Member Organization Associate Other PAOs
Legal and Regulatory Environment
Overview of Statuatory Framework for Accounting and Auditing
The corporate financial reporting framework in Ukraine is governed by requirements outlined in the following legislations:
- Company Law (2004)—describes financial reporting requirements for Limited Liability Companies (LLCs) and Joint Stock Companies (JSCs).
- Law on Audit Activities (2003 with subsequent amendments)—stipulates entities subject to statutory audits, authorizes national regulator of the audit profession, the Auditing Chamber of Ukraine (ACU), to set auditing standards, and requires application of ISA. According to the Law, statutory audits are mandatory for JSCs, issuers of securities, bond issuers, professional securities market participants, financial institutions, insurance companies, and companies with foreign investment.
- Law on Accounting and Financial Reporting of 2000 stipulates that the overall development and implementation of accounting and financial reporting methodology is regulated by the Ministry of Finance of Ukraine (MoF). MoF is authorized to approve the National Accounting Standards (NASs) and other regulatory acts with respect to general accounting and financial reporting. Under this Law, Accounting Methodological Council (AMC), an advisory body under the Ministry of Finance was established to set NASs based on IASs/IFRS. The Law authorizes the National Securities and Capital Markets Commission) and the National Bank of Ukraine to set specific reporting requirements for their regulated entities.
- Law on Banks and Banking (2000 with subsequent amendments)—outlines accounting and auditing requirements for banks, defines the structure of the banking system, economic, organizational and legal fundamentals for establishment, regulation and operation of banks.
- Law on State Regulation of Securities Markets in Ukraine—establishes accounting and auditing requirements for the securities markets participants.
- Law on Financial Services and State Regulation of Financial Services Markets—states the financial reporting requirements for non-banking financial institutions.
- Various Regulations issued by the ACU—to fulfill its mandate to regulate the profession.
Regulation of Accountancy Profession
The designation of Statutory Auditor appears to be the only regulated accounting qualification in Ukraine at the state level. The Law on Audit Activities of 2003 grants authority to the Auditing Chamber of Ukraine (ACU) to regulate the profession of auditors. The ACU comprises 10 representatives from the public sector (Ministry of Finance, Ministry of Justice, Ministry of Economy, Court of Accounts, State Tax Service, etc.) and 10 representatives of the profession.
ACU is responsible for establishing initial professional development (IPD) and continuous professional development (CPD) requirements for audit professionals, certification and licensing of statutory auditors and audit firms, maintaining the register of statutory auditors, adoption of standards (auditing, quality control, and ethics), implementing quality assurance, and investigation and discipline systems.
Under the Law, the requirements for entry to the auditing profession are (i) a university degree; (ii) at least five years’ experience as an auditor; and (iii) successful completion of professional accountancy certification examinations (final assessment) designed and implemented by the ACU. Only statutory auditors are permitted to conduct audits in Ukraine.
Some of the financial sector regulators establish additional requirements for auditors and accountants who provide services to entities under their supervision. For instance, the Chief Accountants of listed companies are subject to the National Securities and Capital Markets Commission Regulation 769 of 2013, which defines IPD and CPD requirements for this category of accounting professionals. It is unclear whether other financial industry regulators impose similar requirements for accounting professionals in Ukraine.
Professional accountants other than auditors are not subject to regulation at the state level; however, professional accountancy organizations (PAOs) self-regulate their members. The Ukrainian Federation of Professional Accountants and Auditors and Ukrainian Association of Certified Accountants and Auditors, as well as some other Ukrainian PAOs, require members to be Certified Accounting Practitioners (CAP) or Certified International Professional Accountants (CIPA), which are Russian language qualifications designed and offered by the members of the Eurasian Council of Certified Accountants and Auditors (ECCAA), an IFAC Acknowledged Accountancy Grouping. ECCAA attests that CAP/CIPA requirements are broadly in line with the IES requirements.
Audit Oversight Arrangements
There are no independent audit public oversight arrangements in Ukraine. However, Under the Law on Audit Activities of 2003, the Auditing Chamber of Ukraine (ACU), the regulatory body for auditors, has some oversight responsibilities. Under Article 12 of the Law, the twenty (20) member body, equally comprised of appointed members from the government and the profession, has functions which include:
- Certification and licensing of auditors;
- Approval and adoption of auditing standards;
- Maintenance of the registry of audit firms and individual auditors;
- Approval of auditor training programs, and in coordination with the National Bank of Ukraine, training programs for auditors engaged in bank audits;
- Operation of an investigative and disciplinary system for compliance with auditing standards and ethical requirements, and application of relevant sanction for non-compliance; and
- Management of quality assurance inspections.
There are some efforts in place to clarify the role of the ACU through the World Bank’s STAREP project under the Component of Accounting and Auditing Standards Community of Practice, titled Improving Audit Quality by transposing relevant EU requirements. One of the objectives of the 2015 proposed amendments to the Law on Audit Activities is to develop the independent oversight body. It is not clear whether ACU will assume the independent oversight role over the auditor profession.
The ACU is not a member of the International Forum of Independent Audit Regulators.
Professional Accountancy Organizations
The Ukrainian Federation of Professional Accountants and Auditors (UFPAA)
The UFPAA is one of the oldest PAOs in the country, established as a non-governmental, self-regulatory body with voluntary membership in accordance with the Law on Citizen Association. According to UFPAA’s Charter, its objective is to “unite the efforts of accountants and auditors in fostering the reforms and further development of accounting and audit in Ukraine on the basis of the international standards, in improvement of the tax legislation and protection of joint interests of its members.” In 2008, UFPAA was admitted as an IFAC member after working for several years towards membership as an IFAC Associate. Currently, it is one of the key stakeholders in the accounting profession in Ukraine, has a good rapport with the Auditing Chamber of Ukraine and Ministry of Finance, and is a recipient and active participant in many donor-funded projects.
In addition to membership in IFAC, UFPAA is a member of Eurasian Council of Certified Accountants and Auditors and the Fédération Internationale des Experts-Comptables Francophone.
The Ukrainian Association of Certified Accountants and Auditors (UACAA)
The UACAA is a spin-off of UFPAA, established in 2004 with the assistance of the United States Agency for International Development. It became an IFAC Associate in 2004. Membership in UACAA is voluntary and includes accounting technicians, junior accountants, preparers of financial statements, chief accountants, and auditors.
The Union of Auditors of Ukraine (UAU)
The UAU is a non-governmental organization, established in 1992 under the Law on Audit Activities as the auditors’ PAO, but subsequent amendments to the Law revoked references to UAU. Only statutory auditors can be members of UAU.
The Federation of Auditors, Accountants and Financiers of the Agricultural and Industrial Complex of Ukraine (FAAF AICU)
The Council of Independent Accountants and Auditors (CIAA)
Projects or Other Information
The Government of Ukraine is committed to bringing its financial reporting framework in line with the international standards and best practices and as of April 2015, the Law “On Audit Activities” (reg. N 2534 of 03.04.2015) is in the process of being revised. The objective of the proposed amendments is to bring national audit requirements in line with the EU Directive 2014/56/EU, Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities. The World Bank supports these efforts through its Vienna Centre for Financial Reporting Reforms under the Strengthening Auditing and Reporting in the Countries of the Eastern Partnership (STAREP) program.
The Auditing Chamber of Ukraine, Ministry of Finance, Ministry of Science and Education, UFPAA and universities are active participants in the World Bank STAREP program that assists the authorities in the ongoing efforts within Ukraine to assist professional accountancy organizations fulfill their roles in establishing professional entry standards and modernizing systems of professional education in the university sector.
Adoption of International Standards
The Law on Auditing Activities of 2003 established the Audit Chamber of Ukraine (ACU), granting it the legal mandate to establish a mandatory quality assurance (QA) review system for all auditors and firms. A QA system is in place for all audits of financial statements, and, according to the Ukrainian Federation of Professional Accountants and Auditors (UFPAA), is implemented by the ACU’s Auditing Services Control Committee in line with SMO 1 requirements. The ACU’s Regulation No. 232-09 of 2011 adopted the National Practice of Quality Control on Auditing Services, which provides details on applicable quality control standards and is based on ISQC 1.
The ACU coordinates its activities with the National Bank of Ukraine, the Ministry of Finance, National Securities and Stock Market Commission, National Commission for Financial Services Markets Regulation, which also have regulatory authority for the conduct of audits by entities that they oversee.
Under the World Bank’s Strengthening Auditing and Reporting for Eastern Partnership countries project, efforts are underway to transpose the latest EU requirements pertaining to quality assurance and public oversight into national legislation.
Current Status: Adopted
International Education Standards
The responsibility for establishing and administering initial and continuing professional development requirements for professional accountants in Ukraine falls within the remit of Ministry of Science and Education and Universities for university programs, the Audit Chamber of Ukraine (ACU) for auditors, professional accountancy organizations (PAOs) for their members, and, to some extent, the financial sector regulators for accountants who provide services to entities under their supervision.
The Law On Audit Activities of 2003 sets the initial professional development (IPD) and continuing professional development (CPD) requirements for Ukrainian auditors. The Law delegates the authority to the Audit Chamber of Ukraine to carry out certification exams and CPD for licensed auditors. The Ukrainian Federation of Professional Accountants and Auditors (UFPAA) reports that in 2013 ACU’s auditor qualification program was revised to incorporate the IES 8 requirements. It is unclear if other requirements of the IES were incorporated into the ACU’s revised auditor’s qualification program.
The two PAOs with voluntary membership, UFPAA and the Ukrainian Association of Certified Accountants and Auditors (UACAA), set IPD and CPD requirements for their members. Both PAOs require members to be Certified Accounting Practitioners or Certified International Professional Accountants, which are Russian language qualifications offered by the members of the Eurasian Council of Certified Accountants and Auditors or be certified by the established reputable IFAC bodies. UFPAA’s and UACAA IPD and CPD requirements seem to meet many of the requirements of the IES.
National Securities and Capital Markets Commission (NSCMC), the securities and capital market regulator, defines the IPD and CPD requirements for Chief Accountants employed by the entities operating in the securities market of Ukraine. The extent of compliance of NSCMC’s IPD and CPD requirements with IES is not clear.
The UFPAA translated the 2009 version of IES and is in the process of finalizing the translation of the revised IES to be completed in 2015.
There is no information available as to whether the accounting education programs offered by Universities are in in line with the requirements of IES. However, under the World Bank’s Strengthening Auditing and Reporting for Eastern Partnership countries project, efforts are underway to transpose the latest EU requirements pertaining to accounting education and professional accountancy qualification into national legislation.
Although many of IES requirements appear to be incorporated in Ukraine, clarification is needed on the extent of compliance of IPD and CPD requirements for all categories of professional accountants in the jurisdiction with those of IES.
Current Status: Partially Adopted
International Standards on Auditing
According to the Law on Audit Activities of 2003 and Law on Banks and Banking of 2000, statutory audits are mandatory for joint stock companies, banks, issuers of securities, bond issuers, professional securities market participants, financial institutions, insurance companies, and companies with foreign investment.
ISA and other IAASB pronouncements were adopted in Ukraine without modifications as stipulated in the Law on Audit Activities. The Auditing Chamber of Ukraine, the audit standard-setting body in Ukraine, is responsible for translation of ISA into Ukrainian. Ukrainian Federation of Professional Accountants and Auditors’ 2015 SMO Action Plan states that the 2013 version of Clarified ISA has been translated and is being applied. IFAC’s Policy on Translation was adhered to in the translation process.
Current Status: Adopted
Code of Ethics for Professional Accountants
The IESBA Code of Ethics for Professional Accountants was adopted in Ukraine as the National Code of Ethics for the audit profession in accordance with the Law on Audit Activities of 2003. It is the responsibility of the Auditing Chamber of Ukraine (ACU) to ensure compliance with the Code of Ethics, which is mandatory for application by all auditors. Under the 2011 Memorandum on Interaction, Cooperation and Coordination of Actions on the Introduction of International Financial Reporting Standards in Ukraine, ACU has delegated the powers to implement the IESBA Code by Ukrainian auditors to several entities: the Ukrainian Federation of Professional Accountants and Auditors (UFPAA), the Union of Auditors of Ukraine, and a number of training providers. UFPAA indicates that there is an ongoing process in place in Ukraine to incorporate and translate amendments introduced by IESBA to the Code of Ethics of Ukraine. UFPAA translated the 2012 edition of the Handbook of the Code of Ethics for Professional Accountants. Both IFAC member organizations have adopted IESBA’s Code of Ethics for their members.
Although auditors are required by law to abide by the Code of Ethics, it is not clear whether all professional accountants in Ukraine are bound by the requirements of the currently effective IESBA’s Code of Ethics.
Current Status: Partially Adopted
International Public Sector Accounting Standards
The State Treasury of Ukraine, which is accountable to the Ministry of Finance, is responsible for setting accounting standards for the public sector. Information as to the legislative basis for this arrangement is unclear.
IPSAS have not been adopted in Ukraine, although the Ukrainian Federation of Professional Accountants and Auditors (UFPAA) reports that the decision to adopt IPSAS has been already taken, and the national accounting standards for public sector are developed based on IPSAS. In its 2015 SMO Action plan, UFPAA also states that IPSAS have been initially translated in 2003, with the translation of the selected IPSAS taken place in 2006 and 2008. The translated IPSAS have been made publicly available on the Ministry of Finance’s website.
Current Status: Partially Adopted
Investigation and Discipline
The Audit Chamber of Ukraine’s (ACU) mandate as established in the Law on Audit Activity of 2003 includes investigation and disciplinary powers to ensure that licensed audit practitioners comply with applicable laws, standards, and the Code of Ethics. The Ukrainian Federation of Professional Accountants and Auditors reports that the existing investigation and discipline (I&D) arrangements for auditors are in line with the requirements of SMO 6 and will be further reviewed, with a focus on enhancing and clarifying the role of the ACU.
Both IFAC members have established an I&D system for application by its members.
While it is clear that a system of investigation, discipline, and appeals exist and is operational for auditors, it is unclear whether all professional accountants in the jurisdiction are subject to I&D in line with the SMO 6 requirements.
Current Status: Partially Adopted
International Financial Reporting Standards
The Law on Accounting and Financial Reporting of 2000 establishes accounting standards to be applied for the preparation of financial statements. Under the article 6.2 of the Law, Ministry of Finance of Ukraine is defined as the key state executive body responsible for establishing accounting standards in Ukraine.
Under the 2011 amendments to the Law on Accounting and Financial Reporting, IFRS were adopted in Ukraine and became mandatory as of January 1, 2012 for public joint stock companies, banks, insurance companies, and all listed companies (domestic and foreign). The Ukrainian Federation of Professional Accountants and Auditors (UFPAA) has signed a Memorandum on Cooperation and Coordination of Actions on Implementation of IFRS in Ukraine with the Ministry of Finance and National Bank of Ukraine to streamline the implementation of the IFRS Implementation Strategy.
Under Resolution No. 820 by the Cabinet of Ministers in 2013, both the Ministry of Finance and the UFPAA are responsible for the translation of IFRS into Ukrainian. In 2009, UFPAA translated and published the 2009 edition of the IFRS Bound Volume and is in the process of translating the 2014 versions of IFRS.
IFRS for Small and Medium Entities (SMEs) have not been adopted in Ukraine although SMEs are permitted to use IFRS for SMEs, IFRS or National Accounting Standards Plans are in place for the adoption of IFRS for SMEs.
Current Status: Adopted
- Audit Chamber of Ukraine (in Ukrainian)
- Council of Independent Accountants and Auditors (CIAA)
- Federation of Auditors, Accountants and Financiers of the Agricultural and Industrial Complex of Ukraine (FAAF AICU)
- Ministry of Finance
- National Commission on Securities and Exchange of Ukraine
- Ukrainian Federation of Professional Accountants and Auditors (UFPAA)
- Ukrainian Association of Certified Accountants and Auditors (UACAA)
- Union of Auditors of Ukraine (UAU)
- Law on Audit Activities, 2003
- Law on Accounting and Financial Reporting of 2000 (in Russian)
- Law on Accounting and Financial Reporting of 2000
- Law “On Joint Stock Companies,” 2008
- Statue of the Ministry of Finance of Ukraine, 04/18/2013
- Law of Ukraine on Financial Services and State Regulation of Financial Service Markets
- Memorandum on Interaction, Cooperation and Coordination of Actions on the Introduction of International Financial Reporting Standards in Ukraine
- NSCMC’s Regulation ? 2015, “On Approval of Procedures on Education and Final Assessment on the Securities Market Specialists in Ukraine,” 24.09.1996
- NSCMC Regulation ? 769 with subsequent amendments “Defining the Professional Requirements for the Chief Accountants, professional participants of the Securities Market,” 25.04.2013
- IFRS Foundation, “IFRS Application Around the World?Jurisdictional Profile: Ukraine,” October 2013.
- European Financial and Accounting Journal, Michal HORA – Ludmila Chyzevska, “Accounting Regulation in Ukraine,” 2013, vol. 8, no. 1, pp. 7–17.
- Ministry of Finance and National Bank of Ukraine, “MEMORANDUM on interaction, cooperation and coordination of actions on the introduction of International Financial Reporting Standards in Ukraine,” 2011.
- Report on the Observance of Standards and Codes (ROSC) – Accounting and Auditing (A&A): Ukraine 2008.
- STAREP, “Accounting and Auditing Community of Practice: Public Oversight and Quality Assurance in Ukraine,” 2014.
- STAREP, “Accounting and Auditing Community of Practice: Requirements to financial reporting applied to different types of business entities in Ukraine,” April 2014.
- Ukrainian Federation of Accountants and Auditors (UFPAA) SMO Action Plan.
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