Ukraine

The corporate financial reporting framework in Ukraine is governed by the requirements outlined in the Joint Stock Company Law of 2008, the Law on Accounting and Financial Reporting in Ukraine of 1999 (as amended in 2011 and 2017), the Law on Audit of Financial Statements and Auditing of 2017 as well as the laws and regulations governing financial institutions and securities market participants.

Accounting Framework

The Law on Accounting and Financial Reporting in Ukraine of 1999 regulates the provision of accounting services and authorizes the Ministry of Finance of Ukraine (MoF) to establish accounting standards for different types of companies depending on their size and public interest considerations. In 2011, the law was amended to require the application of IFRS by public companies, banks, and insurers; and in 2017 the Law was brought in line with EU requirements in the area of accounting and financial reporting.

IFRS, as officially translated and published on the MoF website (the MoF indicates it has translated the 2021 version of IFRS to date), is required for the following types of companies: (i) public interest entities (securities issuers, companies trading securities which are admitted to stock trading, banks, insurers, private pension funds, and other financial institutions (except for micro and small and medium-sized (SMEs) enterprises); (ii) public joint stock companies; (iii) companies engaged in mineral extraction; (iv) entities that are defined as large by the Law; and (v) entities conducting business activities of types defined by the Cabinet of Ministries of Ukraine.

Other companies must follow either National Accounting Standards (NASs) or IFRS for SMEs as translated and made publicly available by the MoF and other regulatory acts related to general accounting and financial reporting established by the Accounting Methodological Council (AMC) and IFRS Council, which are advisory bodies under the MoF. NASs are based on IAS/IFRS but differ from the international standards.

Auditing Framework

According to the Law on Audit of Financial Statements and Auditing 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 on Audit of Financial Statements and Auditing of 2017 regulates the provision of auditing services by all auditors and business entities regardless of types of ownership and activities. The law requires the application of ISA and other IAASB pronouncements as translated into the Ukrainian language and made publicly available by the MoF. To date, the 2016–2017 ISA translated in Ukrainian plus ISA 540 revised (2019) are being applied.

Statutory auditors and chief accountants of some entities appear to be the only segments of the accountancy profession in Ukraine regulated at the state level. Other professionals may choose to join professional accountancy organizations (PAOs) and be subject to their regulation.

Auditors

The Law on Audit of Financial Statements and Auditing of 2017 defines the roles and responsibilities of entities involved in the regulation of auditors, stipulates requirements for entry in the auditing profession, establishes requirements for initial and continuing professional development (IPD & CPD), and establishes technical standards to be applied by auditors.

Under the Law, the requirements for entry to the auditing profession include (i) having a university degree; (ii) demonstrating theoretical knowledge and competencies by successfully passing the qualification examination; and (iii) having at least three years’ practical experience in audit.

The certification of auditors is carried out by the Attestation Commission. The Attestation Commission is responsible for developing regulations relevant to the certification of auditors; accrediting independent evaluation and examinations centers; approving examination programs; organization of examination process; approving examination results; taking decisions on qualifications and the appropriateness of applicants for conducting audit activity; considering appeals; and formulating requirements to legal entities allowed to conduct continuous professional development training for auditors. Regulations related to examination and practical experience developed by the Attestation Commission are subject to approval by the Auditing Public Oversight Board (APOB) and then by the MoF.

Examinations are conducted by independent assessment centers accredited by the Attestation Commission. PAOs, institutions for higher education, and other entities may prepare candidates for the examination, in line with programs approved by the Attestation Commission. A candidate may also independently prepare for the examination.

All auditors are subject to CPD requirements. CPD of auditors may be conducted by legal entities that comply with requirements set by the Attestation commission, including PAOs, and audit firms that have developed their own CPD programs recognized by a PAO that is a member of IFAC.

Under the Law on Audit of Financial Statements and Auditing of 2017, all auditors and audit entities are subject to public oversight carried out by the APOB. The APOB is responsible for the oversight of (i) registration of auditors and audit entities; (ii) implementation of ISA; (iii) certification of auditors and continuous professional development of auditors; (iv) quality assurance (QA) of audit services provided by auditors conducting statutory audits; and (v) disciplinary proceedings and imposition of sanctions, among other functions.

All auditors and firms must also be registered members of the Audit Chamber of Ukraine (AchU) after completing the IPD requisites. The AChU, under the oversight of the APOB, 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 of CPD training of auditors providing services to non-public interest entities (PIEs); (iii) QA of audit services provided by auditors conducting statutory audits of non-PIEs; and (v) disciplinary proceedings on auditors conducting statutory audits of non-PIEs.

Chief Accountants

The Law on Accounting and Financial Reporting in Ukraine of 1999 establishes the following IPD requirements for chief accountants of PIEs: a university degree in economics; three-year practical experience in finance, accounting, and taxation; and no criminal record.

The National Securities and Stock Market Commission Regulation No. 793 of 2013 defines the following IPD requirements for chief accountants of entities traded in stock market: university degree, having a certificate from an accredited educational provider, and five years of practical experience as a chief accountant (an exception of three years if employed by banks). Chief Accountants of financial institutions must fulfill requirements of the National Commission for State Regulation of Financial Services Markets Regulation No.1590 of 2004, amended 2018.

Other

Professional accountants other than auditors and chief accountants of the entities specified above are not subject to regulation at the state level; however, they may choose to join a PAO and be subject to its regulation. PAOs may establish requirements for their members, such as obtaining a certain level of education, adherence to the code of ethics, mandatory QA reviews, and may impose sanctions. According to the World Bank (2019), there are several organizations that are registered as professional accounting and auditing organizations. Only the Ukrainian Federation of Professional Accountants and Auditors (UFPAA) is an IFAC member. UFPAA offers a voluntary certification scheme for accountants at the Certified Accounting Practitioners (CAP) or Certified International Professional Accountants (CIPA) levels.

Under the Law on Audit of Financial Statements and Auditing of 2017, all auditors and audit entities are subject to public oversight carried out by the Auditing Public Oversight Board (APOB). APOB is responsible for the oversight of (i) registration of auditors and audit entities; (ii) adoption of ISA; (iii) certification of auditors and continuous development of auditors conducting statutory audits; (iv) quality assurance of audit services provided by auditors conducting statutory audits; and (v) disciplinary proceedings and imposition of sanctions. The APOB also oversees the operations of the Audit Chamber of Ukraine – the mandatory organization for all auditors and audit entities.

APOB is a member of the International Forum of Independent Audit Regulators (IFIAR).

According to the World Bank (2019), there are several organizations that are registered as professional accounting and auditing organizations in Ukraine. Only the current IFAC member and IFAC candidate are listed here.

The Audit Chamber of Ukraine (AChU)

The 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 (APOB), 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 (PIEs); (iii) quality assurance (QA) of audit services provided by auditors carrying out statutory audits of non-PIEs; and (v) disciplinary proceedings on auditors of non-PIEs.

The Ukrainian Federation of Professional Accountants and Auditors (UFPAA)

The UFPAA is a non-governmental, self-regulatory body with voluntary membership established in June 1996 in accordance with the Law on Associations at the first Congress of Accountants and Auditors of Ukraine. According to UFPAA’s Charter, its objective is to represent the profession of accountants and auditors, and to foster reforms and development of accounting and audit in Ukraine in line with international standards. In addition to membership in IFAC, UFPAA is a member of Eurasian Council of Certified Accountants and Auditors, the Fédération Internationale des Experts-Comptables Francophone, and has cooperation agreements with several professional organizations nationally and internationally.

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 . QA reviews of other audit firms carrying out statutory audits are conducted every six years by the Audit Chamber of Ukraine (AChU).

According to the self-assessment conducted by the AChU, the overall QA review system complies with the requirements of SMO 1.

Current Status: Adopted

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 while the requirements for chief accountants are outlined in Law on Accounting and Financial Reporting in Ukraine of 1999 and the National Securities and Stock Market Commission Regulation No. 793 of 2013. 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).

The requirements for chief accountants of public interest entities (PIEs) include: a university degree in economics; three-year practical experience in finance, accounting, and taxation a university degree. Chief accountants of listed entities need a certificate from an accredited educational provider, and five years of practical experience as a chief accountant (an exception of three years if employed by banks). There is no final examination or CPD required by law.

Certification of auditors is carried out by the Attestation Commission. Regulations on examinations and practical experience developed by the Attestation Commission are subject to approval by the Auditing Public Oversight Board (APOB) and then by the Ministry of Finance (MoF).

Examinations are conducted by independent assessment centers accredited by the Attestation Commission. Professional Accountancy Organizations (PAOs), institutions for higher education, and other entities may prepare candidates for the examination, in line with programs approved by the Attestation Commission. A candidate may also independently prepare for the examination.

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. The AChu reports that the examination process for auditors is consistently being refined to align with the requirements of International Education Standard (IES) 6. Initiated in 2021, this process includes both qualification and theoretical examinations. Furthermore, a mutual recognition agreement concerning training programs and examinations has been established between the APOB and the ACCA.

Universities independently establish their programs and curricula. Nonetheless, there is a growing trend towards broadening the study scope in areas such as management, decision-making, and financial reporting, with an emphasis on IFRS issues.

According to the latest version of the Law on Audit, accreditation and monitoring systems for CPD has been improved and new regulations were adopted. The APOB is responsible for oversight and for supervising monitoring CPD. The APOB may delegate the AchU and/or PAOs control over CPD of auditors. PAOs have the right to: to prepare individuals for passing the qualification exam and exams on theoretical knowledge for the purpose of attestation of auditors; to establish independent knowledge assessment centers for conducting qualification exams and exams on theoretical knowledge for the purpose of attestation of auditors; to conduct CPD of auditors and, if delegated, to control CPD of auditors – their members.

Again, according to the World Bank’s National Education Initiatives – Ukraine (2019) report, CPD requirements could also be improved to meet IES 7 and 8 requirements by focusing more on competencies and implementing accreditation and monitoring systems for CPD fulfillment.

Professional accountants other than auditors may choose to join PAOs and be subject to their educational requirements (IPD and CPD). They may also choose to voluntarily pursue professional accountancy qualifications available in Ukraine, which include Certified Accounting Practitioner (CAP), or a Certified International Professional Accountants (CIPA) certification offered by Ukrainian Federation of Professional Accountants and Auditors (UFPAA), an IFAC member. The World Bank’s National Education Initiatives – Ukraine (2019) report indicates that the UFPAA’s certification program aligns with the IES requirements although it is not clear which version the program was assessed against. Additionally, the UFPAA’s CPD requirements could be improved to meet the IES 7 requirements through mentoring, feedback and reflection, and including an output-based approach.

Although UFPAA reports that if has undertaken measures to review its certification programs to align with IES, the extent of incorporation of the latest IES requirements is not clear. It also remains to be established whether UFPAA’s syllabus and learning materials are being regularly updated to reflect developments in international standard-setting.

There is no information available as to how the accounting education offered by other PAOs in the jurisdiction align with the 2019 revised IES requirements.

Current Status: Partially Adopted

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. (effective in the 2018 IAASB Handbook) is being applied. Currently the 2018 IAASB Handbook and ISQM1, ISQM2, ISA 220 (revised), ISA 315 (revised 2019), ISRS 4400 (Revised) is being applied.

Current Status: Partially Adopted

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 2021 International Code of Ethics.

Accountancy professionals other than auditors are not regulated at state level but may choose to join a professional organization and be subject to its regulation. The Ukrainian Federation of Professional Accountants and Auditors (UFPAA), an IFAC member, reports that its members must comply with the International Code of Ethics.

Information on whether other PAOs in Ukraine adopted the International Code of Ethics for application by all their members and whether chief accountants of certain enterprises that are subject to regulation, such as educational requirements, are also required to comply with ethical requirements is not available.

Current Status: Partially Adopted

The Ministry of Finance 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 (funds’ budgets, except for financial means of the 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.

Current Status: Partially Adopted

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) oversees audit activity in Ukraine.

APOB is directly responsible for investigating and disciplining of auditors and audit entities carrying out statutory audits of public interest entities (PIEs).

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.

Accountancy professionals other than auditors and chief accountants of selected types of entities are not regulated at the state level but may choose to join a professional accountancy organization and be subject to its regulation.

In 2019, the Ukrainian Federation of Professional Accountants and Auditors (UFPAA), an IFAC member, conducted a self-assessment of its I&D system and indicated less than full compliance with the requirements of SMO 6. It appears that there is no separation between investigation and discipline functions, no linkage with the results of QA reviews, limited range of penalties, no independent appeal body, and the results of proceedings are not made publicly available, among other areas.

Information on whether other PAOs in Ukraine have an I&D system that meets the SMO 6 best practices is not available.

Current Status: Partially Adopted

The Law on Accounting and Financial Reporting in Ukraine of 1999 regulates provision of accounting services and authorizes the Ministry of Finance of Ukraine (MoF) to establish accounting standards for different types of companies depending on their size and public interest considerations.

MoF is responsible for translation of IFRS into Ukrainian. IFRS Council, established under the MoF, is an advisory body that conducts proofreading of the IFRS translation. According to the Audit Chamber of Ukraine and the IFRS Foundation, the 2022 version of IFRS has been translated and is applicable.

IFRS are required for application by public interest entities (securities issuers, companies trading securities which are admitted to stock trading, banks, insurers, private pension funds, other financial institutions (except for micro and small and medium-sized (SMEs) enterprises); public joint stock companies; and companies engaged in mineral extraction; large entities as defined by the Law; as well as by entities conducting business activities, listed by the Government.

Other companies must follow the National Accounting Standards (NASs) adopted by the MoF, or IFRS for SMEs as translated into Ukrainian and made publicly available by the MoF as well as other regulatory acts related to general accounting and financial reporting established by the Accounting Methodological Council (AMC) and IFRS Council, both advisory bodies under the MoF. NASs are based on IASs/IFRS but differ from the international standards. Voluntary application of IFRS by entities, other than those required to apply IFRS by law, is allowed.

Current Status: Partially Adopted

Relevant Organizations

• Audit Public Oversight Body of Ukraine (APOB)
• Audit Chamber of Ukraine (in Ukrainian)
• Ministry of Finance
• National Commission on Securities and Exchange of Ukraine
• Ukrainian Federation of Professional Accountants and Auditors (UFPAA)

Relevant Legislation

• Law on Audit of Financial Statements and Auditing, 2017
• Law on Accounting and Financial Reporting in Ukraine, 1999 (as amended in 2020)
• Law on Joint Stock Companies, 2008
• Law of Ukraine on Financial Services and State Regulation of Financial Service Markets
• NSCMC Regulation On Approval of Procedures on Education and Final Assessment on the Securities Market Specialists in Ukraine No. 215, 1996
• NSCMC Regulation on Defining the Professional Requirements for the Chief Accountants of the Professional Participants of the Securities Market No. 793,” 2013

Relevant Publications

• IFAC, CIPFA, International Public Sector Financial Accountability Index: Country Data, 2020.
• IFIAR, Member Profile: APOB, 2021.
• IFRS Foundation, “IFRS Application Around the World?Jurisdictional Profile: Ukraine,” June 2017.
• 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.
• UFPAA, SMO Action Plan, 2020.
• World Bank, Report on the Observance of Standards and Codes (ROSC): Accounting and Auditing—Ukraine, 2008.
• World Bank/CFRR, National Education Initiatives – Ukraine (2019)
• World Bank/CFRR, Stocktaking of Public Sector Accounting and Reporting Environment in PULSAR Beneficiary Countries: Ukraine, 2020.