Goodwill Accounting: CPA Brings Modern Business Training to Russia

By Jay Dismukes

Over the last several years, George R. Kaminski has quietly served as an unofficial goodwill ambassador for the U.S. accounting profession and in the process helped modernize Russian business practices and integrate the country’s economy into the global marketplace.

Kaminski, a sole practitioner from Latham, N.Y., remembers many of Russia’s small- and medium-sized businesses operating in the mid-90s according to a giant cash and barter business model. At that time, Kaminski had only recently signed on with the Morozov Project, and the ability of the U.S.-backed endeavor to promote and instill fundamental principles of a market economy and improve business skills was still unknown.

Created in 1993, the Morozov Project is a broad-based business development and training program established by the Academy of Management and the Market, a Russian non-governmental, not-for-profit organization founded in 1991 by economic universities in Moscow and St. Petersburg. The project and the Academy’s primary mission is to “assist business people throughout the regions with small-business development, to promote the entrepreneurial spirit, and to provide education,” according to the Academy.

Through training instructors, consultants and organizational managers in the business characteristics of an open market, the project helps realize and sustain the dreams of Russia’s entrepreneurs who want to own and operate their own businesses. But, as pointed out by the Academy, the project’s existence is rooted in political and economic objectives that go much deeper than merely providing financial expertise and guidance to the former Communist nation’s mom-and-pop shops. Through the “creation of a ‘critical mass’ of entrepreneurs and managers,” the project also “guarantee(s) that the democratic reforms attained in Russia are irreversible,” the Academy maintains.

In addition to governmental agencies, international organizations and foundations like the World Bank, the Morozov Project has been heavily funded through the United States Agency for International Development (USAID). Since its inception, USAID has given approximately $15 million to the project. Kaminski estimates the latest funding equals about $2 million.

Though it now gives directly, USAID funded the project’s first six years through the State University of New York (SUNY), which in turn managed the grant money and programs through the Research Foundation of SUNY. As a CPA who had experience reviewing grants and tracking costs, Kaminski possessed the sort of professional background that could be of use to SUNY and the project and could help accomplish economic objectives.

“He had extensive experience with nonprofits involved with getting grants,” said Ann Chatwin, who, through SUNY, served for six years as the Morozov Project manager. “So his expertise in understanding how this organization ran was terribly important.” Chatwin added that Kaminski’s involvement with the project required him to become familiar with Russian accountancy.

Kaminski came on board the project in 1995 and assisted in developing and setting up a dual accounting system that mirrored the USGAAP (Generally Accepted Accounting Principles) structure, while still being compatible with RAAP (Russian Accepted Accounting Principles). Since that time, Kaminski has made numerous trips to Moscow, conducting audits on the Academy and its programs on each trip.

As part of his auditing contract, Kaminski, a member of the New York State Society of CPAs since 1978, acts as a consultant to the Academy staff and trainers who are associated with the Morozov Project. To that end, Kaminski has advised on different management matters, reviewed programs and activities, helped select appropriate accounting software, lectured on western accounting principles, distributed his own handouts during seminars and presentations, and even helped host members of the Academy’s accounting staff in the United States.

“There is a large pool of well-educated, talented people and they are very interested in the West,” Kaminski said of the Academy staff he has helped to train. “They realize the importance of accounting standards and the importance of compliance and accountability.”

A member of the Society’s Not-for-Profit Organizations Committee, Kaminski said Russia’s accounting principles are evolving—when he first visited, the Academy worked from manual payroll sheets to pay the staff. The system, he notes, is “not as wild as when (he) first got there.”

According to Kaminski, the Morozov Project has been a success, both individually and at the broader level, creating a delivery network of business support across the country’s regional expanse—an achievement, Kaminski noted, all the more remarkable given the tightly regulated atmosphere that gripped Russia for most of the last century.

Indication of the project’s success is inherent in the high staff turnover at the Academy, which poses the biggest challenge to the project, but, as Kaminski stated, is inherently a good thing. The Academy’s former fiscal director is now a senior manager at McKinsey & Co., the London-based worldwide consulting company, while many of the staff’s younger members have gone to work for western software companies and different governmental departments.

While the young demographic, who are perhaps more entrepreneurial in spirit, have especially benefited from the training and exposure to business ideas, the project’s impact on the country’s small businesses has been difficult to track, Kaminski said. However, according to a comprehensive report released in 2000, the Morozov network included 59 regional business training centers (BTCs) or satellite offices; resulted in the training of 7,500 BTC trainers at the Academy who in turn rendered training and consulting services to more than 317,000 small- and medium-sized businessmen and managers; and helped create 3,900 small enterprises, while preventing an additional 15,000 from going under.

As the project, which SUNY is no longer attached to, moves forward, Kaminski said the Academy has acquired better training materials, is slowly maturing and is able to focus more on remote-site training. The Russian government also appears to have taken a greater interest in the project, with the Education Ministry partnering more often with the Academy, and Prime Minister Vladimir Putin seemingly supportive of the project’s objectives, Kaminski said.

In July, the New York state CPA will make his sixth trip to Moscow. For him, the project has been about the development of “intellectual capital,” and one that he believes could be applied to other parts of the world, such as Afghanistan, whose populations could greatly benefit from economic initiatives and business support.

Kaminski’s involvement with the Morozov Project and the Academy has been a fascinating cultural and professional opportunity, one that, as a product of the Cold War, has made an impression on him that only recently seems altogether obvious.

“The experience has made me realize they are just like us, trying to live their lives and make a buck,” he observed.