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 registered 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 - structure for ensuring cooperation which includes auditing firms and/or auditors other legal entities 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 performing auditor activities on the bases and according to the procedure provided by this Law and international standards of audit and also can render not auditor services;
6) the audit report - the document prepared by the subject of auditor activities according to international standards of audit and requirements of this Law by results of financial records audit (consolidated financial statements, combined financial statements);
7) auditor services - audit, the overview of the financial reporting, consolidated financial statements, task performance from other provision of confidence and other professional services provided by subjects of auditor activities according to international standards of audit and audit standards of Great Britain or the United States of America and taking into account requirements of this Law;
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) good reputation of the auditor - reputation in case of which within two years in a row collection three and more times was not applied to the auditor or administrative punishments for violation of requirements of this Law twice during 12 calendar months were not imposed;
9-1) good reputation of auditing firm - reputation in case of which to auditing firm penalties in the form of the prevention or stop of the right to provision of services on statutory audit of the financial reporting three also more time during 24 calendar months was not applied;
9-2) electronic office are information and communication system of Body of public supervision of the auditor activities providing electronic form of interaction between Body of public supervision of auditor activities and auditors, subjects of auditor activities, other physical persons and legal entities concerning realization by them of the rights and obligations determined by this Law;
9-3) other obligatory task - tasks according to the overview of interim financial statements (intermediate consolidated financial statements) or tasks on rendering other auditor services which provision is required according to the legislation are accepted and carried out by the subject of auditor activities according to requirements of the law, other regulatory legal acts and international standards of audit by results of which accomplishment by the legislation promulgation and/or representation to the National Bank of Ukraine, National commission on securities and the stock market, public authorities or local government bodies of the report of the subject of auditor activities is required;
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 the professional standards establishing rules of provision of auditor services also open questions of ethics and quality control (quality management) which are determined by international standards of quality control (quality management), audit, the overview, other provision of confidence and the accompanying services, accepted by 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 who are published by the International federation of accountants;
14-1) not auditor services - other services, except the auditor services rendered by the subject of auditor activities according to the legislation
15) nonpracticing person - physical person, which within three years before date of appointment: did not carry out and does not make 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 (their groups), educations without the status of the legal entity which according to the legislation shall promulgate or provide such financial reporting (consolidated financial statements), to users of the financial reporting together with the audit report, and also the combined (subconsolidated) financial reporting of banking groups and non-bank financial groups, other educations which according to the legislation shall provide such reporting together with the report of the subject of auditor activities that it is carried out by subjects of auditor activities on the bases and according to the procedure, provided by this Law;
16-1) full membership of the auditor in the professional organization of auditors and accountants - membership (participation) of the auditor (in the presence) in one of the professional organizations of auditors and accountants, information on which is provided by the auditor in the Register of auditors and subjects of auditor activities for promulgation;
17) the connected face of the subject of auditor activities - the physical person, the legal entity and/or educations without the status of the legal entity connected with the subject of auditor activities by the relations of property and/or control and/or management that can influence conditions or economic results of their activities or activities of persons whom they represent, taking into account the criteria determined by the Tax code of Ukraine for the connected persons;
17-1) professional organization of auditors and accountants - the public organization formed according to the Law of Ukraine "About public associations" for realization and protection of the rights and freedoms, satisfaction public, in particular economic, social, professional and other interests of auditors and accountants have the All-Ukrainian status and among which total number of members at least 50 percent are constituted by auditors and/or accountants;
17-2) professional scepticism - the auditor's relation to the acquired information when implementing auditor activities which includes critical approach and attention to circumstances which can specify possible misstatements owing to fraud or mistake, and critical evaluation of auditor proofs;
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;
18-1) professional obligations are the obligations of the auditor and/or the subject of auditor activities determined by this Law, regulatory legal acts concerning auditor activities adopted according to this Law, and international standards of audit;
19) the Register of auditors and subjects of auditor activities (further - the register) - the information and communication system providing collection, accumulating, protection, accounting, reflection, processing of register data and provision of register information on auditors and subjects of auditor activities who have the right to implementation of auditor activities in Ukraine and also contains other information according to requirements of this Law;
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; registered in the Register as the subject of auditor activities;
22) joint carrying out audit of the financial reporting carrying out of financial records audit (consolidated financial statements) by two or more subjects of auditor activities appointed according to this Law, according to the signed contract with determination of task allocation between such subjects of auditor activities and provision of the joint audit report.
2. The terms "financial accounting", "financial reporting", "consolidated financial statements", "users of the financial reporting", "report on management", "group", "group", "average group", "national provision (standard) of financial accounting", "international accounting standards", "the companies which are of public interest", "the big companies", "medium scale enterprises", "small enterprises" in this Law are applied in the values given in the Law of Ukraine "About financial accounting and the financial reporting in Ukraine".
Other terms applied in this Law and not determined by it are used in the value established by other laws of Ukraine.
If concepts, terms, rules and provisions of other acts contradict concepts, terms, rules and provisions of this Law, concepts, terms, rules and provisions of this Law are applied to regulation of the relations in the sphere of auditor activities.
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.
3. The requirements of this Law concerning features of the organization, carrying out audit and provision of other auditor and not auditor services established to the companies which are of public interest extend also to political parties which receive financing from the government budget, the state companies (except those that correspond to criteria of small enterprise and microcompany), the National Bank of Ukraine, banking groups, non-bank financial groups.
1. Auditor activities are regulated by this Law, other regulatory legal acts concerning auditor activities 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, acquisition of practical experience according to the procedure, determined by this Law, and registration in the Register. The auditor has the right to perform auditor activities solely only after registration it in 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. It is excluded according to the Law of Ukraine of 20.09.2022 No. 2597-IX
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 which registration in the Register within the last year was cancelled based on the decision made according to the procedure was imposed, determined by this Law 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.
7. The auditor shall have good reputation.
8. The auditor loses the right to implementation of auditor activities after cancellation of its registration in the Register on the bases provided by this Law. Such person acquires the right to implementation of auditor activities only after confirmation of qualification suitability according to the procedure, determined by this Law, and registration in the Register".
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.
the legal entity who is not meeting the requirements of this Article has no right to use in the name the term "auditing firm".
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. To the size of share of founders (participants) of auditing firm who are auditors and/or auditing firms the share of auditing firm in own authorized capital is not set off.
3. The official who according to constituent documents performs management of auditing firm, can be only the auditor. The head of auditing firm cannot be the auditor to whom within two last years penalties two and more times were in a row applied or administrative punishments for violation of requirements of this Law were imposed.
4. The head of auditing firm can be the employee of other auditing firm, except auditing firms, the founder (participant) of which he is.
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 registration in the Register.
6. The auditing firm shall have good reputation. Registration of the auditing firm which lost good reputation in the Register is cancelled based on the relevant decision made according to the procedure, determined by this Law.
7. In case of cancellation of registration of auditing firm in the Register based on the decision concerning removal of register information from the Register and cancellation of registration in connection with loss of kind reputation by it or about application to auditing firm collection in the form of removal of register information from the Register and cancellation of registration repeated registration of such auditing firm in the Register is possible not earlier than in year after adoption of such decision.
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.
Subjects of auditor activities can render services in statutory audit of the financial reporting of the companies (their groups) or other educations without the status of the legal entity and service in statutory audit of the financial reporting of the companies which are of public interest only after introduction of information about such subject of auditor activities in appropriate sections of the Register.
For provision by the subject of auditor activities of auditor services to subjects of managing, by education without the status of the legal entity 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 including to the companies which are of public interest or subjects of managing, education without the status of the legal entity which according to requirements of the legislation shall promulgate and/or give to the National Bank of Ukraine, National commission on securities and stock market, other public authorities or local government bodies the report of the subject of auditor activities for results of accomplishment of such task, information on such subject of auditor activities it shall be made to appropriate section of the register.
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. It is excluded according to the Law of Ukraine of 20.09.2022 No. 2597-IX
4. This Law sets restrictions for simultaneous provision by subjects of auditor activities to the companies which are of public interest, services in statutory audit of the financial reporting and provision by such subjects of auditor activities and/or the related persons of such not auditor services":
1) creation of tax statements, calculation of taxes, other mandatory fees and payments, representations of legal entities on disputes over the specified questions;
1-1) provisions of consulting services in the tax matters, and also in case the help of the subject of auditor activities is not required by the legislation, services in determination of the state grants and tax benefits;
2) the services providing participation in process of acceptance of management decisions or accomplishment of any functions on enterprise management, being of public interest to which services in statutory audit are provided;
3) financial accounting and financial reporting preparation;
4) development and deployment of procedures of internal control or the procedures for risk management connected with forming of financial information and also development and deployment of the information systems connected with financial information;
5) provision of 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 the personnel making management decisions and which are responsible for financial reporting preparation;
7) the services in assessment including executed in connection with provision of actuarial services or services of maintenance of legal procedure;
8) the services connected with attraction of financing, profit distribution, development of investment strategy except services in provision of confidence in the relation of financial information, including holding the procedures necessary for preparation, discussion and release of comfort letters in connection with issue of securities of legal entities;
9) the services connected with internal audit function of the company which is of public interest to which services in statutory audit of the financial reporting are provided;
10) the services connected with promotion of shares of the legal entity to which services in statutory audit, trade or stock subscription of such legal entity are provided.
The subject of auditor activities and/or the related persons, and/or the member of auditor network whom such subject of auditor activities concerns has the right to provide the services provided by Items 1 1 and 7 of part 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. It is excluded according to the Law of Ukraine of 20.09.2022 No. 2597-IX
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. By the agreement on rendering auditor services the possibility of application by the subject of auditor activities by provision of auditor services (except services in statutory audit or services in accomplishment of other obligatory tasks) audit standards of Great Britain or the United States of America can be provided.
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.
Reports by results of task performance on statutory audit of the financial reporting and other obligatory tasks are constituted according to requirements of the law, regulatory legal acts concerning auditor activities, international standards of audit and drawn up in writing (paper or electronic).
The audit report in paper form can be prepared according to the financial reporting constituted in paper form. The audit report electronically, on condition of observance of requirements of the legislation on electronic documents and electronic document management, is constituted according to the financial reporting constituted electronically.
6. The subject of auditor activities which performs other obligatory task shall provide creation by the auditor who carries out such task, working documents of the auditor for each other obligatory task taking into account the requirements to working documents established by part four of article 24 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.
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