From 1 January 2018, the amendments to the Law of Ukraine ‘
On Accounting and Financial Reporting’ (hereinafter – the “Law”) will come into legal force.
According to the introduced amendments, for the purpose of accounting all companies in Ukraine will be classified as follows:
Micro enterprises
(which comply with at least two of the following criteria in the year preceding the reporting one) :
- Balance value of assets is < EUR 350k
- Net sales revenue is < EUR 700k
- Average number of employees is < 10 persons
Small enterprises:
- Balance value of assets is < EUR 4 million
- Net sales revenue is < EUR 8 million
- Average number of employees is < 50 persons
Medium enterprises
- Balance value of assets is < EUR 20 million
- Net sales revenue is < EUR 40 million
- Average number of employees is < 250 persons
Big enterprises
For the purposes of above classification the annual average of official UAH/EUR exchange rates shall apply.
Micro and small enterprises as well as representative offices of non-residents, except for those which are obligated to submit financial statements prepared under IFRS, report only a Balance and P&L Account. Financial statements can be prepared under the IFRS translated into Ukrainian and published on the web-site of the Ministry of Finance. At this, reconciliation with the local GAAP is not required. All statements shall be prepared in UAH; however, upon users’ request they can be recalculated in foreign currency.
Consolidated financial statements shall be provided by holding (parent) companies. Such obligation will not be applied in case the total indicators of business activity of both holding company and subsidiaries are the same as those established for small enterprises.
Financial statements cannot be recognized as confidential information and shall be provided upon request.
Furthermore, a definition of Public Interest Enterprise (PIE) was introduced into Ukrainian law, which is defined as enterprises – issuers of securities circulated on stock exchange, banks, insurers, non-state pension funds and other financial institutions (except for financial institutions classified as micro and small enterprises) as well as enterprises which are classified as big enterprises.
The requirements applied to PIE according to the amended law include:
- Existence of accounting department consisting of at least two persons including a chief accountant who is responsible for signing financial statements;
- Obligation to prepare financial statements in accordance with IFRS as well as to introduce corresponding accounting policy;
- Obligation to publish financial statements along with an audit opinion on its web-site until 30th of April of the year following the reporting one (except for PIEs which do not issue securities).
The disclosure requirements and obligation to carry out the audit of their annual financial statements will also concern non-listed PIE, middle sized enterprises as well as micro and small financial institutions which will be obligated to publish their audited annual financial statements on their web-sites until 1st of June of the year following the reporting one. This obligation will apply to the 2019 reporting year.
The principle of ‘essence over the form’ was embodied into the new provision that
nonessential deficiencies of documents which contain the information concerning a business transaction,
cannot be a basis for a failure to recognize such transaction, provided that they do not prevent identification of a person who participated in the transaction, and contain the data concerning date of compiling the document, name of the company on behalf of which it was compiled, the content and scope of the transaction. A failure to reflect a primary accounting document in accounting registers cannot affect the parties’ rights and obligations under such primary document.
Furthermore, it is provided that in case the company’s accounting is carried out by an outsourcing accounting or audit firm, the financial statements of such company should be signed both by a director of the company and a director of an outsourcing company.