ORDER OF THE MINISTRY OF FINANCE OF UKRAINE

of March 31, 1999 No. 87

About approval of Provisions (standards) of financial accounting

In pursuance of the Program of reforming of the system of financial accounting using international standards approved by the resolution of the Cabinet of Ministers of Ukraine of October 28, 1998 No. 1706, I ORDER:

1. Approve such Provisions (standards) of financial accounting approved by Methodological council on financial accounting under the Ministry of Finance of Ukraine (are applied):

1 "General requirements to the financial reporting".

2 "Balance".

3 "Report on financial results".

4 "Cash flow statement".

5 "Report on equity".

2. Determine that the specified Provisions (standards) 1-5 are applied to creation of accounting reports under transactions which happen since 2000. Items 39-45 of the Provision (standard) 3 "The report on financial results" are applied to filling of appropriate section of indicators for the period in which the Provision (standard) 24th "Profit per share" becomes effective.

3. Provide that other regulations of the Ministry of Finance of Ukraine on financial accounting are effective in part which does not contradict the above-stated provisions (standards) of financial accounting.

 

Approved by the Order of the Ministry of Finance of Ukraine of March 31, 1999 No. 87

Provision (standard) of financial accounting 1 "General requirements to the financial reporting"

General provisions

1. This Provision (standard) determines the purpose, structure and the principles of preparation of the financial reporting and requirement to recognition and disclosure of its elements.

2. Regulations of this Provision (standard) should be applied to the financial reporting of the companies, organizations and other legal entities (further - the companies) all patterns of ownership (except budgetary institutions and the companies which according to the legislation constitute the financial reporting under International Financial Reporting Standards) and consolidated financial statements.

3. Terms which are used in provisions (standards) of financial accounting have such value:

Assets - the resources controlled by the company as a result of last events which use, as expected, will lead to receipt of economic benefits in the future.

Balance - the report on financial condition of the company which displays its assets, obligations and equity for certain date.

Accounting records - the reporting which is constituted based on accounting data for requirements satisfaction of certain users.

Expenses - reduction of economic benefits in the form of asset retirement or increase in obligations which lead to reduction of equity (except for capital reductions due to its withdrawal or distribution by owners).

Equity - part in assets of the company that remains after deduction of its obligations.

Income - increase in economic benefits in the form of receipt of assets or reduction of obligations which lead to growth of equity (except for growth of the capital at the expense of fees of owners).

The report on equity - the report which displays changes in structure of equity of the company during the accounting period.

The report on financial results - the income statement, expenses and financial results of activities of the company.

The cash flow statement - the report which displays receipt and funds expenditure as a result of activities of the company in the accounting period.

Obligations - the debt of the company which arose owing to last events and which repayment in the future, as expected, will lead to reduction of resources of the company which personify economic benefits.

Consolidated financial statements - the reporting which displays financial condition results of activities and cash flow of the legal entity and its affiliated enterprises as single economic unit.

Users of the reporting - physical persons and legal entities which need information on activities of the company for decision making.

Accounting policy - set of the principles, methods and procedures which are used by the company for creation and provision of the financial reporting.

Notes to financial statements - set of indicators and explanations which provides disaggregation and justification of articles of financial statements, and also other information which disclosure is provided by relevant provisions (standards).

The principle of financial accounting - the rule by which it conforms to be guided in case of measurement, assessment and registration of economic activities and in case of display of their results in the financial reporting.

Disclosure - provision of information which is essential to users of the financial reporting.

Article - element of the financial statement which answers the criteria established by this Provision (standard).

Essential information - information which lack can influence the decision of users of the financial reporting. Materiality of information is determined by relevant provisions (standards) of financial accounting and management of the company.

The financial reporting - accounting records which contain information on financial condition, results of activities and cash flow of the company for the accounting period.

Purpose of the financial reporting

4. The purpose of creation of the financial reporting is provision to users for decision making of complete, true and impartial information about financial condition, results of activities and movement of enterprise assets.

5. The procedure for provision of the financial reporting to users is determined by the current legislation.

6. The financial reporting provides information needs of users relatively:

acquisitions, sales and ownerships of securities;

equity participations of the company;

quality evaluations of management;

estimates of capability of the company timely to fulfill the obligations;

security of obligations of the company;

determinations of the amount of dividends which are subject to distribution;

regulations of activities of the company;

other decisions.

7. The financial reporting shall satisfy needs of those users who cannot require the reports constituted taking into account their specific information needs.

Structure and financial statement elements

8. The financial reporting consists from: balance, report on financial results, cash flow statement, report on equity and report notes.

9. Financial statements contain Articles, structure and which content are determined by relevant provisions (standards).

10. Article is provided in the financial reporting if answers such criteria:

there is probability of receipt or disposal of the future economic benefits connected with this Article;

assessment of Article can be authentically determined.

11. The financial reporting joins indicators of activities of branches, representations, departments and other separate divisions of the company.

In lines of forms of the financial reporting which not having indicators, the crossed out section is put.

Accounting period

12. The accounting period for creation of the financial reporting is calendar year. The balance of the company is made for the end of the last day of the accounting period.

Intermediate (monthly, quarter) the reporting which covers certain period is constituted by the accruing result since the beginning of accounting year.

13. The first accounting period of the neogenic company can be less than 12 months, but there cannot be more than 15 months. The period since the beginning of year until liquidation is the accounting period of the company which is liquidated.

Quality characteristics of the financial reporting

14. Information which is provided in financial statements shall be intelligible and expected unambiguous interpretation by its users provided that they have sufficient knowledge and are interested in perception of this information.

15. The financial reporting shall contain only pertinent information which influences decision making by users, gives the chance to timely estimate last, present and future events, to confirm and correct their estimates made in the past.

16. The financial reporting shall be reliable. Information provided in the financial reporting is reliable if it does not contain mistakes and twistings, capable to influence decisions of users of the reporting.

17. The financial reporting shall give opportunity to users to compare:

financial statements of the company for the different periods;

financial statements of the different companies.

Premises of comparison is reduction of the relevant information of previous period and disclosure of information on accounting policy and its changes. Establishment and changes of accounting policy of the company are performed according to the decision of the owner (owners) or authorized body (official). Accounting policy of the companies of the state, utility sectors of economy is determined in the administrative document which is accepted by the company according to Regulations on procedure for financial accounting of separate assets and transactions of the companies of the state, utility sectors of economy and the economic organizations which own and/or N1213 use objects of the state-owned, utility property, the approved order of the Ministry of Finance of Ukraine of 19.12.2006.

Principles of preparation of the financial reporting

18. The financial reporting of the company is created with respect for such principles:

autonomies of the company in case of which each company is considered as the legal entity isolated from owners. Therefore the personal property and the obligation of owners shall not be displayed in the financial reporting of the company;

going concern which provides assessment of assets and liabilities of the company, proceeding from the assumption that its activities will continue further;

frequency which allows distribution of activities of the company to certain periods of time for the purpose of creation of the financial reporting;

historical (actual) cost which determines priority of assessment of assets, proceeding from expenses on their production and acquisition;

charge and compliance of the income and expenses on which for determination of financial result of the accounting period it is necessary to compare the income of the accounting period with expenses which were performed for receipt of this income. At the same time the income and expenses are displayed in accounting and the reporting at the time of their origin, irrespective of time of receipt and payment of money;

complete lighting according to which the financial reporting shall contain all information on the actual and potential effects of transactions and events which can influence the decisions made on its basis;

the sequences which provides application of the chosen accounting policy by the company permanent (from year to year). Change of accounting policy shall be proved and opened in the financial reporting;

discretion according to which the evaluation methods applied in financial accounting shall prevent understating of assessment of obligations and expenses and overestimate of assessment of assets and the income of the company;

content prevalence over form on which transactions shall be considered according to their essence, and not just proceeding from the legal form;

the single cash measuring instrument which provides measurement and generalization of all transactions of the company in its financial reporting in single monetary unit.

Disclosure of information in the financial reporting

19. In order that the financial reporting was clear to users, it shall contain data about:

company;

to date of the reporting and accounting period;

to currency of the reporting and unit of its measurement;

the relevant information for the accounting period and the same period of previous year;

to accounting policy of the company and its change;

consolidations of financial statements;

termination (liquidation) of separate types of activity;

restriction concerning ownership of assets;

participation in joint businesses;

the found errors of last years and the related adjustments;

to revaluation of articles of financial statements;

other information which disclosure is provided by relevant provisions (standards).

20. Information on the company which is subject to disclosure in the financial reporting includes:

the name, form of business and the location of the company (the country where the company, the address of its office is registered);

short description of the main activities of the company;

the name of governing body under which authority the company, or the name of his mother (holding) company is;

average the number of employees of the company during the accounting period;

approval date of the reporting and governing body of the company, it approved.

21. Each financial statement shall contain date as of which its indicators, or the period which it covers are given. If the period for which the financial statement is constituted differs from the accounting period provided by this Provision (standard), then the reasons and effects of it shall be opened in notes to the financial reporting.

22. In the financial reporting the currency in which reporting elements, and unit of its measurement are displayed shall be specified.

If the currency of the reporting differs from currency in which financial accounting is kept, then the company shall open the reasons of it and methods which were used for transfer of financial statements from one currency in another.

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