The ACCA (Association of Chartered Certified Accountants) hosted a public debate entitled “Future of Audit” to discuss the increasing public interest in the work of auditors in current economic conditions around the world. Topics discussed included role of audit in society, tackling the lack of transparency, addressing corruption, calls for stricter adherence to existing regulations and greater cooperation with regulators, the economics of audit in times of downturn, proportionate and fair limitation of auditor liability.

The discussion brought together representatives of stakeholders of the profession in Ukraine, including Auditors Chamber of Ukraine, Union of Auditors of Ukraine, State Commission on Regulation of Financial Services Markets of Ukraine, Big 4 audit companies, the World Bank, State commission on securities and stock exchange, representatives of profession and business.

Steve Priddy, Director of Technical Policy and Research, ACCA, said: “A strong audit function promotes trust and contributes to the working of efficient markets. Economic crisis and the resulting current economic conditions raise numerous challenges for the audit profession and its stakeholders. When economies throughout the world are shaken by corporate corruption scandals, it is important to reassess what the future of audit should be, and very importantly, how its role in the economy will and should be understood by wider society.”

“Ukraine has to adopt International Financial Reporting Standards (IFRS) as accounting standards, and there should be no special needs for having separate standards. The role of audit is critical for recovering Ukraine from the crisis, by ensuring accurate disclosures for business”, says Vladimir Vakht, FCCA, Managing partner of Deloitte&Touche in Ukraine,- “Ukrainian business for its development needs working capital. It is more difficult and expensive to get it in Ukraine, than on international markets. In order to get access to these markets, transparency and accuracy of financial statements are key.”

Gerry Parfitt, Audit Partner, KPMG, conceded the profession had not done enough in reducing corruption and ensuring transparency. “One of the things that I would like to see in Ukraine is transparency, where people and businesses appoint auditors to give transparency to the business. In the UK every single company has to file their accounts annually with the registrar of companies - it is a public document easily available over the Internet”.

Viktor Suslov, Head of State Commission on Regulation of Financial Services Markets of Ukraine, brought up the issue of conflict of interest in audit-business relations: “The one who pays is the one who calls the tune. When shareholders rather than their agents (the board of directors) commission the audit, then it will be more reliable. It is not always the case when management is commissioning the audit – as management wants to look better before the shareholders, and selects an auditor accordingly. Out of 40 insurance companies that were recently excluded from the register due to insolvency – all of them had positive audit reports”.

“There were 1300 certified auditors as of 1 January 2009. Now there are 958, and a quarter of auditors have left the market. The reason is simple – we started controlling the assurance of obviously false reports by auditors, and coordinated closely with Auditors’ Chamber of Ukraine,” – Mr. Suslov pointed out.

Mikhail Krapivko, Vice president of the Union of Auditors of Ukraine, talked about extending the auditor's role beyond purely reporting on financial statements: “ The owner s of the company need a report prepared not according to regulator’s requirements, but according to requirements of auditing standards. Auditor should not be uncritically copy-pasting numbers, but rather say: - this is disclosed correctly, here I have some concerns, and I would especially draw attention to this and that.”

Referring to the EU integration efforts, Volodymyr Bogatyr, Deputy Minister of Justice of Ukraine, said: “Implementation of IFRS is a priority for the Ministry of Justice. The Ministry produces annual recommendations on bringing legislation of Ukraine in accordance with EU legislation on accounting. We also carry out monitoring of implementation of Ukraine legislation developed in accordance with EU law. Financial reporting issues were reflected in Ukraine-EU Association agreement, which puts obligations on Ukraine to bring its legislation in accordance with international standards. Together with Ministry of Finance we explore possibility of translating IFRS for SMEs into Ukrainian, which would increase transparency of reporting of Ukrainian SMEs.”

According to Angela Prigozhina, Senior specialist of financial sector, World Bank in Ukraine , it is impossible for Ukraine to climb out of the crisis, without strengthening its transparency and its competitiveness.

“Quality of accounting and audit are the key elements of transparency and competitiveness. There are countries which do not have resources – neither oil, nor land, nor grain. But these countries are competitive, because they play by the rules of the game. The first step on the way to improving competitiveness – is to become open and transparent. It is naïve to assume that the market in Ukraine will increase the quality of audit and financial reporting – as market itself conceals information, in order to participate in unfair redistribution of private resources in times of crisis”, said Angela Prigozhina.