Business Proposal

The audit firm UNIFIN Limited has been active in the Russian audit services market since 1996.

It has a many-years experience in rendering consultancy services in the field of finance (including accounting and taxation) to both Russian and foreign companies in various industry sectors.

Particularly, we have been successfully working together for years with such companies as Television Company TNT, Stroitransgaz-Oil, LaVina Corporation (an alcoholic beverages vendor), Central Partnership, a leading Russian film distributor and producer, the Komponent Factory (radio electronics), etc. We also have a long-standing experience of working together with Russian-based subsidiaries of major foreign companies, including Zepter (trading), Carat (advertising), Rabo Bank (financial services), Agroindustrial Financial Company (leasing) as well as with representative offices of such companies as Daewoo International Corporation and Philips. In addition to those industry sectors, we possess a long-standing and versatile experience in working with trading, construction, transport, research, oil and gas producing and oil processing companies. Along with providing consultancy services regarding current matters of civil, tax, currency and accounting laws, we also render assistance in streamlining business processes in Russia. Based on our experience we believe that provision of comprehensive subscription-based services is the most effective and mutually beneficial type of cooperation.

Subscription-based services include:

setting a fixed monthly price for an agreed package of services;

designating a manager and an overseeing partner to each client;

granting the client’s CEO and any other officers he may designate for that purpose (up to 2 persons) the right to request oral or written consultations in “real-time” and to engage experts from the audit firm with the purpose of resolving disputes with counterparties or regulating authorities; 

providing the client’s accounting staff and staff from other financial departments with oral consultations on a regular basis right at the client’s premises with regard to any issues requiring immediate attention.

The advantage of subscription-based services consists in the client’s right to make unlimited (subject to the maximum monthly time budget) number of requests to the audit firm and to receive oral or written competent responses at lower rates (compared to ad hoc (order-based) consulting). In addition, subscription-based services include auditor-initiated activities (subject to the client’s agreement) aimed to promptly identify and eliminate errors and law violations and to prevent them from ever appearing. Subscription-based service also means that no additional fee will be charged for a number of services aimed at prompt resolution of any disagreements the client may have with tax authorities.

As part of its subscription-based services UNIFIN Limited renders the following types of consultancy services with regard to taxation, accounting and civil-law matters:

1. oral consulting;
2. written consulting;
3. conducting tax and accounting experts’ reviews of draft contracts to be entered into by the client;
4. preparing monthly reports on changes in the legislation affecting the client’s activity;
5. preparing statements of disagreement with taxation authorities, statements of claim to be filed with arbitration courts, requests to competent bodies regarding accounting and taxation matters; 
6. representing (defending) the client’s interests before taxation and other regulatory authorities;
7. preparing materials for, and participating in, meetings and negotiations with the client’s counterparties;
8. conducting express audits with regard to certain matters to determine whether or not the client has properly followed up on the auditors’ recommendations. 

Brief description of consultancy services

1. Oral consultation includes:

• a manager (or a specialist who is in charge of the matter at issue) visiting the client’s office upon request of an authorized officer to discuss the previously agreed matters;
• a responsible manager (or a specialist who is in charge of the matter at issue) initiating visits to the client’s office in order to discuss matters relating to any changes in the legislation materially affecting the company’s activity;
• a manager providing the client’s accounting staff with oral consultations on a regular basis at the client’s premises at such dates (time) as may be agreed by the client;
• providing the client’s authorized persons with on-the-spot consultations via means of communication;
• the overseeing partner providing personal consultation to executive staff regarding personal and confidential matters.

Manager (specialist) visits the client whenever necessary (as agreed upon with the client’s authorized officers) and to provide regular consultations for the client’s staff on such days as may be agreed upon by the client. The minimum number of visits and the duration of the manager’s stay at the client’s premises depend on the fee paid for monthly subscription-based services.

2. Written consultation includes:

• the client sending a clearly formulated written enquiry signed by an authorized officer. If necessary, such written enquiry is accompanied by underlying documents relating to the subject of enquiry;
• the audit firm drawing up a written reply to the enquiry which includes references to specific law provisions. The time required to prepare such a reply depends on the complexity of the task and is subject to the parties’ agreement. The reply is signed by the audit firm employee responsible for the task;
• asserting the position set forth in the written reply during tax inspections or in arbitration courts in the event of any subsequent disagreements with regulatory authorities. The conditions and the manner of the auditors’ participation in arbitral proceedings should be agreed upon on a separate basis.

As a rule, the following matters require written consultation:

            - any matters for which an unambiguous interpretation cannot be provided under the current laws;

            - any matters that are of fundamental (substantial) significance to the client;

            - any matters that require lengthy study, analysis and comparison of various regulations, etc.

The company’s CEO or any authorized persons designated thereby (up to 2 persons) shall have the right to determine whether or not a written reply is necessary. It is by those persons that the enquiry should be signed.

The necessity for a particular complex issue to be addressed in writing may be initiated (recommended) by UNIFIN Limited’s responsible manager; but, in any event, a written enquiry should be drawn up and signed by the client’s authorized officer.

3. Tax and accounting experts’ review of draft contracts to be entered into by the client means that:

• drafts of non-standard (non-typical) contracts chosen by the client’s authorized officer are sent to the auditors for review in order to determine whether or not the terms and conditions of such contracts are in accordance with regulatory acts, to optimize tax implications and to set up a proper document handling procedure. Depending on the results of such reviews oral or, if necessary, written recommendations are given. Based on the required number of man-hours, fees charged in respect of such written recommendations are similar to those charged for written replies.

4. Legislation overview includes:

• monitoring all regulations being issued on a monthly basis;
• preparing written overviews of newly issued regulations with emphasis on those which may have a substantial effect on the company’s activity;
• providing prompt information via communication means on any issued regulations that have a fundamental significance for the company’s activity.

5. Preparation of statements of disagreements with tax authorities, statements of claims for arbitration courts and requests to competent bodies regarding accounting and taxation matters means that:

• services are rendered whenever necessary and include drawing up a written substantiation of the taxpayer’s position with references to specific law provisions. Based on the required number of man-hours, such written substantiations are similar to written replies.

6. Representation (defense) of the client’s interests before taxation and any other regulatory bodies includes:

• oral explanation and substantiation of the client’s position with regard to any matters in dispute directly to representatives of regulatory bodies based on the power of attorney issued by the client. In terms of required number of man-hours, such explanations are similar to oral consultations.

7. Preparation of materials for, and participation in, meetings and negotiations with the client’s counterparties mean that:

• services are rendered at the request of the client’s authorized officers whenever it is necessary to have a prompt competent solution for any tax-related or other issues within the auditors’ scope of competence directly in the course of negotiations;
• in terms of required number of man-hours, these services are similar to provision of oral consultations. 

8. Express audits with regard to certain matters to determine whether or not the client has properly followed up on the auditors’ recommendations include:

• hecking, on a quarterly basis, on whether or not the auditors’ recommendations in respect of the previous quarter have been properly reflected in tax and accounting reports, correcting any errors or violations identified in the course of consulting. If the duration of an audit is up to 3 business days no written report is issued; if the duration is up to 5 business days, a written report is drawn up. With regard to certain maters express audits may be initiated by the client, but up to the overall limit of man-hours for such type of subscription-based services and only up to 4 times a year.

If the monthly subscription fee for services is RUR 50,000 or above, no additional fees (other than the subscription fee) are charged for any such services rendered at the client’s request.

The monthly fee payable for a package of services depends on the complexity of the task and the required number of man-hours. A typical configuration of types of works (services) and required numbers of man-hours is shown in Table 1 below, with the monthly subscription fees being RUR 40,000, RUR 50,000 and RUR 65,000. Different fees may be agreed upon depending on the anticipated service requirements.

Table 1

Description of services	Subscription fee, thou. RUR (net of VAT)
	40	50	65
1. Provision of oral consultations to the staff
- number of manager’s visits	Up to 2 in a month	Up to 3 in a month	Up to 4 in a month
- standard man-hours	Up to 8 man- hours	Up to 12 man- hours	Up to 16 man- hours
2. Written replies to written queries
- number of replies	Up to 2 in a month	Up to 3 in a month	Up to 4 in a month
- standard man-hours	UP 16 man-hours	UP 24 man-hours	UP 32 man-hours
3. Tax and accounting experts’ review of contracts to be entered into
- number of contracts	2 in a month	Up to 2 in a month	Up to 3 in a month
- standard man-hours	Up to 8 man-hours	Up to 8 man-hours	Up to 12 man-hours
4. Participation in negotiations (meetings) with the client’s counterparties
- number of meetings		Up to 1 in a month	Up to 2 in a month
- standard man-hours		Up to 3 man-hours	Up to 6 man-hours
5. Drawing up statements of disagreement with tax authorities, written requests, statements of claim to be filed with arbitration courts	As necessary, up to the max number of man-hours required for provision of written replies (see item 2)
6. Representation of the client’s interests before tax bodies	As necessary, up to the max number of man-hours required for provision of oral consultations (see item 1)
7. Express audits
- audit frequency	None	Up to once in every six months	Up to once in a quarter
- standard man-hours	Up to the total max number of man-hours
8. Legislation overview
- overview frequency	Monthly	Monthly	Monthly
- standard man-hours	2 man-hours	2 man-hours	2 man-hours
TOTAL standard man-hours	34 man-hours	49 man-hours	68 man-hours

The services package structure and the labor costs are supplied on a tentative basis. It means that with less services of one type required more services of the other types may be ordered. If the actual volume of services rendered exceed is either over and above or below the proposed labor input for a certain period of time (3 consecutive months), either party may review the price of services and/or decrease/increase the volume of services rendered.

Ad hoc consultations are also possible. If this type of consultancy services is chosen, the parties should agree in advance upon the required labor input and the deadline for each such consultation. Depending on the task complexity, and the professional level of the person in charge of the task, the hourly rates are as follows:

Partner – RUR 4,000

Manager – RUR 2,500

Auditor/Consultant – RUR 1,500