ACCOUNTING AND TAX COMPLIANCE SERVICES IN RUSSIA AND UKRAINE

Awara ACCOUNTING AND TAX COMPLIANCE SERVICES IN RUSSIA AND UKRAINE Accounting, Tax Accounting and Financial Administration: Make it Safe, Sound and Efficient

Awara Accounting provides professional services designed to overcome cross-cultural challenges in all accounting and financial administration issues and to ensure full compliance with Russian statutory financial and tax accounting rules. Awara Accounting offers full accounting outsourcing services, including: Russian bookkeeping Financial accounting Tax accounting Tax compliance services Management and group reporting with international standards (US GAAP, IFRS) Payroll accounting outsourcing Customized IT-solutions for accounting and financial administration Awara takes care of your financial administration needs Accounting as a genuine service Awara offers you accounting outsourcing as a genuine service. Each solution is tailor-made to the client s needs and special circumstances. Awara can fill all the roles in your accounting department, including serving as a chief accountant, accountant for any field of specialization, financial controller, and any other specialist that will be needed. The full service of Awara guarantees a seamless integration of all financial solutions from budgeting to legal compliance. As a summary, your business will have full support of skilled local and international professionals which enables smooth and correct financial administration routines in the challenging Russian and Ukrainian business environments. This is the best way of minimizing risk and guaranteeing cost-efficiency over the years. We serve clients all over Russia, and have offices in Moscow, Saint-Petersburg, Tver, Yekaterinburg, Kyiv and a European hub in Helsinki. Awara Accounting is part of Awara Group, one of the leading foreign owned business administration services providers on the Russian market, serving international and local organizations and individual entrepreneurs. We offer advisory services for strategic business development, business set up and investment, as well as the implementation and execution of our advice. Our services cover a wide range of business administration services: accounting, management consulting, law, audit, financial administration, recruitment and other HR services, as well as IT-development. All our fields of expertise are combined in an integrated act of professional services to meet our client s specific needs. As a result we deliver truly comprehensive and cost-efficient solutions that increase the client s competitive advantages, enable profitable growth, and enhance shareholder value. Our efficient and accurate solutions derive from our international background and superior knowledge of local practices. Bookkeeping It is commonly recognized that Russian and Ukrainian accounting are permeated by bureaucratic and formalistic rules which unfortunately are designed to serve primarily the needs of the tax inspection and other state authorities and not the company in its own reporting needs. The statutory system does not produce the data actually needed for the company management and shareholders. This is where Awara comes to fill the gap, ensuring all reporting needs are served. Management and group reporting with international standards (US GAAP, IFRS) Producing international or other management reports out of Russian (Ukrainian) statutory accounting is not plausible without accommodating the underlying accounting processes. Due to the local accounting and tax laws and practices it is not possible to resolve the reporting problems by simply mapping the local accounts to the internationally applied accounts. With the service of Awara Accounting a functional universal add-on solution can be implemented to allow flexible report building with any desired requirements.

Russian statutory requirements inadequate for proper reporting. The standard chart of accounts of Russia (Ukraine) provides a rigid pre-defined set of accounts, which does not capture data on a sufficiently detailed level. This problem has to be remedied by inserting necessary analytical subaccounts. The conversion of Russian (Ukrainian) accounting data is additionally complicated by the fact that transactions have to be documented in a rigid form prescribed by the law. This prevents proper recording before the necessary formal requirements have been fulfilled. Management reports require a detailed level of data input In international practice management reports are built on a chart of accounts that capture detailed input (possibly up to several thousands of accounts) and enables detailed reports. Also the requirements on group accounting policy may significantly differ from the local accounting standards. When putting in place a management reporting system of international standards we have to deal with these challenges. Tax Compliance Services We have invested heavily in standardized processes and innovative technology tools to offer organizations high-quality, cost-effective tax compliance services. Our tax compliance services cover the following areas: - Tax accounting as an outsourced service - Tax review (initiative audit of your tax situation and risks; Tax Due Diligence / Self Checks) - Assisting taxpayer at tax inspections (tax audits by tax office) - VAT Compliance - VAT Registration - VAT disputes - Transfer pricing compliance - Permanent establishment risk analysis - Filing of corporate tax returns/tax declarations (Profit tax, VAT, property tax, land tax, payroll taxes, including employers social and pension contributions) - Filing of personal tax returns/tax declarations - Personal wealth management tax compliance - Awara Accounting delivers solutions that are designed to assist the organization in its efforts to automate, refine, and support the tax compliance cycle - solutions that enables the company to react in time to avoid a tax dispute. - The solutions involve software that enables the client to enhance efficiencies, align data and improve transparency from ERP systems all the way through the reporting and documentation process. Financial Journal and Documents NAVISION General Ledger Corporate CoA M-M + Filtering RU GAAP CoA Posting RU GAAP Transactions GAAP Journal Export Corporate Review Report Export based on Mapping -Rules Awara IFRS Reporter Corporate report Corporate CoA Posting Mapped Russian + additional GAAP Figure 1: Advanced reporting scheme for US-based technology company

Payroll services Awara Accounting s payroll service consists of calculation of salaries, incentives, and reimbursements; calculation of taxes and filing of tax returns, provision of electronic salary slips; and provision of all necessary statutory and management reports. The service starts with a thorough start-up analysis for defining and establishing the various procedures, critical dates, and software needs. In addition to ensuring all the statutory and other common payroll routines we offer extended value-added services such as Private Lounge, a web based information channel between the employee and the company. This speeds up information exchange and lowers the cost of processing complex payroll and HR-data. As an example of our superior service we want to mention that we advise in adapting your corporate incentive policies to the local requirements to ensure full compliance. Shortly, we assist in putting in place the needed data systems to meet all your needs. Customized IT-solutions for accounting and financial administration For most companies, the usage of a standard accounting software package will not be enough for managing the complex financial administration processes. In most case an adequate ERP-system is needed to ensure proper reporting. Awara is the expert consultant in Russian ERP. We have extensive experience with all kinds of ERP systems starting with connecting the popular Russian accounting program 1C to a relevant ERP environment. Awara IT Solutions is a Microsoft Partner, specializing in ERP-solutions for the financial administrations. We also offer our in-house developed financial administration systems Awara Purchase Manager and Awara IFRS Reporter. Our payroll service includes: - Calculation of salaries, incentives, bonuses, and other remunerations - Handling expense reimbursement - Payslips and expense reimbursement reports to employees - Tax calculations - Social security and pensions calculations - Filing of all government reports on taxes and other payments - Reporting to employer to any extent required - Time and attendance reports - Payroll budgeting, including net to gross calculations - Business control reports - HR and payroll software that will fulfil all your controlling and reporting needs

Audit Services The auditing subdivision of Awara Group is Awara Audit Alliance. Most often Awara is engaged in parallel with Big4 auditors as the local auditor for the Russian (Ukrainian) statutory audit and for tax compliance audits. Here is the full list of our audit services: - Local statutory financial audit according to Russian accounting standards (RAS) - Audit in accordance with international standards (IFRS, GAAP) - Audit of Russian tax accounting - Review of tax risks (tax audit) - Express and Spot Audit Services - Audit of NGOs We have experience with serving various types of clients, for example, subsidiaries of multinational corporations, medium sized business, private equity investors, and Russian investors aspiring to international standards. We have experience in various industry sectors, manufacturing, retail, agriculture, FMCG, finance and investments, etc. The primary role of the external auditor is to express an opinion on whether the financial statements are free of material misstatements. But we want Awara to be perceived as delivering more than that. Therefore we take a proactive approach to our audit assignments Because we are proactive we stress the need of the auditor to assess the level of risk management and internal controls, and more than that, the auditor has to direct attention to developments that might impact the business in the future. The auditor has to give his input in spotting trends and their impact. On our markets it is very important to address the issue of fraud detection as well. We know the business practices and the methods in use around here, so we know what to draw attention to. Good communication is the single most important factor in delivering a proactive service. The business environment has become more complex, riskier and faster, which increases the risk of miscommunication. And all these factors receive an even more important role on the Russian and Ukrainian markets we serve. Below we tell more about Awara s stress on proper communication. Proper presentation of audit findings is also a question of good communication. It seems that all over the world the audit reports are getting thicker and thicker, it is as if the auditor were transferring the burden of getting to grips with the audit findings to the recipient. We have made a concentrated effort to buck this trend by investing in working methods which result in clear and concise reports. We bring up the issues that matter and help the client make sense of them. Anybody with experience from the Russian market will appreciate how our standards differ from the prevailing practice of presenting thick reports that include exhaustive lists of subjects - not just the main issues but everything - that have received the auditor s attention without any attempt to structure the reports in accordance with relevance and materiality of the issues.

There is more that Awara Audit Alliance can do for you Awara also conducts assignments of internal audit. We can even perform the function of internal controller (internal auditor) on an outsourced basis. Often an engagement starts with the auditor being hired to implement the necessary controls. As an auditor with valuable experience of Russian risk management and all the checks and balances that a solid internal control system requires we can help companies to extract more benefit from their compliance efforts. We want to go further than that, beyond internal controls we want to make an investment in incorporating our knowledge and experience into the company s operating procedures Here is what else we can do for you: - Internal audit assignments - Implementation of a proper reporting system for international standards (IFRS, GAAP, etc) - Transformation of Russian (RAS) and Ukrainian accounting standards into international standards (IFRS, GAAP, etc). - Financial Due Diligence - IT audits We also offer these compliance services and audits of compliance systems: - Tax compliance (see above more in detail) - Transfer pricing policies - Anti-corruption and anti-bribery compliance - Competition law compliance - Data Protection compliance - Labor law and HR administration compliance - Corporate Governance audit Why Awara s Accounting Service in Russia Makes a Difference - Awara Combines Accounting with Value-Added Financial Administration Services From the business administration point of view, the main challenge on the Russian market is to free up management time for strategic and operative management and put the business administration functions in the hands of professional experts. Accounting is one of the prime areas of business administration to be outsourced. Frankly, up-to-date it has not been an easy task to find a reliable outsourcing partner on the Russian and Ukrainian markets. Most accounting firms have not understood that their challenge lies more so with financial administration rather than with the accounting itself. Awara Accounting fills this gap on the market by offering value-added financial administration services combined with accounting services with a consulting edge. This way we, in reality, take care of the client s financial administration and reporting needs, resolve problems, clear hurdles and break the barriers which lie between a good business strategy and profit. In Awara the client does not hire just a bookkeeper but a financial administration team that delivers results. And while the cost of our service is more valuable than that of a bookkeeper, the same can be said of the results. Our service is not intended as a direct cost-saving effort but as a value-added input into the operations. With our service the client significantly cuts the implementation time of projects and greatly propels growth, for with us the client receives practically unlimited resources.

Accounting, Financial Administration, and all combined in Risk Management While quick in delivery, we are sharp in risk-management. Our team has gained all the necessary experience through 20 years of Russian transition to the market economy. While professionally managing risks, we deliver the best economic savings in financial and taxation choices, for we have the skills, experience and expertise to recommend the best solutions in any given situation. We have grown with quality and we help the client to do the same. Not Big, but Few Can Compete with Us in Resources Awara Group is among the largest Russian business administration firms in its fields. Our expertise is unique compared with the others, inasmuch as we are the only one that combine accounting, taxation and law expertise on highest level in one firm. The competition may be able to provide lawyers and accountants separately, but no one else can offer the combination. We also provide an additional competitive edge in human resources services and recruitment. On the Russian market, where the regulatory environment is still in the early stages of its evolution and the business practices are young, there cannot be any talk about effective provision of financial administration services if the service provider does not offer the complex combination of skills and experience in all these core areas of expertise. In Russia an accounting firm lacking strong expertise in business administration, taxation and law will not qualify as a value-added producer of accounting services. It can rather only serve as a bookkeeper recording the events post fact, leaving the client to look for other sources to help him steer his business on the demanding Russian market. Effective Communication At the end of the day the decisive aspect of doing business is communication. In Russia where so much in society has fundamentally changed, communication gets highlighted like nowhere else. Communication in the field of accounting and financial administration is more challenging in Russia than in most parts of the world for a number of reasons: a difficult regulatory environment; heavy bureaucratic traditions; the fact that tax authorities and courts are themselves only learning and practicing the rules,; language skills; the challenge to communicate between different business cultures; different accounting systems; different reporting sets; etc. These challenges, combined with a deficit of experienced and professional accountants, mean that accounting in Russia consists of much more than just recording transactions and reporting the service that a traditional bookkeeper would restrict itself to. An important link in the proper service and thus proper communication is assigning to each client a key account manager with the purpose of ensuring that all of the clients vital interests get proper attention and concentrated service. Awara is the first in its field to carry customer service - and hence quality - this far in Russian accounting services.

Created by Awara Marketing with Kai Venäläinen Awara Global call center for all countries: + 7 495 225 30 38 info@awara-accounting.com www.awara-accounting.com