The management of the Commission, USAID Financial Sector Transformation Project and EU-FINSTAR Technical Assistance Programme for priority areas of the Ukrainian financial sector has signed the Memorandum of Understanding on Procurement and Implementation of the Financial Reporting System in Ukraine (hereinafter referred to as the “System”).
The international partners of Ukraine, which provide assistance to the financial sector in the implementation of reforms, intend to assist in the procurement of this System in accordance with established business requirements, as well as its adaptation and implementation.
The new System, based on the widespread iXBRL standard, will allow the collection, processing, verification and disclosure of regular financial statements of entities in a unified electronic format.
Key innovations in the introduction of the new System in the Ukrainian market are as follows: single window for submitting financial statements to financial regulators; high level of automation of financial statements collection and processing, effective and reliable analysis of financial indicators of entities, rapid detection of errors and inconsistencies in financial statements.
the latest amendments to the Law of Ukraine “On Accounting and Financial Reporting in Ukraine”, the entities of public interest are obliged to prepare financial statements through the IFRS 2018 taxonomy and submit them to state authorities in a unified electronic format. Such entities are classified by law as follows: issuers of securities admitted to stock trading, banks, insurers, non-state pension funds, other large financial institutions and companies.
The EU-FINSTAR programme intends to provide assistance to both the Commission and other government bodies, which participate in the project, in the transition to the preparation and submission of regular financial statements by entities of public interest through the IFRS taxonomy.
The USAID Financial Sector Transformation Project also intends to assist the Commission in drafting changes to the laws and regulations required for the System implementation. The EU-FINSTAR programme is planning to conduct training and outreach activities for the future System users.
We remind that the launch of the new System is scheduled for 1Q 2019, as it is since 2019 that in accordance with the above mentioned law, entities of public interest should prepare and submit financial statements to state authorities in a unified electronic format in compliance with the international standards.
“Thanks to the laws adopted at the end of last year, the National Bank, the Ministry of Finance and we are working on the introduction of the new financial reporting system for entities of public interest. Ukraine may become a leader in this matter in Europe, since as of today only Holland has implemented such system. The transition to electronic reporting will allow us to create a basis for the transparent and efficient economy. After all, information content, truthfulness, integrity, completeness and adequacy of financial reporting in the financial market is, perhaps, the main prerequisite for the credibility of an entity, the market and the economy as a whole,” said the Commission Head Timur Khromaiev.
“The introduction of regulatory reporting of entities of public interest through the Ukrainian XBRL-based IFRS taxonomy is an important step towards higher financial transparency. The new regulatory reporting framework based on the Ukrainian IFRS taxonomy will facilitate the adoption of IFRS, enhance investor protection, improve the investment climate in the country, and provide financial regulators with new advanced supervision capacity that will help to prepare Ukrainian capital markets for integration with European and other cross-border markets,” added Scott Calhoun, EU-FINSTAR Technical Assistance Project Manager.
XBRL (eXtensible Business Reporting Language) is an open standard for business information exchange. In Western countries, it is a commonly accepted standard for filing financial statements in electronic form under IFRSs and US GAAP. XBRL is widely used in many countries by securities market regulators, bank regulators, tax authorities, and national statistical agencies. Today XBRL is officially recommended and supported by the IFRS Board for the preparation of electronic statements under IFRSs. XBRL’s main advantages: automatic data entry without re-transformation; prompt and automatic report generation, including consolidated reports; fast, efficient and reliable analysis and comparison of data; data monitoring, reduced decision-making time; higher efficiency and savings in supervisory; etc.
On the instructions of the European Union, EU-FINSTAR Programme provides assistance to the financial sector of Ukraine by supporting the Government implementing the reforms set out by the Association Agreement and provisions thereof regarding the Deep and Comprehensive Free Trade Area Agreement between the Government of Ukraine and the European Union.
USAID Financial Sector Transformation Project is a 4-year programme whose main task is to develop and improve the provision of financial services in Ukraine to meet the needs of Ukrainian citizens and businesses of any size. The programme is being implemented within the framework of the Agreement between the Government of the United States and the Government of Ukraine on humanitarian and technical and economic cooperation.