The Law of Ukraine”On Changes to the Law of Ukraine “On Accounting and Financial Reporting in Ukraine” (updates of certain provisions)”  was passed by the Supreme Council of Ukraine on 5 October 2017.  The Law comes into effect on 1 January 2018. The Law harmonizes the legislation on accounting and financial reporting in Ukraine with the European legislation, in particular the EU Directive No. 2013/34/EU.

Company executives need to pay attention to the following legislative innovations:

1. Criteria of classifying entities as certain types have been changed.

To be classified as a certain type, the entity needs to comply with two criteria out of three.

The indicators are identified as of the date of the financial statement preceding the reporting year. To establish compliance with the criteria mentioned in EUR, the official UAH currency exchange rate (average for the period) is applied, which is calculated based on the National Bank’s rates set for EUR during the corresponding year.

2. A new notion is introduced - “a socially relevant company.”  These are companies issuing stock listed in stock exchanges, banks, insurance companies, private retirement funds, other financial institutions (except for other financial institutions and private retirement funds belonging to micro-companies and small enterprises) and big companies.

3. A socially relevant company (except for private retirement funds and shared investment institutions) is obliged to establish an accounting service headed by a Chief Accountant with at least two employees. 

4. Qualifications of a Chief Accountant of a socially relevant company have been changed.  It could be an appointed person with completed higher economic education, experience of working in finance, accounting and taxes for at least three years, who has no open or acquitted record of crimes against property and in business activity.

5. A number of entities now obligated to apply International Financial Reporting Standards has been extended.  They now include socially relevant companies, public stock companies, mining companies that deal with minerals of national significance.  These companies prepare and submit their financial statements based on the requirements of the International Financial Reporting Standards in a uniform electronic form set by the central executive authority which develops and implements state policy in accounting (this regulation will apply to financial statements starting in 2019).

6. A new obligation is introduced  for companies obliged under the law to prepare financial statements and consolidated financial statements according to the international standards, to establish accounting in accordance with the accounting policy under the international standards after submitting a first financial statement or consolidated financial statement according to international standards which is recognized as such by the procedure set by the international standards.

7. Changes to the publication of financial statements. The financial statements together with the auditor’s opinion should be published on the company’s web site (unabridged) and in other ways required by the law.  The entities’ financial statements do not make any commercial secret, do not constitute confidential information and are not classified as restricted information.  Entities will be obliged to provide a copy of financial statements at the request of legal and natural persons in a procedure stipulated by the Law of Ukraine “On Access to Public Information.”

8. Deadlines for the publication of financial statements (with the auditors’ opinion) shall be the following:

- Socially relevant companies (apart from big companies that do not issue stock), public stock companies, subjects of natural monopolies on the nation-wide market and mining companies dealing with minerals of national significance - no later than by 30th of April of the year following the reporting period;