Accounting Software Grows

Accounting can pose big headaches for companies even in the best of circumstances. In Russia, where financial regulations and laws sometimes seem to change overnight, and where industry standards are different than in the West, the headaches can be even bigger.


To address those difficulties, an increasing number of firms are turning to computerized software applications that managers say can cut both time and expense -- while improving quality -- in figuring out the corporate bottom line.


For Western companies operating in Russia -- and for Russian companies with their eye on Western investors -- a balance sheet that conforms to both local and international standards is indispensable.


"The market has grown significantly during the last two years," said Cary Walker, a partner with accountants Arthur Andersen in Moscow. "What is important is that the number of Russian companies buying the accounting software is growing too. These are the companies that look at attracting foreign investors and need to be audited."


In an effort to tap into this market -- worth $3 million a year in Moscow alone, according to one accountant's estimate -- a number of Western software-makers have jumped into the breach in the last few years. America's Platinum, Sweden's Scala and Britain's Sun Systems are the most prominent players in the field.


Although a number of Russian software-makers have created accounting packages, they are based on domestic accounting practices that differ from the Generally Accepted Accounting Principles, or GAAP, adopted in the Western countries, and so are not suitable for a Western audit.


The Western-made packages consolidate all of a company's accounting on one system, and can create reports and forms required both by Russian tax authorities and that conform to GAAP standards. They have bilingual documentation and help menus, and are compatible with DOS and Windows operating systems, including Windows 95.


Power comes at a price. Basic installation costs run from $7,000 to $35,000, depending on the size of a company and number of modules needed. Additional installation and training costs can run from $3,000 to $10,000.


For General Electric International, the money invested in a Platinum package has been worth it, saving both time and labor costs.


"The software helped to cut our accounting staff four times," said Yelena Platonova, deputy chief accountant with GE International's Moscow office. "It also allows us to prepare the tax report extremely fast."


David Proctor, executive director of Platinum, said Russia is one of the company's most promising markets. "Only a year ago we had zero clients, now we have about 70," Proctor said.


The first such Western product on the market was Scala, developed by the Swedish company Beslutsmodeller AB, and introduced in Moscow in 1991 by Ernst & Young Vneshaudit.


"Most of our clients are Western firms, but our number of Russian clients is growing too," said Melissa Klorfine, sales director for Scala, adding that more than 160 copies of Scala have been installed at companies in Russia.


"Working with two sets of books takes too much time," Klorfine said, explaining the popularity of computerized accounting.


Lana Basov, senior accountant with Moscow Cellular Communications, said her company used Scala for three years and passed four audits with this program. "We were one of the first users of this product and are 'very happy' with it," said Basov.


Sun Systems is a British product offered through the Russian company RBS. Igor Stepanov, general director of RBS, said the company has installed 78 packages since 1993, mostly at joint-venture companies.


"After a number of years in Russia we have built a good knowledge of the Russian market," Stepanov said.


Sun, Scala and Platinum cooperate with major accounting firms working on the Russian market. Scala maintains its alliance with Ernst & Young, while Sun and Platinum cooperate with Arthur Andersen, KPMG, Price Waterhouse, Coopers & Lybrand and Deloitte & Touche.


Walker of Arthur Andersen points out that installing a software package does not solve all a company's accounting problems.


"The accounting software has to be utilized and optimized for the company's specific needs," Walker said.


Arthur Andersen and the other major accounting firms provide training and support using the software packages. Most companies take at least a year to learn how to use programs properly on their own, Walker said, but the trained accountants can slash the adjustment period.