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LAW OF UKRAINE

of September 20, 2022 No. 2597-IX

About introduction of amendments to some laws of Ukraine concerning enhancement of the legal basis of implementation of auditor activities in Ukraine

The Verkhovna Rada of Ukraine decides:

I. Make changes to the following laws of Ukraine:

1. 2 parts one of article 3 of the Law of Ukraine "About prevention of corruption" (Sheets of the Verkhovna Rada of Ukraine, 2014, No. 49, of Art. 2056 with subsequent changes) to add the subitem "an" of Item with the words "members of council of supervision of auditor activities Organa of public supervision of auditor activities, are not persons specified in Item of 1 part one of this Article, officials and inspectors of Inspectorate for quality assurance Organa of public supervision of auditor activities, members of council of Auditor chamber of Ukraine, officials of Auditor chamber of Ukraine and the staff of committee on quality control of auditor services of Auditor chamber of Ukraine and committees on quality control of auditor services of the professional organizations of auditors and accountants".

2. Part one of article 3 of the Law of Ukraine "About enforcement proceeding" (Sheets of the Verkhovna Rada of Ukraine, 2016, No. 30, Art. 542; 2017, 48, the Art. 436) to add No. with Item 10 of the following content:

"10) decisions Organa of public supervision of auditor activities or Auditor chamber of Ukraine which the law are acknowledged as executive documents".

3. In the Law of Ukraine "About financial records audit and auditor activities" (Sheets of the Verkhovna Rada of Ukraine, 2018, No. 9, Art. 50 with the following changes):

1) in Article 1:

in part one:

in Item 2 of the word "it is included in the Register" shall be replaced with words "registered in the Register";

in item 4 of the word "auditor network (network)" shall be replaced with words "the auditor network", and after the words "and/or auditors" to add with the words "other legal entities";

state Items 5-7 and 9 in the following edition:

"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, the combined financial reporting);

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";

"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";

add with Items 9-1 - 9-3 following of content:

"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";

state Item 14 in the following edition:

"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";

add with Item 14 1 of the following content:

"The 14th 1) not auditor services - other services, except the auditor services rendered by the subject of auditor activities according to the legislation";

in Item 15 the word "carries out" shall be replaced with words "carried out and does not make";

state Item 16 in the following edition:

"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";

add with Item 16 1 of the following content:

"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";

state Item 17 in the following edition:

"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";

add with Items 17-1,17-2 and 18-1 of the following content:

"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";

"18-1) 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";

state Item 19 in the following edition:

"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";

in Item 21 of the word "it is included in the Register" shall be replaced with words "registered in the Register";

add with Item 22 following of content:

"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";

the second to state part in the following edition:

"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 field of auditor activities";

Article 2 to add 2) with part three of the following content:

"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";

Article 3 part one after words "regulatory legal acts" to add 3) with the words "concerning auditor activities";

4) in Article 4:

state part one in the following edition:

"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";

third to exclude part;

in part four of the word "to which it was applied within the last year penalties by way of exception from the Register for representation in the Register of unreliable information" shall be replaced with words "registration of which in the Register within the last year was cancelled based on the decision made according to the procedure, determined by this Law";

add with parts seven and the eighth the following content:

"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";

5) in Article 5:

add part one with the paragraph the second the following content:

"the legal entity who is not meeting the requirements of this Article has no right to use in the name the term "auditing firm";

the second to add part with the offer of the following content: "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";

third to add part with the paragraph the second the following content:

"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";

the fourth to state part in the following edition:

"4. The head of auditing firm can be the employee of other auditing firm, except auditing firms, the founder (participant) of which he is";

in word part five of "its inclusion in the Register" shall be replaced with words "registration in the Register";

the sixth to state part in the following edition:

"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";

add with part seven of the following content:

"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";

6) in Article 6:

add part one with paragraphs second and third the following content:

"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";

third to exclude part;

in part four:

the first – the tenth to replace paragraphs with thirteen paragraphs of the following content:

"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) provision 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;

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