Upcoming New Regulatory Reporting for Public Interest Enterprises in Ukraine Will Use XBRL - PART 2

INTERVIEW PART 2

Today, we present the second part of the two-part series from an interview with Scott Calhoun who is leading the implementation team for European Union financed technical assistance delivered through the EU-FINSTAR project.  EU-FINSTAR is funded by the EU and implemented by a consortium led by Human Dynamics, a specialized provider of consulting services headquartered in Vienna, Austria.  The interview focuses on EU assistance supporting Government plans for a new regulatory reporting framework for Ukraine’s public interest enterprises (PIEs).  New regulatory reporting requirements for PIE financial information will be introduced by the Government in 2019.      

INTERVIEW QUESTIONS AND ANSWERS

EN:  Why is the EU supporting the new regulatory reporting framework for Ukraine’s PIEs? 

SC:  Financial transparency is regularly identified as a problem for Ukraine by donors, international financial institutions, and foreign investors.  The reason is simple.  Financial transparency is imperative for a well-functioning market economy that is competitive and attractive for foreign and domestic investment.  Reforming Ukraine’s financial sector and business environment require financial transparency to be improved.  Without acceptable financial transparency, Ukraine’s integration with European markets is more difficult and foreign investment will look for opportunities elsewhere.  Long-term foreign investment Ukraine needs to modernise private sector industries and support economic growth that increases the number of good jobs depends on improving financial transparency in tandem with other improvements in Ukraine’s business environment.     

Financial transparency, approximated to standards found in more advanced markets, is a key condition for Ukraine’s future development.  Through EU-FINSTAR, EU assistance is supporting three important priorities that together will strengthen financial transparency for Ukraine’s private sector. 

• EU assistance has been provided to strengthen accounting and financial reporting standards harmonized to international IFRS standards.  Amending the Accounting Legislation was an important benchmark, as well as, the assistance being provided to harmonize national accounting standards for requirements in the amended Legislation and with IFRS.

• EU assistance has also helped enact legislative reforms for Ukrainian statutory audits.  New Audit Legislation was enacted that includes a new model for independent regulation for Ukraine’s audit profession that adheres to EU and international standards and good practices – the newly formed Public Oversight Body of Ukraine.  The role of statutory audits is to certify by competent auditors the company’s financial accounts and reports and that the accounting policies and practices of the company adhere to the prescribed standard.  The auditor’s opinion expressed on the company’s financial accounts and disclosures from the statutory audit is important to a broad community of people and institutions.  For example, the auditor’s opinion on the financial information and disclosures are important to investors, business counterparties, suppliers, shareholders, depositors, lenders, analysts, regulators, and the public.  

• EU assistance is also supporting the development and implementation of the Government’s new regulatory reporting regime for financial information by PIEs.  The new regime will standardize the formats for submitting financial information using the Ukrainian IFRS [XBRL] Taxonomy and automate into a single-window the delivery, validation, processing, and subsequent reporting of PIEs’ financial reports.    

Let me share some key public benefits which result from the new regulatory reporting regime for PIEs the Government will be introducing.  

• Strengthens financial transparency by:

- Providing easy access to reliable information for domestic and foreign investors based on IFRS

- Increasing ability to make comparisons within Ukraine and with European PIEs

- Improving private sector access to credit

- Improving information for the financial condition of all PIEs across all sectors of the economy

- Enabling investors and the public to access reliable financial information not limited because of language or currency   

• Improves IFRS implementation across Ukraine’s largest and most important entities 

• Strengthens framework for investor protection

• Improves and automates information used to fight corruption and money laundering

• Prepares Ukraine for integration with Europe and cross-border markets

• Enhances regulatory capacity (e.g. identify accounting irregularities, analytics, peer comparisons, etc.)

EN:  You mention automating the reporting.  What are you referring to regarding the automation of the regulatory reporting?

SC:  Using the Ukrainian IFRS [XBRL] Taxonomy, the Ministry of Finance will publish the Taxonomy and users will have access to online tools that were developed to assist PIEs in preparing their submissions.  There are no new software or system requirements necessary to prepare the PIE Report that follows the taxonomy.  Once the PIE prepares its Report (aka instance document), it will be submitted online to the Financial Reporting System hub (FRS hub).  PIEs’ Reports submitted to the FRS hub electronically will be validated, processed, subsequently reported to relevant regulators and stored.  The FRS hub also includes a public portal where PIEs non-confidential financial information and disclosures can be viewed.  

When you look at the three areas together mentioned earlier – i.e. accounting reforms, audit reforms, and the new regulatory reporting regime for PIEs –significant progress is being achieved to improve financial transparency into Ukraine’s private sector.  Of course, even with the progress achieved, there is much work that remains ahead and the EU will continue monitoring progress and providing its support for these important changes and reforms being introduced and implemented by the Government.  

EN: How much longer will the project be supporting these reforms? 

SC:  EU-FINSTAR was launched by the EU Delegation to Ukraine in March 2015.  The project’s original term was for three (3) years, although the EU Delegation extended the project which is allowing the financial transparency reforms to continue being support through September 2019.  But it is important to understand the EU remains committed to seeing these important reforms continued, and they are already planning for future assistance to continue supporting these reforms to ensure they are implemented appropriately and that Ukraine continues on the path of implementing EU and international standards that allow Ukraine to have a solid European future with its neighbours and natural partners. 

E-news.com.ua