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Legislation regarding auditing updated in Ukraine

Legislative bodies in Ukraine have been working together with European officials in the past years to reform the country's laws on auditing companies. The new law on auditing was adopted on 1st of October 2018.

Currently Ukraine has about 3000 state-owned enterprises, 150 of the largest of them being the most influential for business. The operations of these companies are not transparent, and private companies have found it difficult to compete against them. The new law may bring about changes that make the playing field more even for competition. This can be achieved through proper auditing of state companies, reducing the amount of corruption going on within them.

The new law takes away audit control from individuals that may have conflicts of interest in executing audits properly. If enforced properly it should force government enterprises to have supervisory bodies. Companies will be required to start submitting management reports along with their financial statements, where managers disclose for example development prospects and the main risks of the company's activities. Auditors will also be held to a higher standard in the future, requiring them to make evidence-based declarations similary as in EU countries.

The next couple of years will show if the new law is properly enforced and if it will bring about positive changes. The potential effects include reduced corruption in state enterprises which would lead to more even competition with private companies, and this would eventually provide an incentive for faster privatizing of the state companies. So far the pace of privatization has been lackluster, and speeding it up is also something that Ukraine's European partners are keenly looking forward to.


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