Associate | Established: 1993
The Audit Chamber of Ukraine (AChU) was established in 1993 under the Law of Ukraine on Auditing Activity. In 2018, the chamber was re-established under the Law on Audit of Financial Statements and Auditing of 2017 as a not-for-profit, self-regulatory organization of auditors established to carry out tasks related to auditor regulation. Membership in ACU is required for all auditors and audit entities. The AChU, under the oversight of the Auditing Public Oversight Board, is delegated the following functions, provided that its organizational structure prevents conflicts of interest: (i) registration of auditors and audit entities; (ii) provision and supervision over the training of auditors providing services to non-public interest entities; (iii) quality assurance of audit services provided by auditors carrying out statutory audits of non-PIEs; and (v) disciplinary proceedings on auditors of non-PIEs.
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Statements of Membership Obligation (SMO)
The Statements of Membership Obligations form the basis of the IFAC Member Compliance Program. They serve as a framework for credible and high-quality professional accountancy organizations focused on serving the public interest by adopting, or otherwise incorporating, and supporting implementation of international standards and maintaining adequate enforcement mechanisms to ensure the professional behavior of their individual members.
Last updated: 11/2022
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Status of Fulfillment by SMO
SMO 1: Quality Assurance
The Law on Audit of Financial Statements and Auditing of 2017 requires mandatory quality assurance (QA) reviews of all statutory audits. Audit firms that conduct statutory audits of public interest entities are reviewed every three years by the Auditing Public Oversight Board (APOB). QA reviews of other audit firms carrying out statutory audits are conducted every six years by the Audit Chamber of Ukraine (AChU)’s Quality Control Committee. According to the self-assessment conducted by the AChU—available in its SMO Action Plan— the overall QA review system complies with the requirements of SMO 1.
The AChU introduced QA reviews for its member since 2007 and from 2018 onwards, it has collaborated with the APOB per the recent legislation and shares information regarding its QA review system and results.
The chamber has developed and published QA review guidelines and a yearly review schedule as well as resources for its members on applying quality control standards. The chamber indicates that it provides training for members on relevant standards as well as common issues identified in the results. A summary of the QA review results is also published on its webpage. The AChU also organizes events and forums on QA matters to further support members and collaboration with key stakeholders. In June 2021, the chamber indicates that it organized a training on the ISQM to introduce members to the changes in quality management standards effective in 2022.
Together with the Ministry of Finance (MoF), APOB and the Ukrainian Federation of Professional Accountants and Auditors (UFPAA), the AChU is participating in the World Bank’s project Strengthening Auditing and Reporting for Eastern Partnership countries (STAREP), which includes activities related to raising awareness and best practices for QA.
It is commendable that AChU is conducting reviews in line with the SMO 1 requirements. AChU is encouraged to continue its activities related to monitoring and supporting the implementation of ISQM1 among members when it becomes effective as of December 15, 2022. It is also encouraged to ensure the APOB is aware of and prepared to address the quality management (QM) standards in its reviews. Resources on the QM standards are available on the IAASB website.
SMO 2: International Education Standards
The initial and continuing professional development (IPD and CPD, respectively) requirements for auditors are established in the Law on Audit of Financial Statements and Auditing of 2017. The requirements for entry to the auditing profession include (i) having a university degree; (ii) demonstrating theoretical knowledge and competencies outlined in the law by successfully passing the qualification examination; and (iii) having practical experience in audit (at least three years). Certification of auditors is carried out by the Attestation Commission. Regulations developed by the Attestation Commission are subject to approval by the Auditing Public Oversight Board (APOB) and then by the Ministry of Finance (MoF).
Under the Law on Audit, all auditors are subject to CPD requirements approved by the APOB and MoF. CPD of auditors may be conducted by legal entities that comply with requirements set by the Attestation Commission, including Professional Accountancy Organizations (PAOs) and audit firms that developed their own CPD programs that are recognized by PAOs that are members of IFAC.
Prior to the 2018 effective date of the Law on Audit, the Audit Chamber of Ukraine (AChU) was responsible for establishing IPD and CPD requirements for auditors in Ukraine. Since 2018, it is authorized to provide CPD to its members under the oversight of the APOB. It also coordinates with higher education institutions to support implementation of IPD requirements (preparation of auditors for the exam of the Attestation Commission) in line with IES. The chamber organized several forums for members on the new certification process for auditors and AChU members often provide lectures and/or internships for university students to support the right competencies. AChU indicates it has signed MoUs with six universities to hold theoretical & practical conferences annually and has several Board members that work in universities. Through these members it endeavors to influence university curricula to correspond to the topics that will be on the examination for auditor candidates.
AChU participates in a World Bank-organized Accounting Education Community of Practice, through the Strengthening Auditing and Reporting for Eastern Partnership countries program, that aims to modernize accountancy education. According to the World Bank’s National Education Initiatives – Ukraine (2019) report, the IPD requirements for accountancy professionals can be strengthened to align with the revised 2019 IES. For example, university programs and curricula could increase the number of topics relating to professional ethics, results management and decision-making process, analysis, and interpretation of financial reporting. In 2020, AChU reports that an organization of accountancy lecturers was founded and the AChU cooperates with the organization on trainings related to ethics, performance management, and interpretation of financial statements.
The same World Bank (2019) report indicates that the examination process for auditors could also be improved to align with IES 6 and the AChU reports that it cooperates with the Attestation Committee in the development of certification procedures to promote the incorporation of IES requirements. At the end of 2021, AChU advocated to the Ministry of Education regarding the professional entrance test for auditors and the subject matters.
In 2020, the AChU participated in a joint event with the ACCA on improving competencies for professional accountants. It indicates that it monitors fulfillment of CPD obligations among its members and provides the Attestation Committee with recommendations on how CPD providers can address new IES requirements on information and communications technology (ICT) and professional skepticism.
Recognizing AChU’s scope of authority for IPD and CPD adoption and implementation, it is positive that the AChU is raising awareness of the newly revised IES that address learning and development for ICT and professional skepticism. The AChU is encouraged to review the analysis from the World Bank’s National Education Initiatives – Ukraine (2019) report and prioritize actions to address the recommendations in the report wherever feasible – either as it relates to its own CPD programming or in support of universities and other training and exam centers — to bring accountancy education in line with the international benchmarks. These plans with reasonable timeframes should be outlined in its Action Plan. AChU can utilize the IFAC Accountancy Education E-Tool and may considering completing the IES Checklist developed by IFAC as part of its progress.
SMO 3: International Standards on Auditing
According to the Law on Audit of Financial Statements and Auditing No. 2258-VIII of 2017 statutory audits are mandatory for public interest entities, large enterprises, and medium enterprises, as defined in the Law on Accounting and Financial Reporting in Ukraine of 1999. The law requires application of ISA and other IAASB pronouncements as translated in the Ukrainian language and made publicly available by the Ministry of Finance. To date, the 2016–2017 ISA translated in Ukrainian plus ISA 540 revised (2019 (effective in the 2018 IAASB Handbook)) is being applied.
Prior to 2018 when the responsibility for promulgation of ISA was handed over to the Ministry of Finance, the AChU was responsible for auditing standard-setting and adopted, regularly translated, and published the IAASB Handbooks per an agreement with IFAC. AChU also had a joint analytical group with the Ukrainian Federation of Professional Accountants and Auditors (UFPAA), an IFAC member, to discuss and provide comments on the IAASB Exposure Drafts. Now the AChU is responsible for supporting and enforcing implementation of the ISA.
To assist with the application of ISA by its members, the chamber offers seminars and conferences; continuing professional development (CPD) programming; develops guidance on ISA application; and communicates developments on its website and in its monthly magazine Auditor of Ukraine. Further, according to the World Bank (2019), the AChU also accredits short-term trainings for auditors conducted by the Training and Methodological Center of the UPFAA. The chamber indicates that throughout 2020 it held several webinars on ISA, such as the auditor’s report and professional skepticism, and it analyzes the results from its quality assurance reviews to plan training that address common deficiencies and difficulties for members and firms.
Additionally, the AChU indicates that it cooperates with higher education institutions – which provide most of the IPD for auditors – and organizes meetings with other regional bodies to exchange information and experiences with ISA.
The 2020 IAASB Handbook is now effective, which includes ISA 315 revised effective December 2021. The AChU may consider how it can support and/or advocate for the timely translation of the 2020 Handbook and raise awareness of the changes that will become effective throughout 2022 (e.g., ISA 315, ISQM 1, ISQM 2, ISA 220, and ISRS 4000 (revised)) to prepare auditors to properly apply the standards upon effective date.
Secondly, while AChU indicates it cooperates with universities, as recommended by the World Bank (2019) and to the extent feasible, AChU is encouraged to further its collaboration with higher education institutions to ensure that methodological support, such as teaching materials, practical applications and manuals related to auditing are harmonized with the latest standards and that auditors have access to practical application trainings of the standards as well.
SMO 4: Code of Ethics for Professional Accountants
The Law on Audit of Financial Statements and Auditing No. 2258-VIII of 2017 requires all auditors and audit firms to abide by the International Code of Ethics for Professional Accountants issued by the IESBA (the IESBA Code) and translated into Ukrainian by the Ministry of Finance (MoF). The MoF has translated and published the 2018 International Code of Ethics.
Prior to the MoF being responsible for the translation and publication of the Code of Ethics, the AChU had proactively adopted in the IESBA Code of Ethics in 2003 for the audit profession. Now the AChU indicates that it promotes and supports application of the ethical requirements among members and monitors compliance. Failure to comply with ethical standards is considered a disciplinary offense and results in disciplinary actions. There are no additional requirements currently set by AChU. The chamber is discussing the adoption of a Code of Conduct/Behavior for AChU members.
The chamber supports implementation through events and training on ethics; inclusion of ethics-related topics in its continuing professional development programming; publications in its AChU journal; and informing members of developments on its website and social media pages. For example, in December 2021, it organized a conference on ethics, which included an update on the Code of Ethics from an IESBA Member as well as knowledge sharing among Professional Accountancy Organizations in the region.
The World Bank (2019) notes that collaboration among higher education institutions (HEI) would help ensure professionals ethics are included within ethics curricula. AChU indicates that it has relationships with HEIs, including collaboration around the curricula for future accountants and auditors to ensure that professional ethics is included within the education process. Joint events and meetings with teachers and students are regularly held. A textbook for students entitled "Professional Ethics for Accountants", co-authored by AChU members is currently being prepared for publication and will be recommended for higher education institutions.
The 2021 version of the International Code of Ethics is now available. The Handbook includes revisions to Part 4B of the Code and revisions to promote the role and mindset of professional accountants, which are effective as of December 2021. The 2021 Handbook also includes approved revisions that will become effective in December 2022, such as: revisions to non-assurance services, fees, and objectivity of an engagement quality reviewer. The AChU may consider how it can support and/or advocate for the timely translation of the 2021 Handbook and raise awareness of the changes that will become effective throughout 2022 to prepare auditors to properly apply the standards upon effective date.
While AChU indicates it cooperates with universities, as recommended by the World Bank (2019) and to the extent feasible, AChU is encouraged to further its collaboration with higher education institutions to ensure that professional ethics is included within curricula for auditors; and with other PAOs and accountancy stakeholders to develop and implement a publicly available program dedicated to the Code of Ethics for all professionals.
SMO 5: International Public Sector Accounting Standards
The Ministry of Finance (MoF) is responsible for adoption of the national accounting standards for the public sector of Ukraine. According to the World Bank/CFRR’s 2020 Stocktaking of Public Sector Accounting and Reporting Environment in PULSAR Beneficiary Countries: Ukraine the current standards are accrual-basis for financial reporting of budget funds, controllers and social funds while the execution of budgets is a cash-basis. The Ministry of Finance has developed standards that are based on IPSAS which are reportedly 80% compliant with the 2012 IPSASs.
Within the framework of the Strategy for the Reform of the Public Financial Management System for 2017-2020 and the Strategy for the Modernization of the Accounting and Financial Reporting System in the Public Sector by 2025, the Ministry of Finance is translating into Ukrainian the 2018 IPSAS to update the provisions in force and to develop new national accounting provisions (standards) in the public sector.
The AChU indicates that the adoption and implementation of public sector accounting standards is outside of its remit and that it can only promote and raise awareness of IPSAS when it has meetings with the MoF and the State Audit Service. It will continue to explore opportunities in this area.
AChU has indicated that, within the scope of its authority, it is committed to meet the SMO 5 obligations. The association is encouraged to further consider opportunities in the area of public sector accounting and support for accrual-basis IPSAS as the MoF progresses with its strategies for modernizing the financial reporting system. For example, the 2021 IPSASB Handbook was effective as of January 2021 which contains updates from the 2018 IPSAS. AChU may also find IFAC’s Train the Trainers: Introduction to IPSAS resource helpful for any training and educational activities it is considering and/or translating the materials to provide technical support to the MoF.
SMO 6: Investigation and Discipline
The Law on Audit of Financial Statements and Auditing of 2017 lays down a system for investigating and disciplining auditors. The Auditing Public Oversight Board (APOB) is directly responsible for investigating and disciplining of auditors and audit entities carrying out statutory audits of public interest entities (PIEs). Meanwhile, the Audit Chamber of Ukraine (AChU), under the oversight of the APOB, investigates and disciplines auditors and audit entities of non-PIEs. According to the information provided by the AChU, the I&D system for auditors is in line with the requirements of SMO 6 except for the fact that AChU’s disciplinary committee is comprised of auditors only. AChU notes that this is due to legal provisions and will consider making amendments to legislation in the future that would help align with SMO 6.
The AChU’s Quality Control Committee will investigate any complaints received and disciplinary actions are determined by the AChU Board. Between 2019 – 2021, the AChU has handled over 100 disciplinary cases having received complaints from varying key stakeholders. It has issued multiple warnings and suspensions and removed one individual from its registry. All results of I&D procedures are published on the APOB website and the AChU website. The chamber indicates that it regularly organizes forums for members regarding their professional responsibilities, ethical requirements, and consequences of non-compliance.
It is commendable that the AChU has an enforcement mechanism that largely meets the SMO 6 benchmark. Enforcement mechanisms that meet the SMO 6 benchmark for all professional accountants are essential to public trust and confidence in the accountancy profession. There are a few identified areas that need improvements to fully meet the SMO 6 best practices. As AChU continues to advance the implementation of its I&D procedures, it should prioritize making improvements to its system as noted in the comments from IFAC. These plans with reasonable timeframes should be outlined in its Action Plan.
SMO 7: International Financial Reporting Standards
Since the adoption of IFRS by the Ministry of Finance for public interest entities in 2012, AChU indicates that it endeavors to support implementation of the standards by providing trainings, tools, and offering continuing professional development on IFRS.
In 2019 and 2020, it reports that it held multiple meetings and discussions with members on IFRS, including IFRS 16, the new conceptual framework, and common mistakes made in preparing financial statements in accordance with the IFRS. In 2021, AChU indicates that it is engaging with members, the National Securities, and Stock Market Commission, regarding new financial reporting procedure based on eXtensible Business Reporting Language IFRS (XBRL) Taxonomy.
AChU has demonstrated that, within the scope of its authority, it has undertaken initiatives to meet the SMO 7 obligations and is committed to continued improvement. As noted and recommended by the World Bank (2019), AChU is encouraged to strengthen its collaboration with both higher education institutions and the Attestation Commission to advocate that analysis and interpretation of financial reporting are included in the curricula and that examinations offered by accredited centers are assessing competencies and knowledge of the latest IFRS, respectively.
IFAC bears no responsibility for the information provided in the SMO Action Plans prepared by IFAC member organizations. Please see our full Disclaimer for additional information.
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