This article was first published in the September 2016 international edition of Accounting and Business magazine.

Building a career in audit in a country that is often regarded as among the most corrupt in the European Union (EU) is not a job for the faint-hearted. But that is what Nikolay Garnev FCCA, EY managing partner for Bulgaria, Macedonia, Albania and Kosovo, has done.

Speaking to Accounting and Business at his office in Bulgaria’s capital, Sofia, he recalls the day when he flew home from London, having gained his ACCA Qualification: ‘The flight attendant handed me a “martenitsa” [an ornament made from twined red and white threads representing the advent of spring, often worn as a brooch or wristband] – an important Bulgarian custom. I was not even able to thank her as on one hand I was feeling nostalgic about our traditions, and on the other, I was wondering if I would regret my decision to return home after becoming ACCA qualified.’

But now he is convinced that the decision he took 14 years ago to practise in his home country was the right one, even though this has required considerable positivity and courage given Bulgaria’s rank at 69 out of 168 countries in the 2016 Transparency International corruption perception index. 

Garnev is clear that business in Bulgaria needs the firm hand of tough regulation and solid financial reporting. Bribery and corruption continue to represent a substantial threat to sluggish growth and fragile financial markets, in Bulgaria as well as several other EU member states. EU legislation on statutory audit came into force in June, but Bulgaria (along with many other EU member states) has so far failed to introduce the necessary implementation legislation. However, Garnev predicts that ‘the situation might change in September’. 

Contrary to the mood in Brexiting Britain, there is a well-spring of goodwill towards the EU in Bulgaria, which helps the government implement rules emanating from European legislation. He says: ‘We can feel a great benefit from being in the EU, more so than the old members. There are plenty of [regional development] funds… from which people see tangible results. The other benefit is the legislative framework and regulation.’

Unified requirements and strict monitoring promoted by EU rules are vital for Garnev’s day-to day business. In October last year he was appointed an EY risk management leader for central and south-eastern Europe, which involves him establishing globally consistent risk management execution priorities for practices in 22 countries, only 14 of which are EU members. 

‘There is a worrying tendency that countries are applying different practices,’ he notes. The expectation is that the incoming EU-promoted audit regime will help promote high-quality audit results in countries that are members of the EU, enhancing investors’ trust in the financial information of companies in the region. 

According to an EY study on corporate abuse and personal responsibility in eastern Europe (including Bulgaria), every second respondent surveyed agreed that organised corruption exists in their country. ‘This is a problem typical not only for Bulgaria. A big part of business says that under certain circumstances and under the pressure to achieve excellent results, people admit they might tolerate non-ethical practices,’ Garnev admits. 

In their responses, managers said that regular external financial controls are the most efficient solution, defining discrepancies between acceptable norms and reality. They also called for other actions such as formal whistleblowing channels, awareness raising campaigns, regular analyses of fraud risks, the development of cybersecurity strategies and effective and detailed anti-corruption programmes run by governments, in cooperation with business and law enforcement agencies.

One possible problem, if such initiatives are rolled out, is that businesses and audit firms in Bulgaria and other central and south-eastern European countries are reluctant to hasten mandatory audit firm rotation. EY would like to see all EU countries adopt the same maximum engagement period of 10 years for audit reviewers. In Bulgaria the proposed period is seven years. 

‘The idea of the procedure is to strengthen the auditor independence and provide a fresh perspective, while retaining expertise and knowledge of the business,’ Garnev says, warning that if countries adopt different rules for rotation periods, that could cause ‘a serious problem to the pan-European business’.

Business of accountability

Nevertheless, he remains optimistic: ‘We are constantly working on showing good practice. The region has an upside potential and this is what I took into account when I decided to come back,’ he says. In difficult moments, he remembers what a representative of Transparency International in Brussels said about his profession: ‘You say you are in the business of accounting; we say you are in the business of accountability.’ 

Garnev believes his ACCA training has certainly helped him in achieving this. ‘The ACCA Qualification has made me not just a good accountant but also an open-minded economist in the broader sense; it completely defined my understanding of the ethical norms in the field.’ 

Such experience is increasingly reflected in Bulgarian audit policy, with the government now pushing a joint audit regime for banks, insurance companies and the national social security system in the country. The mechanism already exists in France, where audits are performed by two auditors who produce a single report and share a common responsibility for the result. 

Bulgaria’s finance ministry has argued that the reform will help smaller audit firms to enter the financial sector, although the Association of Banks in Bulgaria (ABB) claims the move could increase bank audit expenses by around 25%.  

Interviewed by AB just a few days after the UK’s EU referendum vote, Garnev says he feels deeply sorry about the choice made by UK citizens to leave the EU. He hopes that during the negotiations to decide its future relations with the EU, Britain will decide to remain anyway, because in his opinion Europe benefits from having a single market that spans the continent. 

One benefit of the EU is its free movement of professionals, and Garnev notes that central and south-eastern Europe lack skilled young professionals. Although EU and Bulgarian policies are trying to develop key competences, such as ICT skills, companies often have to train their own staff: ‘The education system is still in debt to business,’ Garnev says, smiling. In Bulgaria EY has had to hire graduates and then give them significant on-the-job training, providing financial support for staff studying for and obtaining an ACCA Qualification, for example. 

But the investment is starting to pay off: ‘My impression is that the country partners in the [central and south-eastern] region are younger compared to the leaders in western Europe,’ he explains. He predicts that western European countries will soon need to take similar proactive steps to retain professionally excellent cadres.

Riding the wave of change

Garnev has certainly ridden the wave of social and economic change in his country, which shrugged off communism in 1990; indeed, for him, in career terms ‘things happened rather naturally’. A student conference in Paris during the final year of his BA studies in marketing at the University of National and World Economy in Sofia encouraged him to move abroad. It was in 1997, just a few years after Bulgarians regained the right to travel freely, and ‘young people were hungry for integration and communication with western Europe’, he remembers.

Already managing the accounts of a Greek company and other small firms while studying for his marketing degree, Garnev’s potential was spotted at the Paris fair by a KPMG human resources manager, who offered him work as an auditor in the Big Four firm’s Bulgarian bureau. 

The job required him to study for an ACCA diploma in London, which he secured in 2002. At that point, with knowledge about the market economy still limited in Bulgaria and higher education curricula still strongly influenced by communism, he decided to return home, even though he had the possibility of a job in the City of London. ‘I would have always been feeling a foreigner abroad. The opportunities here can be as good if you are hard-working, a good specialist and love your job. Therefore I came back,’ he concludes. 

His efforts yielded good results when a headhunter saw his profile and invited him to work for the EY office in Romania. EY had need of a financial sector specialist who could build an effective business strategy in 2006, just a year before Bulgaria and Romania joined the EU. 

In 2007, Garnev was nominated for a partnership in EY’s Sofia office. He now manages almost 300 people, of whom 200 are auditors – all ACCA graduates.  

Bucking the trend

It is a good time to handle such a large team as Bulgaria has become a viable location for outsourcing customer service, and major companies are continually establishing new branches in the country. As a result, EY Bulgaria is busy. It is immediately clear however that this office does not reflect Bulgaria’s average working environment. There is a business eco-café right next to the main entrance, a new exhibition of paintings is being set up in the lobby, and there are French speakers in the elevator – far from the norm in the country.

Asked if he has guidance for accountants just stepping into auditing, he answers: ‘I do not have a definitive formula for success and I do not enjoy giving advice. However, if I have to think about myself, it is my work attitude and the perception that I have always had, even when I was a junior audit assistant, to do the work as if it is my own business.’ 

Diana Yordanova, journalist