From Russia with flair

Inessa Mnatsakanova ACCA tells Colette Steckel how she manages to juggle her demanding work at metallurgical giant base metals company, Norilsk Nickel, with her directorship at a tuition college in Moscow. And why she thinks Russia is making progress in business and accounting

You only have to stroll along Tverskaya Ulitsa, one of Moscow's main thoroughfares, to get an inkling of how much business is booming in the city. Some of Moscow's upmarket shops - designer brands like Gucci, and glamorous jeweller Tiffany's - jostle for retail space on the wide boulevard. While in nearby Alexandrovsky Garden, overlooking the Kremlin's western wall, fashionably-dressed locals enjoy a balmy evening in summer, seemingly without a care in the world.

And with good reason. The economy is on a roll. GDP is expected to grow 5.8% (1) in 2003, the rouble is strong, foreign exchange reserves are a healthy $64bn, and the trade surplus is rising. Life in Russia is most definitely looking up.

All of which is a far cry from the devastating financial crisis five years ago that rocked Russia and almost toppled Yeltsin's Government. Back in August 1998, Russia was facing an economy weakened by the collapse of world oil markets and suffering from the knock-on effects of the Asian financial crisis. Things got progressively worse when the rouble went into free-fall, losing almost 70% of its value against the US dollar. Russian banks, once the standard-bearers of the financial community, were on the brink of ruin, running huge foreign currency commitments that couldn't be met and holding almost worthless government bonds that wiped out a large share of their assets.

Inessa Mnatsakanova ACCA, a native of Moscow, remembers the events well. 'One of the most memorable and saddest points in my career happened during the August 1998 crisis,' she rues. 'I was working as deputy chief accountant for Inkombank, one of the largest Russian wholesale and retail banking institutions at that time. The events of August 1998 had a massive effect on the bank. It was going bankrupt and I saw it dying. My colleagues and I thought the Central Bank would never allow the bank to go under, but it did. With the proper management, it might have been saved, but the right financial decisions weren't made in time. It didn't really come as a shock but it was a very sad experience.'

The bank's death knell was sounded in October 1998, when Inkombank was joined by equally chastened Russian banking institutions unable to ride out the financial storm. Inessa left Inkombank at the onset of the bank's woes, joining Western bank Credit Suisse First Boston, where the crisis had made less of an impact on the bank's business. It was also an opportunity to get experience in a global investment banking institution, although, within three years, she wanted out of banking altogether. 'I had spent all my career working in or for commercial and investment banking so I decided it was high time to go and work in industry,' she explains.

She was headhunted by Norilsk Nickel, Russia's largest producer of base and precious metals, and one of the world's leading producers of nickel, palladium and platinum, joining the sales division team last November as head of trade support and operational control. 'Norilsk Nickel makes most of all its sales abroad, so there's quite an extensive Western sales network,' she explains. 'The back office, where I work, acts as a bridge between sales and other divisions of the business like the finance department. My job is to ensure the international network runs smoothly, so I get involved in project management, budgeting, financial analysis and systems implementation. And that's why my financial background is so important.'

Norilsk Nickel also trades on international metal exchanges, using metals like nickel as an exchange commodity, which is where Inessa's experience with financial instruments, gleaned from her years in the banking sector, comes to the fore. 'Metals trading is quite complicated, but exchange instruments like futures and options are quite familiar to me from my banking days and that knowledge helps with this job.'

Earlier this year, Norilsk Nickel announced its 2002 results, posting net profits of $584m on metal sales revenues for the year of $3,094m, and consolidating its position as one of Russia's leading lights in the business community. Not only did the results beat expectations but they were also prepared for the first time using international accounting standards, making Norilsk Nickel one of the few Russian companies to adopt IAS.

Russian companies move towards IAS

That is about to change. With Russian companies increasingly turning to Western business practices through joint ventures and foreign investment, the Russian Government has recognised the need to bring the accounting system up to date. Gone is the Soviet era notion that accounting was purely to deliver fiscal data to the State rather than provide any meaningful information for shareholders and management. And in comes a long-overdue transition towards IAS. Since 1998, when the Russian Government introduced the Russian Accounting Reform Program, a raft of national standards has been brought into line with international standards.

That was followed by a recently approved plan for mandatory reporting of consolidated financial statements using IAS from 2004 for holding companies and groups of companies. A full transition to IAS is expected by 2007. 'I know people at the Ministry of Finance who are implementing these reforms and I admire them greatly,' says Inessa. 'Because it is not an easy task. Russian accounting was very different back in the Soviet times. But progress has been made and it's important that the Ministry moves forward,' she adds.

Inessa started her accounting career after graduating from the Moscow Institute of Finance (now State Financial Academy). 'It was during the old Soviet times, but even back then I was aware of Western management and economics and I was determined to work for a Western company,' she explains. She got her wish, working for the Chase Manhatten Bank representative office in Moscow where she stayed for three years, before deciding to join an international accounting firm, first with Deloitte & Touche and then KPMG, where she was charged with the task of building the banking practice of the firm. 'KPMG was one of the last big international accounting firms to get established in Russia and they were looking for people with strong accounting backgrounds to help build up their national practice. It was an interesting time and a challenge as well,' she remarks.

It was while working for KPMG that she decided to study for her ACCA qualification, continuing her studies during her stint at Inkombank, which was one of her former clients. 'It was important for me to study for a Western professional qualification. And not only to forward my career. I think that it's essential for finance professionals these days to know about Western management and business practices. Russia is moving towards international markets and it needs people with a good level of professional education,' notes Inessa.

So convinced is Inessa of the importance of a good education that she recently set up a teaching centre in Moscow offering tuition to Russian students and managers on ACCA programmes. She wasn't able to find any Russian partners to support her idea but found an ally in an Irish university, the Dublin-based Griffith College. 'I managed to convince Griffith College that Russia is a big market and that the ACCA qualification will be in a high demand,' she adds, smiling broadly. As director, she oversees the running of the Russian entity and promotes the benefits of getting an international accounting qualification to local companies.

The tuition centre opened last summer, minus a marketing campaign, and managed to get 20 students enrolled on courses for the first semester. Many of those came from big name Russian companies including Norilsk Nickel. 'ACCA has been quite active in promoting its accounting programmes in Russia and the market is increasingly aware of the brand. In the past couple of years, I've noticed that Russian companies are starting to get their own staff to study for the ACCA qualification rather than recruit expatriates. They are moving towards international accounting standards and, besides, they want Western management practices in their businesses. And that has to be a good thing,' she notes.

With her full-time commitment to her job and her directorship at Griffith College, Inessa admits that she doesn't always find it easy juggling her workload. 'Sometimes I'd be in tears, asking for the strength to go on. And, don't I need it!' she jokes. But that hasn't stopped her from enrolling at a prestigious State Higher music school named after Gnesyny in Moscow where she studies the piano. Now in her third year, she devotes her weekends to hours of practice and theory, and performs occasionally at a music school in her hometown of Korolev in the Moscow region. 'I'm the oldest student in the class. They're all children,' she laughs. But she clearly loves playing music professionally, even if it does involve term papers. 'It's my way of relaxing. Music is such a completely different world,' she sighs. 'I have this theory. Musicians are smart, very disciplined, good at solving problems and dedicated to their work. They'd make excellent finance professionals if they ever decided to change their careers,' she adds with a mischievous grin. Budding musicians out there, take note.

For more information on Norilsk Nickel and Griffith College, visit the websites at www.nornik.ru and www.gc-m.ru

(1) Source: Russian State Statistics Committee.