Accounting and financial reporting in Ukraine

Accounting in any country reflects the level of its economic development to some extent. As a dynamic system, accounting is being constantly improving in response to changes in the practice of managing economic activities and informational need of users.

In times of command economy the main purpose of accounting was to control the safety of state property. Since the State was almost the sole owner, accounting was subordinated to the State as to the main user.

Transition to the market economy has created new targets and assigned new functions to accounting. This resulted in accounting reforms in Ukraine as a result of bringing the economy into compliance with market requirements.

A new phase of accounting development in Ukraine began on January 1, 2000, when the Law “On Accounting and Financial Reporting in Ukraine” and the Accounting Standards (Provisions) of Ukraine (ASU) came into force.

The Law of Ukraine “On Accounting and Financial Reporting in Ukraine” determines legal foundations for regulating, organizing and performing the accounting and preparing financial statements in Ukraine. It applies to all legal entities founded in compliance with the legislation of Ukraine, irrespective of their organizational and legal forms, as well as forms of ownership. It also relates to representative offices of foreign economic entities, which are liable to perform the accounting and present financial statements in accordance with the legislation.

In compliance with the Law, the purpose of accounting and financial reporting is to provide full, true and unbiased information on financial situations, activity results and cash flow of an enterprise.

Accounting is performed by an enterprise in the currency of Ukraine. Financial, tax, statistical and other types of reporting prepared in monetary terms are grounded on accounting data.

The methodology of accounting and financial reporting is regulated by the Ministry of Finance of Ukraine, which approves the accounting Standards of Ukraine (ASU), the Chart of Accounts, the instruction on its application, and other normative legal acts related to performing the accounting and compiling the financial reports.

The important instrument of accounting regulation in Ukraine is the Chart of Accounts, an arranged list of accounts necessary to reflect activities of enterprises and organizations.

The Chart of accounts is formed in accordance with the elements of financial reports and includes ten classes of accounts.