On 7 March, a draft Law of Ukraine “On Amendments to the Law of Ukraine ‘On Audit of Financial Statements and Auditing Activities’ and Certain Other Laws of Ukraine to Improve Legislation in the Field of Auditing” was published.
The proposed amendments form part of Ukraine’s broader alignment with European Union legislation and aim to modernise the regulatory framework governing corporate reporting, audit quality oversight and accountability of public-interest entities.
Sustainability (ESG) reporting as a new regulatory focus
A central element of the draft law is the introduction of corporate sustainability reporting in line with EU requirements. The proposals include:
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harmonisation of Ukrainian legislation with EU sustainability reporting standards;
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implementation of assurance standards for sustainability reporting;
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establishment of a legal framework for certification of auditors authorised to provide assurance on sustainability information;
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enhanced oversight of entities providing such assurance services.
As a result, assurance on non-financial and ESG reporting is expected to become an integral part of the regulated audit market.
Changes to the audit quality oversight model
The draft law proposes a significant restructuring of audit quality control, including:
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assigning the Quality Assurance Inspectorate of the Public Oversight Body for Auditing (OSNAD) responsibility for quality control of all audit firms performing statutory audits;
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termination of the delegated quality control functions previously exercised by the Audit Chamber of Ukraine with respect to audit firms included in the so-called “third register”.
This approach strengthens the role of OSNAD as the central audit oversight authority and aligns with EU supervisory practices.
Financial sanctions for public-interest entities
The draft law also introduces financial penalties for public-interest entities (PIEs) in cases where they fail to:
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establish an audit committee or properly assign its functions;
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comply with statutory requirements for the appointment of an internal auditor or head of the internal audit function;
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remedy identified violations within the prescribed timeframe.
The proposed penalties range from 10,000 to 100,000 non-taxable minimum incomes, equivalent to approximately UAH 170,000 to UAH 1.7 million.
Practical implications
If adopted, the amendments will require audit firms and public-interest entities to reassess their internal governance structures, audit arrangements and approaches to both financial and sustainability reporting.
To minimise regulatory risks and prepare for upcoming changes, companies and audit firms should already assess the potential impact of the draft law on their internal processes, corporate governance systems, and approaches to preparing financial and ESG reporting.
Contact Kreston Ukraine’s experts to receive professional advice and ensure timely adaptation to the new legislative requirements.
