Int’l accounting firms' withdrawal from Iran to impact foreign trade: expert

By Sara Rajabova

The withdrawal of international accounting firms from Iran will have an enormous impact on the country's foreign trade.

Expert in economics Mehrad Emadi said that such a move will affect large industrial and commercial companies that are still present in the Iranian market.

The international companies Grant Thornton, RSM and Crowe Horwath have recently announced that they are pulling out of Iran, creating further difficulties for foreign companies still operating in the country.

In particular, the company Grant Thornton, which is a prominent representative of the British global network of accounting, has recently decided to cease cooperation with the Iranian firm Rymand & Co.

British RSM and American Crowe Horwath also declared that they will stop the cooperation with their Iranian counterparts Dayarayan and Hoshiyar / Behmand & Co.

Emadi told Trend news agency that a large number of foreign companies were working in the Iranian market by linking their activities with the services of international accounting firms that made up legal documents for them, conducted reports on revenues and expenditures, as well as prepared the annual accounts.

"Large companies in Iran can make use of international accounting firms for preparation of the annual balance sheets, but it can result in huge financial cost," he said.

He said that in the future withdrawal of the international accounting firms from Iran will have an enormous impact on the country's foreign trade, which is currently suffering from international sanctions.

RSM, a UK-based firm, and Crowe Horwath of the U.S. have joined Grant Thornton in leaving Iran after coming under the U.S. political pressure.

The firms are the latest in a long list of international businesses which have left Iran in recent years amid strict economic sanctions that have been imposed against Tehran in an effort to influence its nuclear program.

The Western countries and some of their allies have repeatedly accused Iran of pursuing non-civilian objectives in its nuclear energy program, with the US and European Union using that claim as excuse to impose sanctions against Tehran.

Iran has categorically rejected the allegation, noting that as a committed member of the International Atomic Energy Agency and a signatory to the Non-Proliferation Treaty it is entitled to develop nuclear technology for peaceful purposes.

By imposing sanctions on Iran, the international community target internationally-respected auditors because they provide the sort of independent scrutiny that some multinationals require in order maintaining operations in foreign countries.

The provision of accounting, auditing and other professional services by these accounting networks and associations is a gift to the Iranian economy and facilitates international commerce in Iran, often by creating a veneer of credibility and transparency that encourages foreign investment.

According to a lobby group United Against Nuclear Iran, Iranian member and correspondent accounting firms benefit immensely from membership in these brand name accounting networks and associations. The member firms receive training, multinational business opportunities, global expertise and access to a referral network and specialized technical manuals. The presence of these branded accounting firms in Iran also lends a sense of security to multinational businesses that partner with Iranian entities and masks the serious fiduciary and reputational risks that most responsible businesses would otherwise refuse to accept.

Earlier, the "big four" accounting firms pulled out of Iran in 2010. These "big four" firms were PwC and Ernst & Young of UK, Deloitte of U.S. and KPMG of Netherlands.

The Big Four are the four largest international professional services networks in accountancy and professional services, offering audit, assurance, tax, consulting, advisory, actuarial, corporate finance and legal services. They handle the vast majority of audits for publicly traded companies as well as many private companies, creating an oligopoly in auditing large companies.

"It sends an important message when accountancy firms decide that it is too risky to do business in Iran," said Mark Wallace, the head of United Against Nuclear Iran lobby group. "Without respected auditors, it makes it much harder for other international companies to continue doing business there," he said, Financial Times reported.

The latest withdrawals come as influential members of Congress are calling for even tougher sanctions to be placed on Iran after the latest round of talks between Tehran and international powers over its nuclear programme broke up without any apparent breakthroughs.

Over the past eighteen months, Congress has passed a series of new sanctions on Iran that has targeted its financial sector and energy companies.