Draft Law of Ministry of Finance on regulation of audit services in Ukraine praised by International Forum of Independent Audit Regulators (IFIAR)

In accordance with the Association Agreement with the EU, the Government of Ukraine committed itself to reform the audit services. In line with that commitment, the Ministry of Finance elaborated the draft law “On the audit of financial reporting and on audit activity” meant to reform of the market for audit services.

The draft law was elaborated under the participation of an EU-expert and with the support of the World Bank, the European Commission and Ukrainian regulatory authorities.

Now, the draft law of the Ministry of Finance has been examined by the IFIAR in regard to its compliance with the principles of this organization which refer to the establishment of a Public Supervisory Body for audit services which can become an IFIAR member.

In general, the draft law was positively assessed by the IFIAR with slight amendments to be made referring to the possible membership in this organization. According to the letter received from the IFIAR, the draft law proposed by the Ministry of Finance of Ukraine complies with EU Directive EU 2014/56/ and Regulation (EU) 537/2014.

The draft law “On the audit of financial reporting and on audit activity” requires to establish a completely new Public Supervisory Body for audit services. This body shall comprise a Supervisory council for audit activity and an Inspection for quality assurance. The Public Supervisory Body shall control the quality of audit services and impose sanctions on audit entities serving enterprises which are of public importance.

The reform of audit services in Ukraine is necessary to adjust them to the European regulations. Also, the improvement of audit service quality in line with the European standards is meant to contribute to the financial stability of the Ukrainian economy, improvement of the investment climate as well as to the access of Ukrainian companies to the global capital market. It should also help Ukrainian auditors enter the European market.

The International Forum of Independent Audit Regulators (IFIAR) was founded in September 2006 by independent market regulators with the aim to foster independent control over the market for audit services. The main activities of the IFIAR refer to practical experience exchange in private audit services with the special focus on the examination of auditors and audit companies, support of cooperation and common decision-making in the regulatory activity as well as creation of a platform for communication with other international organizations interested in delivering high-quality audit services.