of December 21, 2017 No. 2258-VIII
About financial records audit and auditor activities
This Law determines the legal basis of financial records audit, implementation of auditor activities in Ukraine and governs the relations arising in case of its implementation.
1. In this Law the terms below are used in such value:
1) financial records audit - auditor service in verification of accounting data and indicators of the financial reporting and/or consolidated financial statements of the legal entity or representation of the foreign subject of managing, or other subject which submits the financial reporting and consolidated financial statements of group, for the purpose of expression of independent opinion of the auditor on its compliance in all essential aspects to requirements of national provisions (standards) of financial accounting, International Financial Reporting Standards or other requirements;
2) the auditor - the physical person which confirmed qualification suitability to implementation of auditor activities has the corresponding practical experience and is included in the Register of auditors and subjects of auditor activities;
3) auditor activities - independent professional activity of the auditors and subjects of auditor activities registered in the Register of auditors and subjects of auditor activities for rendering auditor services;
4) auditor network (network) - structure for ensuring cooperation which includes auditing firms and/or auditors which activities are directed to profit earning or cost allocation or which has common property, is under general control or management, has general policy and control procedures of quality, general business strategy which provides services under identical sign for goods and services or has general professional resources;
5) auditing firm - the legal entity who performs exclusively auditor activities and/or provides not auditor services on the bases and according to the procedure which are provided by this Law and international standards of audit;
6) the audit report - the document prepared by the subject of auditor activities for results of financial records audit (consolidated financial statements) according to international standards of audit and requirements of this Law;
7) auditor services - audit, the overview of the financial reporting, consolidated financial statements, task performance for the purpose of provision of confidence and other professional services rendered according to international standards of audit;
8) internal control of quality of task performance - job evaluation of the auditor or key partner in audit documented in working documents of the auditor regarding confirmation of justification of the conclusions containing in the draft of the audit report or other reports;
9) group - the group of legal entities consisting of mother company and its affiliated enterprises;
10) tasks on statutory audit of the financial reporting - task on provision of reasonable confidence which is accepted and carried out by the subject of auditor activities according to requirements of this Law and international standards of audit by verification of the financial reporting or consolidated financial statements for the purpose of expression of independent opinion of the auditor on its compliance in all essential aspects and compliance to requirements of international accounting standards or national provisions (standards) of financial accounting and the laws of Ukraine;
11) the customer - legal entity or physical person which according to the legislation shall or has the right to order auditor services;
12) the key partner in audit - the auditor, which:
it is appointed auditing firm responsible for carrying out financial records audit on behalf of auditing firm, in case of audit of group - the auditor appointed by auditing firm responsible for carrying out audit of consolidated financial statements of group and the auditor appointed responsible for carrying out financial records audit of affiliated enterprises;
signs the audit report;
13) conflict of interest - contradiction between private valuable, non-property interests of the auditor (officials of auditing firm) and its professional privileges and obligations which availability can affect objectivity or impartiality in case of execution by it (them) the professional obligations, and also making or non-execution by it (them) actions;
14) international standards of audit - set of professional standards which establish rules of rendering auditor services and open the questions of ethics and quality control determined by international standards of quality control, audit, the overview, other provision of confidence and the accompanying services, accepted by the Council for international standards of audit and provision of confidence, and also the international code of ethics accepted by Council for international standards of ethics for accountants and promulgated by the International federation of accountants;
15) nonpracticing person - physical person, which within three years before date of appointment: does not conduct professional activity on provision of services on statutory audit of the financial reporting; was not official of governing bodies or the employee of auditing firm; was not involved on a contract basis in rendering auditor services; it is not connected with any subject of auditor activities by the relations of property or control;
16) statutory audit of the financial reporting - financial records audit (consolidated financial statements) of subjects of managing which according to the legislation shall promulgate or provide the financial reporting (consolidated financial statements) to users of the financial reporting together with the audit report which is carried out by subjects of auditor activities for the bases and according to the procedure, provided by this Law;
17) the connected face of the subject of auditor activities - any subject of managing irrespective of form of business connected with the subject of auditor activities by joint property, control and management;
18) professional secrecy of the auditor - information (materials, documents, other) which became known to the auditor in the course of rendering auditor services and corresponds to the following signs:
it is unknown or is not public for a wide range of persons;
which disclosure can cause damage to interests of person who addressed the auditor, the subject of auditor activities;
19) the Register of auditors and subjects of auditor activities (further - the Register) - the automated system of collection, accumulating, protection, accounting and provision of information concerning auditors and subjects of auditor activities having the right to implementation of auditor activities in Ukraine;
20) working documents of the auditor - the documents in electronic or paper form and record in electronic or paper form made by the auditor during the planning, preparation and provision of auditor services which contain all information which the auditor considers important for the correct accomplishment of check and also reveal the used procedures, tests, the acquired information and conclusions to which the auditor as a result of carrying out audit came;
21) the subject of auditor activities - auditing firm or the auditor answering to the following criteria: performs auditor activities as physical person - the entrepreneur or performs independent professional activity; acquired the right to implementation of auditor activities for the bases and according to the procedure, provided by this Law; it is included in the Register as subject of auditor activities.
2. Terms "the companies which are of public interest" "large enterprises", "medium scale enterprises", "small enterprises" in this Law are used in the values given in the Law of Ukraine "About financial accounting and the financial reporting in Ukraine".
The term "faultless reputation" in this Law is used in the value given in the Law of Ukraine "About prevention and counteraction of legalization (washing) of income gained in the criminal way, to financing of terrorism and financing of distribution of weapons of mass destruction".
1. This Law extends to auditors, subjects of managing irrespective of pattern of ownership and type of activity, public authorities and local government bodies.
2. This Law does not extend to activities of the public authorities, their divisions and officials authorized by the laws of Ukraine on implementation of the state financial control, and also on activities for internal audit of legal entities, public authorities and local government bodies.
1. Auditor activities are regulated by this Law, other regulatory legal acts and international standards of audit. If the international treaty which consent to be bound is provided by the Verkhovna Rada of Ukraine establishes other rules, than those that contain in this Law, rules of the international treaty are applied.
2. The Cabinet of Ministers of Ukraine can establish features of implementation of auditor activities concerning certain tasks according to the interstate agreements signed according to the legislation on behalf of the Government of Ukraine with the governments of other states.
3. Features of carrying out financial records audit of the National Bank of Ukraine and banks are established by this Law and other acts of the legislation.
1. The auditor acquires the right to implementation of auditor activities after confirmation of qualification suitability and acquisition of practical experience according to the procedure, determined by this Law. The auditor who acquired the right to implementation of auditor activities joins in the Register. The auditor has the right to carry out auditor activities solely only after inclusion it to the Register as the subject of auditor activities.
2. The auditor carries out auditor activities as a part of auditing firm and/or as physical person entrepreneur or performs independent professional activity provided that such person is not the employee of auditing firm.
3. Auditors are forbidden to be engaged directly in others, not compatible to auditor activities, types of business activity which does not exclude their right to gain dividends, income from other corporate laws, lease revenues and alienations of personal and real estate, passive incomes.
Auditors can be engaged in public, educational, teaching and scientific work, preparation of publications with receipt of the corresponding remuneration.
4. Person having the outstanding or not removed in accordance with the established procedure criminal record or on which within the last year administrative punishment for making of the offense connected with corruption and also person to whom collection by way of exception from the Register for representation in the Register of unreliable information was applied within the last year was imposed cannot be auditor.
5. The auditor is forbidden to use the powers for the purpose of receipt of illegal benefit or adoption of the promise or the offer concerning such benefit for himself or other persons.
6. The auditor of foreign state can acquire the right to implementation of auditor activities in the territory of Ukraine according to the procedure, determined by this Law, and on condition of its compliance to the requirements established by this Law.
1. The auditing firm acquires the right to implementation of auditor activities on condition of compliance to requirements of this Article and according to the procedure, determined by this Law.
2. The general size of share of founders (participants) of auditing firm who are not auditors and/or auditing firms in the authorized capital cannot exceed 30 percent.
3. The official who according to constituent documents performs management of auditing firm, can be only the auditor.
4. The head of auditing firm cannot be the head of other legal entity performing business activity by the types not compatible to auditor activities.
5. The auditing firm of foreign state can perform auditor activities in the territory of Ukraine, on condition of its admission to implementation of auditor activities according to the national legal system of country of source of such auditing firm if the key partner of firm who will book audit of legal entities of representation of the foreign subject of the managing or other subject registered in Ukraine conforms to requirements of this Law to the auditor, compliance of auditing firm to the requirements determined by this Law and also after its inclusion in the Register.
6. The auditing firm shall have good reputation. The auditing firm cannot be considered having good reputation if within two years in a row more than three times collection in the form of the prevention or stop of the right to provision of services on statutory audit of the financial reporting or statutory audit of the financial reporting of the companies which are of public interest were applied to auditing firm.
The auditing firm which lost good reputation is excluded from the Register according to the decision of body of public supervision of auditor activities.
1. Auditor services can be provided only by subject of auditor activities to which such right is granted according to the procedure and on the conditions determined by this Law.
2. Subjects of auditor activities can render not auditor services provided that provision of such services does not lead to emergence of threats about independence of the auditor.
3. Auditor activities have restrictions on compatibility with entrepreneurial and other types of activity.
1) creation of tax statements, calculation of mandatory fees and payments, representations of legal entities in disputes over the specified questions;
2) management consulting, developments and maintenances of management decisions;
3) financial accounting and financial reporting preparation;
4) development and deployment of procedures of internal control, risk management, and also information technologies in the financial sphere;
5) rendering legal assistance in shape: services of the legal adviser in ensuring conducting economic activity; negotiating on behalf of legal entities; representations of interests in court;
6) staffing of legal entities in the sphere of financial accounting, the taxation and finance, including services in provision of personnel which make management decisions and are responsible for financial reporting preparation;
7) services in assessment;
8) the services connected with attraction of financing, profit distribution, development of investment strategy except services in provision of confidence in financial information, including holding the procedures necessary for preparation, discussion and release of comfort letters in connection with issue of securities of legal entities.
The subject of auditor activities and/or the member of auditor network (network) has the right to provide services, stipulated in Item 7 parts four of this Article if:
a) such services do not influence directly or have insignificant influence separately or in general on the financial reporting which is subject to audit;
b) the impact assessment on the financial reporting which is subject to audit is properly documented and explained in the additional report which goes to auditing committee of the customer;
c) the subject of auditor activities adheres to the principles of independence established by this Law.
5. Auditors can perform teaching, creative and scientific activities, preparation of publications with receipt of the corresponding fees.
1. Auditor services are provided based on the agreement on provision of auditor services signed between the subject of auditor activities and the customer.
Not auditor services can be provided based on the agreement, the written or oral address of the customer to the subject of auditor activities.
2. The subject, amount of auditor services, the size and payment terms, responsibility of the parties and other conditions according to requirements of the legislation and international standards of audit are provided in the agreement on rendering auditor services.
The rights and obligations of the subject of auditor activities and the customer by provision of auditor services are determined in the agreement according to requirements of this Law and other regulatory legal acts.
3. The customer has the right of the free choice of the subject of auditor activities with observance of requirements of this Law and other regulatory legal acts.
4. Officials of the legal entity whose financial reporting is checked shall create for the subject of auditor activities proper conditions for high-quality rendering auditor services according to requirements of this Law and other regulatory legal acts.
Officials of the legal entity whose financial reporting is checked bear responsibility for completeness and reliability of documents and other information, the auditor services provided to the auditor for rendering.
5. Reports on results of rendering auditor services are drawn up according to international standards of audit and requirements of this Law.
1. Auditors and subjects of auditor activities shall provide when rendering auditor services ethical professional behavior with observance of priority of public concerns, general moral standards, principles of independence and objectivity, professional competence, confidentiality and professional secrecy.
1. Auditors and subjects of auditor activities when rendering auditor services shall observe the principle of professional scepticism which provides assumption of possibility of essential misstatement of information which is opened in the financial reporting, owing to the facts elicited when carrying out audit or the behavior specifying violations, including fraud or mistake despite the previous experience of the auditor and subject of auditor activities concerning honesty and decency of officials of the legal entity whose financial reporting is checked.
2. The auditor and the subject of auditor activities shall critically and with doubt to approach the estimates of fair value, reduction (recovery) of usefulness of assets, providing (reserves) and future cash flow influencing assessment of capability of the legal entity applied by the legal entity to continue the activities on continuous basis.
1. The auditor and the subject of auditor activities have the right to render services in audit, considering the financial reporting and to carry out other tasks on confidence provision if only such auditor, the subject of auditor activities, its owners (founders, participants), officials and workers are independent of the legal entity whose financial reporting is subject to check, did not take part in preparation and acceptance of management decisions of such legal entity. The requirement for ensuring independence extends to the accounting period of the financial reporting which is subject to check, and the period of provision of services on audit of such financial reporting.
2. The auditor and the subject of auditor activities shall take proper measures for ensuring independence by provision of auditor services in the cases provided by international standards of audit, in particular, of non-admission of the existing or potential conflict of interest, and also influence of contractual or other relations in which the auditor, the subject of auditor activities, auditor network, owners (founders, participants), officials and workers of the subject of auditor activities, other persons involved in rendering auditor services and the connected faces of the subject of auditor activities participate.
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