Following the proposal of the Ministry of Finance, the Government adopted the draft law «On the audit of financial reporting and audit profession».
Due to defects in the regulation of the market for audit services in Ukraine, the quality of the financial reports of companies and banks has significant drawbacks, which increases their bankruptcy risks and affects the confidence of potential investors and (regarding financial institutions) citizens.
The draft law elaborated by the Ministry of Finance is aimed to improve the quality of audit services in Ukraine by adjusting the regulation of audit profession to international standards. It shall help:
- gain more trust from investors to the financial reports of Ukrainian companies including state-owned enterprises;
- gain more trust from citizens to Ukrainian banks and insurance companies;
- pave the way to the European market for Ukrainian auditors.
The draft law is also favorable to audit companies, since it enables them to reduce their training and state certification costs.
The adoption of the draft law is in line with the Association Agreement between Ukraine and the EU. The adjustment of the Ukrainian audit regulations to the European standards is also one of crucial points of the Strategy “Ukraine 2020”.
- the draft law was elaborated with the participation of the World Bank, the National Commission for Stocks and Securities, the National Bank of Ukraine, National Commission for the Regulation of Financial Services and the Parliament’s Сommittee for Taxation and Сustoms Issues;
- the draft law shall ensure the adjustment of the Ukrainian legislation to the EU guidelines (Directive of the European Parliament and the EU Council No. 2006/43/EU of May 17, 2006, on the mandatory audit of annual financial reports and consolidated reports);
- the draft law was positively met by the European Commission, the International Forum of Independent Audit Regulators (IFIAR), the Financial Reporting Council of the United Kingdom and the Auditor Oversight Commission of Germany.