accounting] should be done. Model 3G 28 July 2009 Disk Used ARTICLE IN PRESS A. emerging market for audit services. Organiza- tions and Society (2009). p. they are also used tached to auditing. including the 1257 1200 themselves from sham professionals. 1162 attention was drawn in particular to marketing expertise Doctors who heal 1221 1163 and market-oriented instruments of audit firm representa. But we also In doing so. 1271 1214 demonstrations of corporate powerfulness. stigmas 1260 1203 ‘‘doctors who heal” are not only utilised to reinforce differ.

1016/j. and Bukhgalterskii uchet. a representative of the inspection apparatus of the Soviet Ministry the word ‘‘consulting” or a part of it to reflect the universal nature of our of Finance. or FBK (Finansovye i bukhgalterskie 1332 1285 the bookkeeper‘‘ [vrachi dlya bukhgaltera] (Baklan. If we look at it in a different way. entitled ‘‘Accounting firms in the market economy”. That is how the the areas of financial economic analysis. 1342 1295 accounting journal Bukhgalterskii uchet we read: wards had a major impact on such developments. and to themselves as auditor–consultants [auditory-konsultan.aos. p. of Pages 26. auditors sought to re-brand themselves as tial clients.bdo. in 2005 for example belonged to Russia’s five largest na. 1348 1300 consulting services are often more needed than the p. 1998. 1990s onwards. an American accounting firm 1358 1310 owner. 1359 EC Telling wrote: 1360 1311 It is important that [audit] organisations [. Russsian audit firms. 1992. . Model 3G 28 July 2009 Disk Used ARTICLE IN PRESS 14 A. but also 1335 1288 with notions of guidance.007 . the journal published 1357 1309 tient confidentiality and state independence: an article by Thomas Telling. which the client himself cannot carry out. 1999. 1993. Qualified sulting and legal advice” (Bukhgalterskii uchet. emphasise lished by Bukhgalterskii uchet regularly from the early 1356 1308 the importance of client/patient care. 1338 1291 as policemen who want to expose mistakes. The big 1343 firms were seen as role models who had successfully em. it should show that we are going to become part of in the late 1980s. Accounting. pp. 1339 OO 1292 collect fines. and helped clients adapt to 1372 1324 [khozraschetnye konsul’tativnye organizatsii]. he describes the activities of the global system in the future. 2001). Medical metaphors came to be blended with Western consulting ideals. (Bukhgalterskii uchet. A. their client will only be interested in their ser. No. . 1368 1320 an attempt to wash one’s dirty linen in public. 1998. management consulting and legal name ‘‘Unicon” was born – its first part ‘‘uni” stands for ‘‘universal”. Consulting images were invoked not only 1334 1287 inspection [reviziya] came to be reworked and intertwined to reinforce distance from old inspection imageries. smaller Western accounting firms. No. the ‘‘added value” of their services to poten. discretion/doctor–pa. many pared business and financial plans for them. pre. 11) protect their clients from the grip of tax authorities. . .] the name should include (1988). Mennicken / Accounting. 11. No.26 Modelling the fast changing regulatory environment (Podolsky. provided ad. (Bukhgalterskii uchet. Organizations and Society xxx (2009) xxx–xxx 1278 medical analogies. 1362 1314 avoiding the words ‘‘inspection and control” [reviziya i [.wbp (accessed in August 2008). [auditorsko-konsul’tatsionnye firmy]. doi:10. At the same time I wanted a good-sounding name. The ultimate meaning would be ‘‘unique consulting services to newly founded cooperatives in accounting and consulting”. 1350 1302 A shift is articulated from socialist inspection to Western. AOS 682 No. 1998..] Accounting firms help business people. entrepreneur and bookkeeper. helpers. 4. seeking to dis. promoted themselves as ‘‘doctors who heal”. (Bukhgal- fered consulting services to their clients. services. UN 27 Andrei Dubinsky. an Estonian firm offering legal advisory services second part ‘‘con” is for ‘‘consulting”. . ‘‘Took”. akin to Western audit firms in the 1337 F 1290 Soviet inspectors continued to be portrayed as watchdogs.” See http://www. punish and son et al. The presence of the Big Six (later Big Five and then Big 1341 1294 1998. 1328 1281 commercial auditing as medicine for the ailing economy. 2001). Supported were such views by articles from owners of 1352 1353 1354 TE 1306 to root auditing in ideals of science. 1345 PR 1297 from yesterday. 2001. their 1349 1301 audit itself.2009. The auditor of today is an adviser [sovietchik] auditing should ‘‘combine the function of control with con. and the objective of the work does not consist in skii uchet in 1995. advertisements and pub. konsultatsii – Financial and bookkeeping advice). They were not so much used D sional audit development (see e. 1998). 10). 8). Rob. The entrepreneurial success of the big firms. they later relabelled themselves as audit-consulting firms 1326 1279 tinguish themselves from past inspectors and sham profes.] empha- 1312 sise in their regulations and contracts the consulting Accounting firms offer clients all complex accounting 1361 1313 and confidential character of their offered services. started under names such as Unicon (Uni. . 1331 1284 the economy” [doktory ot ekonomiki]. founder and director of Unicon comments on the 26 See for example the article in the journal Bukhgalterskii uchet by Baklan company name on the audit firm’s website: ‘‘[. ty] (see e. 1988. 1992. 2001). 1367 1319 him. They sought to 1369 CO 1321 terskii uchet. help [pomosh] and competent to legitimate the profit orientation of the new audit firms 1336 1289 advice [gramotny sovet] (Pyatenko. In the Four) accounting firms in Russia from the late 1980s on. 8.] They 1363 1315 control].g. p. 1364 RR 1316 tions. . 12. 1980s and 1990s (Hinings et al. if he is convinced that the results of the vices.. 1340 1293 consultants. pre. 2. 1370 1322 Before statutory audits were widely introduced. Amongst other things. and accounting advisors (Pyatenko. pare accounts for tax authorities and provide other ser. Auditors and audit bookkeeping. 1988. came to be seen as important preconditions for profes. pp. which began to be pub. 1365 1317 vices.g. Please cite this article in press as: Mennicken. In the opinion of the leaders of the organisa. No.07. Pyatenko. which 1329 1282 In various journal articles. 1330 1283 lic speeches auditors presented themselves as ‘‘doctors of tional audit firms. Terekhov. Their multifac. which they 1333 1286 Pyatenko. Jeppesen.. and consulting in finance. 1998. the majority of Russian audit firms of. In 1992 for example. 1998). 2001. Savin. as ‘‘physicians for versal Consulting)27. and auditors referred 1327 1280 sionals. 1355 1307 teristics of (Western) management consulting. 1371 1323 audit firms worked as accounting consulting organisations vice on accounting policies. offer valuation services. Suyts et al. that our professional roots are interna- ‘‘Finansy”. Pyatenko. published in the journal Bukhgalter. whose task it was to find errors and eted business engagements reconfirmed beliefs that 1346 1298 breaches. 1344 1296 Auditors are no longer the state inspectors [revizory] braced a competitive market orientation. 1351 1303 1304 1305 oriented business consulting (see also Baklan. Organiza- tions and Society (2009). From inspection to auditing: Audit and markets as linked ecologies. a Moscow firm providing ‘‘unic” sounds similar to ‘‘unique”. a consulting firm in Tbilisi founded in 1987 to offer services in tional. Pyaten- ko. Furthermore. 1373 1325 themselves on Western accounting and consulting firms. Notions of control [kontrol] and continued to carry. Whereas former and communicate. 2007). can help prepare budgets. and I believe it is true. history/index. and ‘‘Ekspert”. describing the foundation of Soviet accounting consulting firms services. . 1347 1299 to the owner. 8) client orientation and general management expertise. its compliance work. 1988. No. books. but to articulate charac. 21) 1366 1318 accomplished work will only be communicated to According to a survey. 1998. [.

119. Amongst the most members. the Handbook of laws abiding organisations. 39) put it: ‘‘In the best case audits are tolerated.07.007 . Pyatenko. tions will show.g. New York: Free Press. In 1996. 1446 1405 accounting and audit practitioners. weaknesses. the Union of Professional Audit Organisations (SPAO. 1452 1412 perspectives of a market for audit-consulting services in [. and founded their everyone. individuals. recognition and respect. With asked to list the main factors that contributed to their economic success the exemption of the RCA. came to 1440 1399 analyses (analyses of strengths. ‘‘professionalism of employees” and ‘‘compre- never been compulsory and audit certificates were. 1996. ‘‘not yet a really effective element opment of the market” (Voronaev.minfin. 1432 1391 marketing and skilful public impression management be. and PR work began to enter in particular lar- ger firms (see e. auditors and consultants. 98): ‘‘When granting loans. The 1457 sphere of professional [audit and consulting] services 1458 CO 28 Pyatenko. under the leadership of where market relations were realised. and their competitive environment (Pyatenko. which became later renamed into IPAR. 1422 1381 (1996. like any 1450 1410 1998). From inspection to auditing: Audit and markets as linked ecologies. 1998. audits as such en. A. 2002. combined with ideas of strategic management. and still are.28 D special attention was devoted once more to the large Wes- tern accounting firms and their ways of organising exper- tise. vidual firms and their capacities for efficient organisation 1437 1396 gan to be adopted to underline professionalism. 1436 1395 egies. .pdf. 1461 Management Consulting Services by Barcus and Wilkinson (1995). Even in 2002 we can read in a sionalism. ‘‘not an instrument of societal their founders began to portray themselves as active audit 1420 1379 control over the commercial activities of enterprises and market organisers – actively forming themselves. rather than as the property of 1438 1397 orientation and entrepreneurial ability (Pyatenko. In this context. Q5 1998). the main vehicle through which high levels of audit profes. and Peoples (1993). developed basically on a combi. as the following sec. and the case of the large international accounting 1434 1393 especially for those with bigger business aspirations (e. accessed in June 2009). Consequently. 1999). by them.1016/j. Unicon.aos. 35. 1998). See Ekspert. Institute of Professional Audit firms sought to actively embrace market ideas. Mennicken / Accounting. 2006. p. p. shown in newspaper articles. . p. ‘‘The auditor comes to the bookkeeper to help” other Russian business. Attributes of organisational proficiency and 1439 1398 2001. ahead of almost 1455 1415 public speeches (e. Vedeneev. business journals 1428 1387 the potential client rather than trust his financial state. marketing and strategic business development 1416 1375 regarded as being of secondary importance. were often own PR. No. came not only to be utilised 1429 OO 1388 ments. (Pyatenko. Rufaudit). new branch of the economy came to be formed. 1994). ‘‘The foundation and development nation of indomitable spirit and entrepreneurial energy. 2006).g. the number of audit associa. 2001. Membership in them has prises (potential clients)”. 1996. Please cite this article in press as: Mennicken. New York: 329) 1462 McGraw-Hill. independent. paved the way for a life in accordance with 1456 the laws of the market economy and competition. 1449 1409 such as ‘‘Choosing an auditor and consultant” (Pyatenko. at conference). They sent their employees to give importantly. Organiza- tions and Society (2009). These carried titles. Auditors and audit 1464 UN the audit firm Unicon. 1997). 32. American management consulting field (McKenna. and organisational competence of audit firms as 1425 1384 widely disseminated Russian audit textbook (see Danilev. the Russian business magazine Ekspert published a survey recognised organisations (see http://www1. the next section shows. firms like FBK. Managing ity to form and develop normal. 203). Model 3G 28 July 2009 Disk Used ARTICLE IN PRESS A. practices aimed at 1442 1443 1444 TE 1403 Further. 1999). professionalism came to be seen as a characteristic of indi. 1995). 1424 1383 joyed limited credibility.. Rufaudit and Unicon founded increasing organisational rigour and discipline provided 1445 1404 their own publishing houses. p. this number was eventually cut down to five officially In 1996. be. 1426 1385 sky et al. p. Stukov.30 Audit firms and 1419 1378 in the market economy”. AOS 682 No. extensively refers to the English and American already itself constitutes a clear example of the possibil. By many departments with the aim ‘‘stop auditing from being poorly 1417 1376 (including auditors and auditees) they came to be seen as understood” and re-emphasise its ‘‘usefulness for the devel. firms (Cooper & Robson.g. 1423 1382 but they are not liked”. banks often sionalism could be realised. They pro. Between 1989 and 1995 audit-consulting. SWOT corporate powerfulness.2009. 1451 1411 (Antipin & Badalin. 29 The two founders of Rufaudit. in this context. Alexey and Alexander Ruf. Selling to the Top. opportunities be utilised to articulate professionalism. audit 1421 1380 organisations” (see e. founded in Auditing came to be regarded as a sphere of business 1463 1992 the Russian Collegium of Auditors. 1435 PR 1394 FBK. not issued hension of the client’s psychology”. More 1454 1414 vices” (Vedeneev. 1459 consulting and marketing literature and quotes Maister (1993). The associations are primarily seen as a platform for auditors and important factors mentioned were: ‘‘good relations with national enter- audit firms to defend their business interests. 2006. 1994). 196–197). as ‘‘motors” of the 1466 tions amounted to more than 100. and audit firm advertisements. were involved in the 1406 setting up of audit business associations29. 1430 1389 auditor”. market 1460 the Professional Service Firm. client and business development. moted themselves as entrepreneurs. New York: John Wiley. As Stukov expectations.] Independently. reprinted in Terekhov (2001. 1441 1400 1401 1402 and threats). Similar to the case of the US. Market success came to be promoted as a sign of profes. also for the general enhancement of public 1431 1390 Against the background of such articulations of distrust. pp. At the same time. Verkhov & Kozlova. 1465 Firms in Russia) was founded. Following the introduction of the Federal Audit Law in 2002. 1433 1392 came important topics for the newly established firms. of Pages 26. Key account management. pp. but the Ministry of Finance. or ‘‘The marketing of audit ser. Organizations and Society xxx (2009) xxx–xxx 15 1374 & Sotnikova. however. 38). They issued journals for also old inspection ideals with new relevance. published ‘‘Civilizing markets”: organisational proficiency and 1447 1407 translations of Western accounting and audit textbooks. doi:10.. where the then 20 largest Russian audit firms (in terms of revenues) were uploaded/library/2009/02/peresh_apao. Western-oriented marketing strat. a well developed and flourishing 1453 RR 1413 Russia” (Pyatenko. 2001. for example. although they have been approved by a licensed for the attraction of new clients. 1997. Greenwood et al. but. 1418 1377 ‘‘necessary formality”. and the requirement for governmental accreditation of 30 such associations. all associations accept audit firms as their and continuing competitiveness on the audit market. Bare audits. Displays of entrepreneurial 1427 F 1386 employ non-official information about the real situation of success. Accounting.g. accounting hygiene 1448 EC 1408 and issued their own books and articles.

In rationalised audit procedures. The point is. 1994). the eco- PR ‘‘pioneers” and ‘‘elite” (Pyatenko. 1535 1482 tween the past and the present – between old worlds of tion and privatisation. . 1550 1497 eration of public recognition and authority (Pyatenko.] The entrepreneur is the openly say to you that our audit certificate is a complete 1528 1475 motor of the machine. a founder and developer of decide to take the exam will also pass. p. 1539 1486 nomic success of an audit firm came to be promoted as a 2001) of Russian audit development. 1575 31 See Regulation No. In accordance with market ideals. work and jurisdiction of the Russian auditing profes. rule-abiding bureaucratic inspection and book- mote themselves as ‘‘sites of professionalisation” (Cooper 1537 1484 keeping and new worlds of Western-oriented accounting & Robson.g. Verkhov & Kozlova.07. Danilevsky et al. The formal entry barriers ment consists in the professionalisation of the organisa. 1534 1481 its progressiveness and. 1998. the Guttseit & Ostrovsky. Bychkova. 1998.007 . 1567 1515 firms remarked in this respect: isation” and ‘‘civilised-ness” (Guttseit. Verkhov & Kozlova. they began to play a 1540 1487 sign of organisational efficiency. and were not strongly con.] The fundament of a 1559 1507 trolled (Danilevsky et al. the 1565 1513 positions ranging from audit trainee.. You Once more. 1991. the particular business history of an audit firm. 2001 EC 1553 1500 government had introduced licensing procedures for audit [1995]). The requirements are very low.. 1503 1998. Seeking to establish themselves as 1538 1485 and auditing. Please cite this article in press as: Mennicken. They 1521 1468 1998. competent management major role in the shaping of new professional identities 1541 1488 and professionalism (Guttseit & Ostrovsky. stress Due to the lacking credibility of the state audit certificates. From inspection to auditing: Audit and markets as linked ecologies. 1997. its positioning D odologies and established differentiated command struc- tures to establish clear divisions of audit labour (see e. . Their ‘‘bureaucratic professionalism” [burokratich. [. adopted international auditing standards. pp. 2001). 1569 1517 atively easy to get. Pyatenko. (Pyatenko. plays of organisational efficiency and economy (see also 1552 1499 Drawing on organisational patterns of the West. 1571 1519 that is all very easy. They 1542 1489 ko. Pyatenko. 2001. 1998. well. reference was made to the Big Six accounting 1570 1518 just need to study for two nights. deputy director and partner of FBK. a strategist. . tion of their business. Model 3G 28 July 2009 Disk Used ARTICLE IN PRESS 16 A.. and I don’t 1530 1477 new markets and the methods of their mastering. for example. formalised their audit meth. sky et al. 1572 1520 exams are interested in letting as many students pass eskiy professionalizm] and rationalised ways of organising 1573 ‘‘paper-work” [bumago-tvorchestvo] came to be seen as 1574 important attributes of audit professionalism (Pyatenko. In attempts to demonstrate a ‘‘more civilised 1549 1496 tant role in the production of status differentials and gen- stage of [audit] development” (Pyatenko. you read a little bit – firms (see e. . Sheremet & Suyts. 2002. 1998. Organiza- tions and Society (2009). 1998. [.1016/j. 1998). Danilevsky. professional examinations represented a presence of well mastered management procedures at 1561 1509 necessary condition for the carrying out of audit work. Pyatenko. . and the ability to quickly and accurately 1562 1510 they did not constitute a very effective mechanism for the utilise standard working algorithms within day-to-day 1563 CO 1511 production of closure and credentialising of expertise. doi:10. In the view professional culture in an audit-consulting firm is the 1560 1508 of many auditors. reinforce distinctions be- and supported by reform programmes aimed at marketisa. Pyatenko. within these struc. Enthoven et al. 2001. . Terekhov. 1990. Mennicken / Accounting. Pyaten- and creation of intra-occupational status hierarchies. Accounting. als of professionalism came to be intertwined with dis. 1557 RR 1505 sion remained largely undefined.] The centres that conduct the 1998). came to be regarded as a sign of ‘‘normal. came to play an impor- 2001 [1995]). wrote: 1554 1501 firms and professional examinations for individual audi- 1555 1502 tors in 1994 (see e. Terekhov. Pyatenko. 119) ide. 2001). but all levels [. Guttseit & 1568 UN 1516 The qualification that is required to do audit work is rel. A. audit partner to firm formalisation and ‘‘industrialisation” (Pyatenko. 1996. 1543 1490 ket competition came to be advanced as crucial for the con and FBK). The regulation was adopted by the government On the lacking quality of auditor certifications comment also Danilev- on 6 May 1994. ambitious audit firms began to pro. Pyatenko. (2002) and Terekhov (2001). 1998. 1536 1483 passive. 1522 1469 distinguishing between audit specialists and audit entre- A senior expert involved in the management of audits at 1523 1470 preneurs for example wrote: the same firm even decided not to enrol for the national 1524 1471 examinations: 1525 1472 Experience and knowledge of the [audit] specialist does 1526 1473 not mean much without the work of the manager and I decided not to get the certificate out of principle. 1998). 2001). oriented towards the future. usually all people who 1529 1476 is a creator. Uni. The Deputy Director of one of Russia’s biggest audit audit activities. [. as possible. [. 2006).]. Sheremet & Suyts. I can 1527 1474 [audit] entrepreneur. .g. survival and development in the tough market environ. 1546 1547 1548 TE 1495 in the market and client portfolio. .g. 2000. pp. 2001. 37). 37–39) don’t have any respect for this exam. This practices. 1997. 1997. of Pages 26. 2002. ‘‘oriented towards the future” (Pyatenko. 482 on the issuing of audit certificates and audit 32 licenses (Danilevsky. 2001.g. 1545 1492 1493 1494 the absence of strong and long-established conventional forms of professional accreditation and organisation. 1558 1506 to the profession remained low. p. have to let the students pass to secure their existence. some people even 1532 1479 Images of audit entrepreneurialism came to be utilised to just buy the certificate. 2001) of 1566 1514 director. Organizations and Society xxx (2009) xxx–xxx 1467 audit machinery. Terekhov. because that’s how they make money. thereby. .31 Yet. . 1551 1498 1998.32 1533 OO 1480 underline the market orientation of the audit sector. (Pya- believe in exams where 100 per cent pass. For auditors and consultants a deciding factor for their 1556 1504 tures. Ostrovsky.aos. He profanation. 1544 1491 enhancement of service quality and client satisfaction. 1998. AOS 682 No.] I just 1531 F 1478 tenko. 7–9) 1564 1512 was confirmed by many interviewees occupying differing The establishment of standard operating procedures.2009. Mar- began to run their own training programmes (see e. Sucher & Bychkova.

but we 1675 incorporated practices and procedures ‘‘defined by prevailing rationalized control every transaction”. From inspection to auditing: Audit and markets as linked ecologies.] Somehow. A senior auditor who worked for another large Russian 1649 1601 1602 1603 pers and audit files. Often. ‘‘civilized competition”. 1998. taking the then Big Six accounting firms as an exam. by providing clean audit reports without backing these vice versa – if there is no document. rationality and keted and commoditised. 1677 enhance their ‘‘legitimacy. thereby. 1659 1611 Against the background of widespread distrust in audit- 1612 ing (and accounting). the objective of an inspection [revi. compliance with national tax and accounting regulations. (Pyatenko. McGee & 1625 1577 and. Ideals of marketisation were reworked work (see e. 1963. . 1669 1622 could be invoked to re-legitimise old Soviet bookkeeping ology of inspection [reviziya]. & Jamal. 2000). standardised 1600 audit manuals. represented. 2005. p. to some extent. 1627 1579 als of formal-rational organisation33: ited in Moscow between 2001 and 2002 (8 out of 9) used 1628 1580 audit manuals. Van Maanen & Pentland. accu. had been working for these 1632 1583 ing ‘‘professional services”. 2002. Avdyunin. came to be audit firm remarks: 1644 PR 1595 provided with new relevance.. ‘‘bureaucratic professionalism” firms confirmed this view: 1661 RR 1614 was advanced as important element in the achievement 1662 1615 of audit quality. the Russian public is more used to inspections [revi. . this principle is still alive 1658 1610 et al.] A certain part of the 1670 1623 and inspection practices concentrating on issues of formal Russian community of auditors is interested in inflating 1671 1624 accuracy. as Power (1996). What changed. [. and formal ziya] is to check on concrete kinds of business activity. Preobragenskaya. old ideals of efficient administration. . doi:10.g. 14–18). . documentation indices. 1996). The problem is that 1653 1605 tors” was widely used amongst regulators and profession- auditors have quite a formal approach to their work. 1668 1621 1999. 1638 OO 1589 Organisational rigour and discipline came to be promoted tion tests.] and firms. 1665 1618 procedural correctness. Organiza- tions and Society (2009).007 . but to To become redefined as market-oriented. there is also a transaction. 1648 1599 articulated internal organisational structures. They have methods [. and – 1656 1608 ple. audit and accounting technologies 1682 Please cite this article in press as: Mennicken. 1990). of Pages 26. . these rules. were the ways in 1679 Soviet bureaucratic organisation and planning. ziya]. on the reliability [dostovernost’] of the financial state. and in view of the absence of credible A Russian partner of one of the large international audit 1660 1613 professional certificates. Guttseit. auditing came to be linked up with Weberian-like ide. These materials were used to increase procedural 1633 1584 standard operating procedures. They say: ‘‘What can they [the Big 1674 33 To paraphrase Meyer and Rowan (1977. 1995. there existed the principle: if 1655 1607 pursued audit activities in an unethical manner. 15) to consist mainly of detailed.2009. structures and procedures already enjoyed widespread legitimacy and. Yet. 1640 1591 mally functioning market relations” and the formation of Less emphasis was placed on checks of the control systems 1641 1592 ‘‘a civilised competitive market” (Pyatenko. Accounting. As the Deputy Director of one large Russian 1643 1594 racy. . came to be seen as characteristics distinguish- ing proper audit firms from foul players. asset valuation and overall economic 1642 1593 Oddly enough. lawfulness [zakonnost’] and legal compliance these differences under the label of Russian specificity. AOS 682 No. could which such practices were restaged. representation. Being both widely ing and audit practices did not necessarily need to be rad. and formalised audit quality control procedures. 1994). auditing marketable. The fixation of Western audit firms on ments as a whole. Model 3G 28 July 2009 Disk Used ARTICLE IN PRESS A. 1998). p. well. 340) the audit firms Four] give you? They control only in general. Mennicken / Accounting. 1678 accepted amongst Western accounting firms and rooted in past ideals of ically changed. . first of all. 1626 1578 ple.1016/j. . actual account.] The Big Six teach orderliness. working paper 1629 blueprints and quality control procedures that had been 1630 1581 Western companies have great experience with meth- imported from the big international accounting firms by 1631 1582 ods of industrialisation and the very process of provid- employees who. today. these new technologies did 1635 1586 methods of] standardisation and industrialisation make not entirely replace old inspection practices. [. mar. . .07. Shama & McMahan. market recogni- Whereas the task of the audit process is to throw light 1663 1616 tion and economic success (Guttseit & Ostrovsky. because 1667 1620 (but see also Barrett. highly standardised transac. 2001). To some extent. often labelled as D audit firm commented: The problem is not that auditors don’t understand the 1650 1651 1652 TE 1604 ‘‘black auditors” [chornye auditory]. resources and stability”. Russian audit companies often hang on to the ide. Looking at how the big international much higher amount of substantive testing than in 1647 1598 accounting firms organised their work. The term ‘‘black audi- operations [of the audited entity]. Campbell. at some point. 1676 concepts of organizational work.g. And therefore you’d have a 1646 1597 e. 2005. aimed at checking documentary accuracy and 1639 1590 as characteristics supporting the establishment of ‘‘nor. 1636 F 1587 it easier to train personnel and deal with turnover. . and accounting hygiene. This ducted on Russian financial statements. Radcliffe. Audits con. Organizations and Society xxx (2009) xxx–xxx 17 1576 1998. 1672 UN Many Russian [audit] firms use this in their competition 1673 with the Big Four. 1664 1617 Pyatenko. ensure accurate documentation and enhance 1634 1585 their people how to work on a conveyer belt. 1666 1619 ‘‘auditability”. you would find less confidence in the 1645 1596 of the market. Bailey. no entry into the EC 1657 1609 up with detailed checks and documentations (Danilevsky books has to be made. 1998. [. in the name In a Russian audit. well designed and other countries. Cooper. proper documentation. 1680 function as powerful symbols signalling orderliness. for exam- there is a document. pp. Power (1997) would put it CO on concrete operations. 1998. In attempts to make post-Soviet 1681 normality.aos. Most of the Russian audit firms that the author had vis. 1654 1606 als for describing auditors who were formally qualified but Back in the Soviet times. well managed archives with working pa. [. largely continued 1637 1588 is their corporate culture. A.] [Their organisational efficiency.” They adopted these bureaucratic struc- tures and rules not so much because of their immediate efficacy. in this context. . bureaucratic traditions were reinvented (see internal control systems. of an organisation.

A couple See also article ‘‘The largest firms on the Russian and world market for audit-consulting services” (Finansovaya razeta. 39 reporting ‘‘on the activities. 52.04. the journal Ekspert).researchandmarkets. Regarding university rankings. 12. ity at a time when ratings and rankings generally had ac.g.1991. issues No.g. service lines. The reputation of the 100 largest Russian corporations Barclays. Please cite this article in press as: Mennicken.08. and soon after that universities and other organisational fields. No. 1734 FBK ranked Russian audit firms by total earnings [vyruchka].39 In the insurance sector.g. 1994. audit-consulting firm rankings began to be CO 36 See e. the group of audit firms wanting to be ranked ac. 18. FBK’s rankings were (and still are) conducted (18. audit Despite criticisms and articulations of mistrust (see e. 1994).g. ing Russian banks and newly issued securities. issues No. They were advanced as 1767 1716 Connections came to be drawn between audit expertise insurers of market principles.1016/j. Questions about auditing came to be re. 1764 1713 tance and central standing. (Finansovaya gazeta. 104. see Kariera accounting firms and banks. 56 (04. Yet. years the rankings gained more and more attention and 1754 PR 1703 placed with concerns about procedural rigour.1996) and the audit newspaper Kommersant-Daily . market for audit services. 31.38 Later the 1760 1709 1710 1711 ibility. Sheremet. but they came fee income. See www.1997) of the journal Profil’. ideas of auditing FBK published its first ranking in 1996 in its in-house journal 1739 1688 themselves came to be redefined. No. auditing could flourish. Finansovaya Gazeta. 18. not just in 1757 1706 to one particular instrument that came to be of increasing auditing and consulting.1997). 1765 1714 into displays of inter-organisational competition. 1729 on a voluntary basis.37 The audit firm rankings began to gain popular.007 . Model 3G 28 July 2009 Disk Used ARTICLE IN PRESS 18 A. see Table 2 below) 1745 1694 audit market designers. 1752 1701 management directed attention away from the actual con. They were promoted as lists of the ‘‘largest” 1772 RR 1720 One of the first Russian audit firm rankings was pub- 1721 lished in February 1992 by the business journal Kommer- 1722 sant (Danilevsky. 16 1728 firm FBK. 04. 1751 1700 firm branding and instruments of efficient organisational Chaya. 04.1996. the ranking included already 100 firms 1744 1693 reinvented as a marketplace. for example.1995. the added consulting services daily) (for an example of a more recent ranking see Table 3 1749 1698 they were promising to deliver. rankings and status configurations 29. No. through the intro- duction and circulation of audit firm rankings. issue No.1996). 27. No. They came to be of wide popularity 37 In an article of the Finansovaya gazeta (No.asp?report_id=220224&t=d&cat_id (accessed September 2008). such criticisms did not stop their later rise and spread. Careful client management. 04.1996) and No. corporate influence. in particular those stated that such ratings misleadingly implied the foundation of a civilised 1733 published by the International Accounting Bulletin (IAB)34. the vice- 1730 and. pp. As will be shown. No.04. Izvestiya. 1992). Organiza- tions and Society (2009).36 1750 1699 fulness they emanated. and the economic success.1996) of the 1727 (No. criticised the methodology of the rankings and 1732 ing on Western audit firm rankings. ideas on professional authority came of open competition” (ibid. 1725 of years later. By 1998. and organisational status differentiations. rankings and ratings had been put 1761 1762 1763 TE 1712 large Russian audit firms sought to reinforce their impor.1991. and comparative international audit firm rankings. p. 33 (12. were regularly published in leading president of the Russian Audit Chamber (Auditorskaya Palata Rossii) UN 1731 Russian business journals (e. from early on. 1759 1708 for their services. which voluntarily participated. the securities rating published in the business journal Kommersant. No. 22.” The IAB is subscribed by many large international Finansovaya gazeta. No. but also in other sectors of activity.35 The ranking consisted 1741 1690 enabling market exchange and accountability.1998). 38 See e. had been conducted on emerg. 23.g. 56. Danilevsky.01. No. in particular D insurance and audit-consulting industries followed. Kommersant.05. over the 1753 1702 tent of audits.). Ernst and Young. 1742 1691 as platform for entrepreneurial development. or issue No. enhance their standing and general cred. 23. AOS 682 No.1995. Market ideals were translated ond assurance mechanism. Also in the auditing field. self-realisa. 103. Izvestiya-Ekspertiza. 27.07. as sec. 1755 1704 powerfulness and skilful impression management. 33. Organizations and Society xxx (2009) xxx–xxx 1683 were not automatically radically reworked.03. 17. issues No. the article ‘‘Rating of the leaders in exchange market structures”.07. 1770 tion” [sposob konkurentnoy bor’by] (Ekonomika i Zhizn.9. 01. Ekspert (see e.2009. The ranking was produced by 1723 the Russian tax authorities and consisted of a list of audit 35 1724 firms ‘‘whom they trust” (Danilevsky. Despite the general public mistrust and had come to be an established feature in the Russian 1746 F 1695 in accounting and audit reports. such as PwC. 2. 1736 1685 Western ideas of strategic organisational management economic growth of each firm and the audit market as a 1737 1686 and the hierarchical structuring of large international pro. In 1997.03. such as Ekspert and Profil’ or 1747 1696 because of the marketing skills of a selective group of newspapers. 1771 1719 Competition.04. 3. 1758 1707 importance for audit firms in attempts to create markets Rankings and ratings. doi:10.1997). (financial and industrial sector) and Russian regions are rated in the journal info. accounting firms. 1743 1692 tion and economic wealth creation. audit sence of trustworthy audits and government structures 1766 1715 firm hierarchies.06.09. journals. KPMG. 58-63). at first. 139. 12.1996). 35 (16. Accounting.03. 6).1996). No.07. 2007.1997 and No. 17. below). 14 1726 produced by the editorial team of the Kommersant-Daily (14.04.08. Deloitte. Attention came to be Finansovye i bukhgalterskie konsul’tatsii [Financial and book. 1756 1705 In the following last part of the analysis. or the article 34 The International Accounting Bulletin (IAB) is an international newsletter ‘‘How to use the rating of banks”. From inspection to auditing: Audit and markets as linked ecologies. to auditing of 20 Russian audit firms. forward as ‘‘second testimony” [vtoroe svidetel’stvo]. particularly needed in the ab.1997) of the newspaper Finansovaya gazeta . published were earnings per employee (audit specialist). 23. Auditing itself was crued to 41. with audit firms as central (amongst them PricewaterhouseCoopers. audit 1769 1718 to be intertwined with measures of corporate success. of Pages 26. and Credit Suisse.1997]. 12. whole. Other indicators 1735 1684 to be intertwined with Western marketing technologies. No. No. business press (e. 38. as promoters of ‘‘conditions 1768 EC 1717 and audit firm size.aos. the paper turns quired vogue in Russia’s business world. In this process. firm rankings came to be regarded as a ‘‘means of competi. 32 (08. and staff numbers. 12 (31. Draw. (No. such as Finansovaya gazeta and Kommersant 1748 OO 1697 new audit entrepreneurs. Attention is drawn to the production and circulation of audit firm rankings.g.09. A. Mennicken / Accounting. performance and strategies of the world’s On the importance of insurance firm ratings see the article by Kolomin. 1740 1689 shifted away from auditing as mechanism of certification keeping advice] (No.1997) of the journal Ekspert.06.1996). No. 1738 1687 fessional services firms.05. 05. 1992.

0 5 FBK Moscow 32.926 2.900 2.8 44.07.757 61.1 77 153.7 UN 3 Rosexpertiza Moscow 44.574 6.8 8 BDO rufaudit Moscow CO 25.6 0. A.8 47.1016/j.1 10 Rusaudit Moscow 17.552 61.aos.010 41. office’s for 1997 (million of specialists in specialist in 1997 for 1996 (million in of specialists in specialist in 1996 revenue per consulting group location roubles)a 1997 (million roubles) roubles) revenue 1996 (million roubles) specialist (%) (%) 1 Price waterhouse Moscow 438.0 239 109.1 570 400. Revenues are construed as total revenues from auditing and consulting operations for the entire affiliated group.026 27.7 in 2008 (thousand roubles) 4314 offices and subsidiaries N.849.112.098 414 227.000 92.011 76 302. English translation provided by author.097 130 200.969 41.6 126 204.03.870. Organiza- 28 July 2009 Disk Used AOS 682 Extract of Russian audit firm ranking published in journal Ekspert in 1998 showing 10 largest audit firms out of 100 firms included in the ranking. Organizations and Society xxx (2009) xxx–xxx 9 Gorislavtsev & Co Moscow 23.127.4 2 Unicon Moscow 94.5 15.2 34. Accounting.604.2 132 186.03.7 3962 11 8 8 Rosexpertiza Moscow 2.3 73 446.2009. Rank Rank Name of auditing.5 A.g.9 70.0 23.200 24. 12.6 28.5 3296 22 9 7 RSM top-audit Moscow 2.8 173 202.763 241 185.8 2707 12 7 9 Energy consulting Moscow 2.2003 and Table 2 below).7 24. doi:10.3 4 Top-audit Moscow 34.322.511 20.0 28.6 3.7 20.480.0 OO 2276 1693 3364 24 330 11 No.585. a Revenues are construed as total revenues from auditing and consulting operations for the entire affiliated group.1998.4 21.2 4.A.797 revenue from auditing (%) 50.845 48.3 7 Business-audit Moscow 26.4 1531 103 10 11 SV-audit Moscow 1.2009. Mennicken / Accounting.339 76 333.8 10. Model 3G sistem (RBS) 5 5 FinExpertiza Moscow 2.8 6 MKPZN Moscow 32.645 80 433. 14.3 78. Central Aggregate revenues for Proportionate Increase in Number of Increase in number of Revenue per specialist Number of branch 2008 1 2007 1 and-consulting Group Price waterhouse coopers office’s location Moscow 2008 (thousand roubles)a 8.547 78 225.0 61 177.057 20.2 33. 14. Rank Name of Central Aggregate revenues Average number Revenue per Aggregate revenues Increase Average number Revenue per Increase in auditing-and.0 revenue 2007– 2008 (%) 27.0 641/197 0.0 34.2 4677 8 Source: Journal Ekspert No.2 400/220 24.9 PR specialists/ certified auditors 1966/1172 specialists 2007–2008 (%) 17.8 1807/431 1683/773 774/98 17.1 32.7 35.027.7 6 4 FBK (PKF) Moscow 2. 19 .870 15.9 81 270.1 14.4 228.7 537/64 30.007 Please cite this article in press as: Mennicken.6 346 225. in subsequent years revenues from auditing and consulting are disclosed separately (e.112. EC TE D Table 3 Extract of Russian audit firm ranking published in journal Ekspert in 2009 showing 10 largest audit firms out of 100 firms included in the ranking. From inspection to auditing: Audit and markets as linked ecologies.561 139 234.5 8. Table 2 tions and Society (2009).500 231 140.8 46.711 26.368 35.855 112.778 43. of Pages 26.0 11.2 7.6 22. ARTICLE IN PRESS Ekspert No.7 26.2 25.04.9 13. 11. 2 3 4 2 3 6 BDO unicon Intercom-audit Razvitie biznes- Moscow Moscow Moscow 4.2 marillion a RR Source: Journal Ekspert No.000 815 537.3 64.1 53. 23.1 32.2 858/167 15. 30.5 690/295 3748 28 F 1. English translation provided by author.603 6.6 1324/482 43.

No.1997). 42. From inspection to auditing: Audit and markets as linked ecologies. No. 20.007 . surrogate for audit quality.9 21. Audit firm size was 1859 1825 and contribute to the formation of an ‘‘audit elite” (Ekspert.5 to 41. 64. such as Eks. 56. ‘‘Auditing 1792 the auditors” [Audit auditorov] (Den’gi. Cf. 35.41 1845 1811 listed in the audit firm rankings. Total revenues (million 20. Total revenues 17. the rankings 1838 1804 firms” (Finansovaya gazeta. rey. sion in the ranking came to be listed. 29. Source: ‘‘Predvaritel’nye pokazateli rynka auditorskikh uslug v Rossiyskoy 1780 vivaetsya] (Kommersant-Daily. 35. They corroborated their lead.8 39.07. 72. Yet. No. Model 3G 28 July 2009 Disk Used ARTICLE IN PRESS 20 A.808. like FBK.6 1790 ‘‘Market.1996).03. conducted by the rating As Espeland and Saunder (2007). came to constitute an important vehicle of representation 1839 1805 more than 3000 audit firms operated in Russia (Kommer. Sauder and Espeland 1846 RR 1812 agency Expert-RA. and de-contextualisation” (Espeland & Saunder. 12. 30. Ekspert. It is interesting to note that audit firm size is also commonly used as a Ekspert (No. rankings 1863 1829 Only the largest 100–150 firms of those applying for inclu. a Russian ‘‘Big Nine” (or Big Ten). of Pages 26. 13.7 28. 64.11. and questions seeking to address issues of 1858 UN 1823 alternative. 04. the total revenues of registered audit firms cessfulness.1996). 04.2009. No. http://www1. 1842 1808 2004 and 2007. 56. No. 56.07. driving professional distinction 1844 1810 ble 4 below). 72. 1831 1797 between large and small firms (see e.2006. in which differentia. issued by the Russian Ministry of 1782 emerging” [V Rossii poyavlyaetsya tsivilizovannyi rynok Finance in 2008.1996).07.1996).392.1996). The rank. sional distinction and status differentiation.09. 1856 1822 17. driving profes.1997).1996. Federatsii za 2007g”. Mennicken / Accounting.06. put forward as a surrogate for audit quality. ranking” [Rynok. [Preliminary indicators of the market of audit ser- 1781 sia a civilised market for auditing and consulting services is vices in the Russian Federation.3 1778 Daily. the 50 largest audit firms and status differentiation. and 1834 1799 1800 1801 ings should inform potential clients and the larger public about the ‘‘leading figures” in the Russian audit and con- sulting market (Kommersant-Daily. Organiza- tions and Society (2009). auditing not.2007. Accounting. No.g. 33.7 billion Roubles (see Ta. focusing on audit firm size came to be regarded as one pos. A. 23. 1981. Firms 1833 who managed to be included gained more visibility. as estimated by the Russian Ministry of Finance. 42. 1860 1826 No.12. No. rynok raz.g. Between questions of audit quality to measures of corporate suc.07.1996). 20. 1840 1806 sant-Daily. No specialist knowledge appeared to be 1855 1821 the then Big Six in particular (Kommersant-Daily. 1837 1803 myths about the ‘indispensability’ of Western [audit] tion. Audit firm size came to be put forward as a 1843 1809 had also doubled from 20.946.DeAngelo. 12. audit firm rankings published in Den’gi (No. 04. doi:10. and they change 1849 1815 instrument that could help make a small subset of ‘‘qual. between who came to be included and who was not.2008. 64. konkurentsiya. No. 24. No.g. 1775 Press articles with audit firm rankings carried titles. 56.04. (million roubles) 1791 ting] (Ekonomika i Zhizn.545.1996). D audit firm leadership came to be equated with a firm’s inclusion in the rankings.04. 13. 2004 2005 2006 2007 1789 ionnykh uslug] (Finansovaya gazeta. issues No. As national 1861 1827 The rankings were not representative of the whole audit licensing and audit certification mechanisms did not have 1862 1828 market. 1776 such as ‘‘The first ten audit firms in 1995” [Pervaya desyatka 2004 2005 2006 2007 1777 auditorskikh firm po rezul’tatam 1995 goda] (Kommersant. No.aos.09. No.2005.40 Total revenues of registered and licensed audit firms in Russia.04. proxy for quality in audit research (see e. 1857 cessfulness. audit firm rankings contributed to a ‘‘simplification 1851 1817 prosperity and professionalism.). ‘‘Who is who on the audit market” F 1785 [Kto est’ kto na pynke auditorov] (Finansovye Izvestiya. to the Wes- 1824 tern ‘‘Big Six” (Finansovaya Izvestiya. 27.1996).1016/j. No. 20. The rankings were controver- 1835 1836 TE 1802 They should demonstrate their influence and ‘‘melt down sially discussed. By 2007. and ‘‘oust non-profession. the roubles) 1779 market is developing” [Auditory est’. 20.06. much credentialising and differentiating power.1996).ru/common/img/uploaded/ library/2008/07/pokaz_030708. rankings shape what we pay attention to.1999).11. the 1830 1796 and introduce (at least rhetorically) quality differentials rankings were of a very specific form.03.09.1996).04. ‘‘The largest firms on the Russian and world Total revenues of 50 largest audit firms retrieved from the audit firm OO 1787 market for audit-consulting services” [Krupneyshie firmy na rankings conducted by the rating agency Expert-RA. 2004–2007. audit quality came to be displaced.1996). 17. 1847 1813 (see Table 5 below).0 29. 26. 2004–2007.731.06.03. Unicon or Rosexpertiza 1794 sought to utilise the rankings to demonstrate the ‘‘civilised 1795 nature” of the audit market. 1864 40 41 See e. competition. 23. The audit firm rankings could be circulated 1853 1819 (ibid. in particular for the larger firms. 16.minfin. No.07. Participation in them was (and still is) voluntary.pdf (accessed in March 2009). They create 1848 1814 The rankings came to be regarded as an important and obscure relations amon g entities. 12. 1793 Large audit firms. No.857. In this respect. exhibit their study.5 41. 2007) of 1852 CO 1818 als from the market” [vytesnenie neprofessionalov c rynka] knowledge. the form and locus of attention. as a ‘‘who is Table 4 1774 who” [kto est’ kto] to aid auditor choice.08.1996. Palmrose. Table 5 1786 72. audita net. Finansovye Izvestiya (No.1996). 1988). 12. 1783 auditorskikh i konsul’tativnykh uslug] (Finansovye Izves- 1784 tiya. 1854 1820 to ‘‘seriously compete” with the international audit firms – pert or Profil’. ‘‘Auditors exist. audit suc. this number had ing role and significance by shifting attention away from 1841 EC 1807 increased to more than 7000 (see Table 1 above). needed for their interpretation. 1788 rossiyskom i mirovom rynke auditorsko-konsul’tats.0 34. Please cite this article in press as: Mennicken. 23.417. AOS 682 No. and market differentiation. Attempts were made to establish a Russian cessfulness came to be redefined in terms of market suc. Finansovaya gazeta.1998). During these years. No. No. picked up about 80% of these revenues (2009)) have pointed out for rankings more generally.1997).03. The rankings should prove that the firms were able widely in popular Russian business journals. Also in the context of this 1850 1816 ity” Russian audit firms more widely known. 216. 16. show their competitive ability. PR 28. In the rankings. 35. 12. and did not only receive affirmative atten.335. 2007]. 04. In 1996. Organizations and Society xxx (2009) xxx–xxx 1773 [krupnyshikh] and the ‘‘leading” [vedushiy]. No. ‘‘In Rus. Source: Audit firm rankings published in the journal Ekspert. tion within the rankings mattered less than the difference 1832 1798 No.03. 12.

It is 1973 1916 demonstrations of corporate influence and the establish. Such struc. This finding is consistent developing a more nuanced and dynamic account of the 1975 1918 with Cooper and Robson’s (2006) reminder that profes. 1999) from one of bureaucracy to one of 1980 1923 1998. when the new Federal Audit Law was adopted. Guttseit and Ostrovsky. 1998. Grey. grammes came to be reworked through new entrepreneur. A. very Neither audit firms. one could argue that a market as such – a mar. Green. state-accredited professional ideas of market creation played in the re-articulation of 1967 1910 examinations and professional associations. 1995. Licenses were audit firm rankings) came to function as neutral. All market-oriented activity. Accounting. did not have relations between government..aos. Instead. audit firms (and not professional 1929 1869 Audit firm rankings will. 1981 1924 wood & Suddaby. ‘‘The market” was not per. Model 3G 28 July 2009 Disk Used ARTICLE IN PRESS A. Auditing was turned into a 1959 1899 certified audit professionals (Danilevsky et al. tradi- 1908 tional mechanisms of professional organisation and clo. audit expertise and profes. 1956 1896 in 2001. 1955 1895 more resources. 2001). Following the clined” (Burrage. 1998.g. Professional prestige accrued not market mechanism. Greenwood et al. AOS 682 No. 1957 1897 small partnerships were no longer allowed. has been used to trace how audit and mar. notions of professionalism came to be and technology. through the audit firm rank.. Four groups allowing for professional development and the enhance. In their positioning in the emerging audit market. but as a platform 1947 1887 and classify audit market participants by size. new audit entrepreneurs did not want ‘‘to escape from 1939 1879 and advance firm size and corporate powerfulness as indica. From inspection to auditing: Audit and markets as linked ecologies. market evaluations” (Burrage. . nor their marketing instruments (e. A ‘linked ecolo. 2006. They were actively created. boundaries could ings).g. In the case studied. the relationship between auditing. Cooper et al. 1979 1922 & Robson. 2006. In contrast to the 18th century lawyers in England 1942 1882 be erected between different groups of audit market partic. 2002. together with concepts drawn from the 1970 1913 to the enhancement of professional status. 1982 Please cite this article in press as: Mennicken. as a rule. 1945 1885 ing. and France that Burrage (2006) studied. crafted 1962 1902 to individual accountants/auditors or professional associa. audit 1937 1877 form for their marketing and brand creation. 1969 1912 tures were developed. 1968 1911 much differentiating and organising power. 1998. such as state licensing. Later ket as envisaged in textbooks – never came to be realised. 1905 Audit firm branding and marketing became decisive for 1906 the erection of intra-occupational boundaries. 1998. Terekhov. prestige and governmentality literature and social studies of science 1971 UN 1914 credibility. multiple relations that came to be formed between audit. suggested that the notion of linked ecologies helps in 1974 1917 ment of administrative efficiency. This paper has examined the roles that images and 1966 CO 1909 sure. 20). and small firms and partnerships (Danilevsky et al. Through the rankings and 1928 other branding activities. 87) increasing professional status and external recognition 1934 1874 Whether or not the rankings actually corresponded with came to be carried forward at the level of audit firms and 1935 1875 different levels of audit quality did not matter much. the Russian audi. 1927 1868 and accounting reform and research. Hanlon. business. market rules could be ‘‘modified or suspended and de. It also allows us to investigate how such pro. 2009. large multinational accounting firms. 1932 1872 enhancement of the quality of audit services. but they did not contribute much gies’ approach. ernment” (Rose. and shaped. particularly large international firms. 2004. 1994. Projects aimed at 1933 1873 & Ostrovsky. p. 1999. In contrast. ‘‘the market” was appealed 1950 1890 1891 1892 and medium-sized Russian audit firms. sional organisation in post-Soviet Russia. Dezalay & Sugarman.. With the embrace and shape them (e. Robson et al. doi:10. 1972 1915 intertwined with activities of organisational marketing. pick out and rank associations) were promoted as the main entities involved 1930 1870 only the best ones [. large firms were provided with an important plat. Caramanis. 1943 1883 ipants. 2006). In so doing. 2002).2009.]. Hinings et al. 2002. 2006. 1977 1920 increasingly important in accounting professionalisation This allows us to examine not only the roles of governmen. 1997. by the audit firms themselves and their repre. ket ideals mutually shape and condition one another. 1941 1881 help of the rankings. 1978 1921 and regulatory processes (see also Anderson-Gough... (Guttseit fessional to the audit organisation. 1931 1871 a high place in solid rankings can strongly support the Attention was thus directed away from the individual pro. but to particular prestigious firms portraying them. p. The 1938 OO 1878 could be used as rhetorical vehicle to gain public visibility. with better trained personnel. at least rhetorically. status group Discussion and conclusion 1965 1907 formations and internal differentiation. 1976 1919 sional firms. second-tier international audit networks. 1936 F 1876 any case. Looking at the West and large 1949 1889 Big Four).1016/j. are and ideas and instruments of post-Soviet market creation. generally larger firms came to be portrayed distinction could be worked out and demonstrated.. 2007).07. Taking the big accounting firms as D to as a mechanism for the promotion of audit develop- ment. tal reform programmes in transforming ‘‘the ethos of gov. 1946 1886 rankings. Boundaries could be erected between those who tors did not seek to construct ‘‘private enclaves” in which 1944 PR 1884 were included and those who were excluded from the rank. between small and large audit firms.007 . Suddaby et al. also textbooks and other media began to divide ceived as a threat to professionalism. for example wrote: tral standing of audit firms. The rankings professionalism and markets came to be reworked. Organiza- tions and Society (2009). Empson. objective 1958 EC 1898 only given to audit organisations consisting of five or more information intermediaries.. 1963 RR 1903 tions. ‘‘The market” came to be seen as a space in which audit quality differentials and mechanisms of professional 1951 1952 1953 TE 1893 a benchmark. audit firm 1926 1867 who at government level were involved in matters of audit rankings and other marketing devices reinforced the cen. 1999. . sentational instruments. 1964 1904 selves as enforcing high standards. Ramirez. but status and reputation of the 1960 1900 this contributed to a further corporatisation of the emerging audit firms did not come to be determined by an abstract 1961 1901 Russian audit profession. The striving of audit firms for in the organisation and transformation of audit expertise. Organizations and Society xxx (2009) xxx–xxx 21 1865 sible alternative mechanism of distinction and status dif. other hand. 1925 1866 ferentiation. On the 1954 1894 as the firms of higher quality. Mennicken / Accounting. 1948 1888 of audit firms came to be identified: the then Big Six (now ment of public recognition. Albeit not uncritically. of Pages 26. Pyatenko. more efficient structures and rigour. but sought to actively 1940 1880 tors of audit quality and professional leadership.

In this process. the in order. 2099 2039 auditing itself. Be. This study showed how the market rele. together with other mar. 2048 1988 and other financial market participants. Yet. 2058 1998 tween abstract globalised ideas and models of audit and gether with their audit firms. sional qualification. 1998. In the ther. auditing did not fulfil 2063 PR 2003 tively engaged in making audit marketable.aos. tion technologies were not entirely changed or replaced.2009. the meaning of markets and the roles of auditing in relatively underdeveloped (OECD. the more they sought to rule. From inspection to auditing: Audit and markets as linked ecologies. The big firms came to be seen and functioned as role models for other firms. listed Russian companies were mainly conducted by the big 2068 2008 book ideals. 2007) away from audit 2047 1987 immediate control demands from shareholders. would be useful to gain deeper insight into the dynamics 2094 2034 along with audit firm rankings similar to those published of client–auditor relationships. Russian audit firms con. More generally. Activities and instruments aimed and we need to be careful not to overstate the transforma. and protected clients 2084 2024 reinforced beliefs that the foundation of commercial. paper showed how new Russian audit entrepreneurs. new of new markets and the methods of their mastering” (Pya. investors content and related questions of accountability. from the taxation authorities. Auditing emerged nance and audit quality control. as this paper has audit practice. and it was appealed to as a mechanism to bring notions. this paper paid attention on the one hand to broader roles of audit in the construction of markets? The 2057 OO 1997 the different relationships and the dynamics evolving be. Audit success was redefined provided new Russian enterprises with valuable business 2075 2015 in terms of corporate success. Russian capital markets remained 2065 2005 cess. 2097 2037 showed. tive power of auditing. Organizations and Society xxx (2009) xxx–xxx 1983 ial selves and their newly founded audit firms. Moscow. In adopting and spreading 2070 2071 2072 TE 2012 self-realisation.07. 2077 EC 2017 were carried forward at the level of audit firms and their ment. tenko. helped shift attention away from built. Mennicken / Accounting. 2046 1986 rise and spread of audit expertise that went beyond the ing attention” (Espeland & Saunder. 2049 1989 at a time when shareholders and financial markets did not als were redefined too. In the case studied. Looking at audit and markets as linked What do these developments imply with respect to the 2056 1996 ecologies. Organiza- tions and Society (2009). Model 3G 28 July 2009 Disk Used ARTICLE IN PRESS 22 A. over and over again. Put differently. 2064 2004 sought to create an audience for auditing and. and to analyse how these 2095 2035 in the International Accounting Bulletin. World Bank Office 2066 2006 them came to be redefined. 2088 CO 2028 and that exhibited high standards of professionalism. and construed themselves as enterprise resource planning and IT management. The big firms were It would be useful to carry out further investigations 2091 2031 further important in the spreading and local transfer of into how auditing interacts with different forms of mar. 2083 2023 models. to enhance their contribute to shifts in strategies of market building and 2096 2036 reputation and local standing. the audit firm rankings. 2078 2018 positioning in the emerging audit market. through markets” means is something that needs to be 2103 2043 tions concerning the characteristics of audit methodology. and ideas and images of competing powerful corporate entities. which had depicted it largely as a mechanism international accounting firms.g. it 2093 UN 2033 Local Russian audit firms adopted these instruments. a founder and developer 2061 2001 audit and audit market creation. Yet. doi:10. 2104 Please cite this article in press as: Mennicken. Auditors sought to reinvent themselves Western technologies of marketing. 2055 F 1995 fine each other. need of being actively ordered and organised. 2092 2032 Western marketing and branding instruments. highlighted the relevance of PR. eclipsing from public scrutiny ques. tween 1991 and 1999. What auditing and ‘‘governing 2102 2042 ble” came to the fore. 1998. Finally. 2087 2027 as entities that had successfully embraced market ideals. actively created the markets 2059 1999 market development. p. A. 2005. Yet. They helped them set up market-oriented business 2076 2016 increasing professional status and external recognition infrastructures. for example. Audit worked. 2101 2041 at making auditing widely ‘‘presentable” and ‘‘communica. deal with tax inspectorates and adapt to the rap. 1995b. Fur. were re. p. gover. 2001. Their international standing and local presence uted to the reduction of legal risk. 39). They introduced notions of client manage. 2044 1984 emerged as a result of the reform programmes. market ide. 2001). They actively the function of spurring capital market development. Russian audit firms sought to offer both control and consulting services. 2001). In the case studied. auditing came to be viewed as a platform for corporate development and entrepreneurial D tributed to the construction of markets in other ways. Ideals close to classic and neoclassic 2050 1990 yet exist. which viewed the market as an abstract mecha. a strategist. with respect to their expertise in reputation management.1016/j. 2100 2040 tion and marketability. The audit firms contrib. many factors contributed to the and other marketing instruments contributed to ‘‘deflect. AOS 682 No. Pyatenko. 2062 2002 Russian audit entrepreneurs and their firms came to be ac. audit firm rankings 2045 1985 In post-Soviet Russia. mar. 1998. 36). 2082 RR 2022 then Big Six accounting firms played a major role as role idly changing legal environment. 2089 2029 had a ‘‘trade mark” that particularly larger Russian audit 1995a. and projects aimed at advice. ket-oriented business management. professional or unprofessional auditing came to be chain management (see e. From early on. and as a space in 2054 1994 audit and market creation came to co-constitute and rede. vance of auditing is something that needs to be actively 2098 2038 keting instruments. and toward mechanisms of its representa. Instead. and. They client management and personnel training (Danilevsky. former Soviet calculative practices and inspec. on the other hand. they 2074 2014 ‘‘business doctors who heal”. auditing itself nism for the coordination of economic exchange. they helped their clients to get the accounting books 2081 2021 market-oriented corporatisation of audit activities. Accounting. and audits for local IPOs and internationally 2067 2007 Auditing came to be shifted away from Western text. which had the audit knowledge base. and provided con. Pyatenko. 2051 1991 such markets into being. In the process. the mean. 2080 2020 linked to audit firm size and corporate influence. and issues concerning profes. strategic management. Markets came to be envisaged as consisting of 2053 1993 expertise itself was marketised. 2090 2030 firms aspired to (Pyatenko. of Pages 26. 2069 2009 2010 2011 to reduce information asymmetry and enhance market accountability. On the other hand. They perceived the role of an auditor 2060 2000 specific and localised programmes and technologies of as that of ‘‘a creator. in this pro. 2052 1992 came to be redefined as a site of market creation. the audit firms 2085 2025 ket-oriented audit firms constituted the right response to themselves came to be seen as successful market actors 2086 2026 inspection reform demands. Notions of good sulting services in the areas of procurement and supply 2079 2019 or bad.007 . worked out. 2004). to. 2073 2013 as business consultants.

M.. Auditing became a knowledge: Methodological advances in the integration of 2190 knowledge and its various contexts. R42200034280) is also gratefully acknowledged. 52(11). 2221 2154 grammes of professionalisation or market-oriented trans. G. new ser- D 413–441. D.. K. & Jamal. valuation services. Some comparisons with soviet accounting. the Stock. 51–53. Johnson. This does not mean that old inspection practices no longer had a place. 58(1). 2218 2152 erning. O. 2185 2127 their marketing activities. 595–623. Privatizing Russia. Anderson-Gough. economic University Press. Pomer (Eds. 2181 Abbott. (1998). R. & Badalin. Effects of auditing.aos. (2005). Accounting. G. A. 2228 Bogomolov. (1999). Linked ecologies: States and universities as 2180 2123 inspections. Nor is it linked necessarily to 171–178). certification of accountants in Trinidad and Tobago accounting. M. 2005a. R. it follows that we need organizovannost’ [Effective control – First of all that’s the state of 2215 CO being well organised]. Åslund. Organiza- tions and Society (2009).1016/j.. Mennicken / Accounting.g. 53–59). 2179 2122 calculation and checking styles. How Russia became a market economy.. nor can it thank David Cooper. F. B. The New Russia: Transition gone awry (pp. K. & M. these new ser. The auditor comes to the bookkeeper 2200 2138 are carried out. auditing was built onto the very same bookkeeping No. (2001). (1995). Hants: Ashgate Publishing. 2231 2161 Acknowledgements Boycko.. transform and rework them. Shleifer. Western audit risk models and sampling Annisette. The financial support provided by the 2172 2114 accountability and organisational or individual scrutiny. Cambridge. 2205 2142 unproblematic. Chicago: 2182 2124 ing. 2206 2143 readily defined rationalities of neoliberalism or audit pro. Innsbruck.. their careful client management. S.). M. environments for professions. Constructing a representation for an ecology of 2189 2130 could sustain itself and further expand. Barrett. (Eds. uchet. 2210 2146 contradiction and instability. Brookings Papers 2212 2147 liberal project of marketisation itself.). 53(2). 1–24. Kristina 2165 2107 paper sought to make more room for the complexities and Tamm Hallström. because of the audit firms’ corporate success.. Cambridge: Polity Press. S. Effektivny kontrol’ – Eto prezhde vsego vysokaya 2214 2149 study by Kipnis (2008). How to 2211 stabilize: Lessons from post-communist countries. The 2229 2160 and 2183 2125 regarded by many as a somewhat ritualistic compliance BOURD. Ethnographies of change in the postsocialist world. can embrace a multi. (1996). A. Model 3G 28 July 2009 Disk Used ARTICLE IN PRESS A. (1973). A. 2219 The European Accounting Review. Armonk. 2191 2131 2132 2133 label for a mix of different activities ranging from transaction checking to strategic consulting. (2007). 2233 Burawoy. Boone.E. A. Department and discipline. O khozraschetnykh formakh finansovogo kontrolya. Bloomington: Indiana University Press. Linkages between audit and markets. 1. D. 217–314.. In L. Neoliberalism. Globalization and the 2226 2158 and thereby contribute not only to the further spread of coordinating of work in multinational audits. 2225 2157 pick such programmes up. 23(3). & Smirnov. A. (2001). (1996). similar to the neo. The reorganization of 2224 2156 Equally important are local concerns and practices.uchicago. P. In L. Origins and consequences of ‘‘Shock Therapy”.007 . are open to conflict. (1989). Liisa Kurunmäki. 2213 on Economic Activity. 2176 2118 and inspection practices that it was asked to reform. 2186 Aganbegyan. the checking of financial statements – continued to be PR University of Chicago. however. M. 37(3). (1991). 2208 RR 2144 fessionalism. 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