Audit becomes the largest line of service
Rimess, which carried out its first audit in 1993, soon started to get more and more work: for example, its audit turnover in 1993 was 46,000 kroons, or less than a tenth of total turnover, but two years later it had grown to 1.7 million kroons, accounting for almost 40% of total turnover. This growth was boosted by the Accounting Act which entered into force in 1995 and which made auditing compulsory for companies with an annual turnover of more than one million kroons.
However, legislative changes have also had varying impact on the audit market: for example, mandatory audit thresholds were increased in 2016, which caused a setback in the audit market that did not leave Grant Thornton Baltic untouched. It can still be said that over the last quarter of a century, auditing has typically been the service that Grant Thornton Baltic provides most, bringing in around half of its annual turnover.
But let’s take a look back at history again. Client numbers, which began to increase rapidly in the first half of the nineties, also created a need for additional manpower at Rimess. Four sworn auditors joined the firm in the mid-1990s, with young people still wet behind the ears being recruited as assistants. One of them was Janno Greenbaum, a second-year student at Tallinn University of Technology, who over the years rose to become an audit manager and partner in the firm.
Greenbaum, who started working at Rimess in 1996, remembers his first task well. “I was handed two printouts, one showing all the sales invoices for a company and the other with the VAT amounts for those invoices,” he explains. “I was asked to check line by line that the amounts in the VAT account were exactly 18% (the VAT rate at the time – Ed.) of the amounts in the sales invoice account. There were hundreds of lines and I worked on it all day long, instead of looking at the last line of the sales invoices on paper, i.e. the total amount of the sales invoices, calculating the 18% and comparing it with the total amount of the VAT account!” Now at least he can laugh about his misplaced effort.
Partner and Sworn Auditor Janno Greenbaum has been developing audit methodology at Grant Thornton Baltic as well as in the Auditors Association for many years.
Greenbaum says auditors today are literally doing a much smarter job than they did years ago, in terms of both audit planning and substantive work based on a plan. The fact that advisory services started to develop rapidly at Rimess around the turn of the century has also allowed auditors to obtain support from fellow tax advisers, lawyers and financial advisers. This helps them do their work much more effectively: in a world of increasingly complex rules, an auditor can no longer be an entire orchestra, playing everything themselves. Not to mention the technological tools that make both data analysis and other steps more efficient.
Coronavirus, which started spreading in 2020, has also contributed to efficiency: the usual visits to clients or visits of clients to the auditors’ office had to be replaced by virtual meetings, as it was no longer permitted to have large numbers of people in the same room. This made it possible to save a lot of time: there is no need to travel, and virtual meetings tend not to last as long as ‘real’ ones.
Rahkama says that hybrid work is here to stay, despite the fact that the restrictions imposed by the pandemic are unlikely to be as strict again as they were in 2020. “You still have to visit clients sometimes, because a video bridge is no substitute for an in-person meeting,” he admits. “But the option to see people face to face and chat with them at the touch of a button is very welcome. That’s why we do hybrid work: we meet with clients at their office or ours, and we also communicate via video.”
Mart Nõmper, Partner, Head of Audit Services and Sworn Auditor, finds the profession of auditor both fascinating and rewarding.
But could technological development eventually erase the need for auditors altogether? Artificial intelligence is already capable of certain tasks that were unimaginable just a few years ago, after all. Head of Audit Services Mart Nõmper feels that the kind of AI that could make management decisions does not, and will never, exist.
However, new market niches are opening up for the cleaners of the financial world. “In addition to auditing financial statements, there’ll soon be a need to audit corporate social sustainability and environmental reports,” he predicts. “Crypto companies are a whole new sector, where the obligation to audit financial statements was introduced by law in 2022. So the audit industry is booming.” You don’t have to look far for proof of this claim: under Nõmper’s leadership, the Audit Department of Grant Thornton Baltic has doubled in size in just three years, in terms of both staff numbers and turnover.
“All of this has been possible thanks to our fantastic and dedicated staff,” he says. “This, in turn, leads to client satisfaction, and satisfied clients recommend us to others. So I see no reason why the same growth in auditing shouldn’t continue.”
The work of an auditor requires cooperation with colleagues from tax, legal and financial advisory services. In the photo are Mikk Mägi, who led the financial advisory area from 2019-2021, and Mart Nõmper, who has been in charge of audit services since 2019, at the Äripäev conference in 2020.
However, the next generation of auditors is a concern. Nõmper concedes that finding new employees is hard work. “If you ask a young person what makes the job of an auditor interesting, they don’t know what to say. I have the answer: an auditor sees the business models of a very wide range of companies in their work. We have more than 500 clients and carry out more than 600 projects a year. So I see hundreds of business models in depth, from the idea behind the business to the movement of money. An auditor visiting a company also steps through the doors marked ‘Staff Only’. You can study at the best possible university, but you can’t get the experience and the breadth of knowledge that auditing gives you from a school or anywhere else!”
Years of work in the Auditors Association
Grant Thornton Baltic has been contributing to the development of audit activities in Estonia for nearly three decades, actively participating in the work of both the Auditors Association and its predecessor, the Board of Auditors. Mati Nõmmiste has spearheaded the Auditors Association, which was founded in 1999, as a member of the management board, as president and as vice-president, contributing a great deal of time and energy to the advancement of the field. This has not gone unnoticed: he was awarded the Order of Merit of the White Star, Fifth Class by the President of the Republic of Estonia in 2016 for his dedicated work.
Veiko Hintsov, a long-standing partner at Deloitte Estonia, worked with Nõmmiste for many years on the management board of the Auditors Association. Hintsov says the grand old man of the Estonian audit sphere is characterised by his unfailing ability to be reasonable. “There were differences of opinion from time to time on the management board of the Auditors Association, but Mati always managed to keep a very good balance,” he says. “He’s a good negotiator and always has a positive attitude.”
In 2019, when Nõmmiste left the board of the Auditors Association, Mart Nõmper, Partner and Sworn Auditor at Grant Thornton Baltic, was elected in his place, and will continue to serve on the next management board elected in 2022.
The board members also elected Nõmper as Vice President of the Auditors Association in August 2022. The sworn auditors of Grant Thornton Baltic have also contributed to the committees and working groups of the Auditors Association. For example, Janno Greenbaum has been a keen advocate for the development of audit methodology on the Methodology Committee for many years.
The Auditors Association submitted the proposed to the President that Mati Nõmmiste be awarded a national decoration. President Toomas Hendrik Ilves presented Nõmmiste with the Order of Merit of the White Star, Fifth Class, on 23 February 2016 at a ceremony at Rakvere Theatre. Photo: Andres Putting, Office of the President of the Republic