Publication date: 09.07.2024
Legal regulation of accounting in Ukraine
Introduction
Accounting is the basis for financial reporting of companies, providing an accurate and reliable reflection of their financial position. It is an important tool for making management decisions, controlling the activities of enterprises and protecting the interests of investors, creditors and the state. Legal regulation of accounting in Ukraine is aimed at ensuring transparency, reliability and comparability of financial information. In this article, we will review the main principles, regulations and bodies that regulate accounting in Ukraine, as well as the rights and obligations of business entities in this area.
Basic principles of legal regulation of accounting
The legal regulation of accounting in Ukraine is based on several basic principles that ensure the efficiency and stability of accounting:
Theprinciple of full coverage. All business transactions of the company must be fully reflected in the accounting records in order to provide complete and accurate information about the financial position of the company.
Theprinciple of prudence. Accounting should ensure caution in the valuation of assets and liabilities, avoid overstatement of assets and income and understatement of liabilities and expenses.
Consistencyprinciple. Enterprises should maintain consistency in applying accounting policies to ensure comparability of financial information over time.
Going concernprinciple. Accounting is carried out on the assumption that the company will continue to operate in the future.
Theprinciple of matching income and expenses. Income and expenses should be recognized in the accounting records in the period in which they are incurred, regardless of the time of receipt or payment of funds.
Key regulations
The legal regulation of accounting in Ukraine is based on a number of regulations, the key ones being:
TheLaw of Ukraine "On Accounting and Financial Reporting in Ukraine". This law defines the legal, organizational and methodological basis for accounting and financial reporting, and sets out requirements for accounting, preparation and presentation of financial statements.
Tax Code of Ukraine. The Tax Code regulates taxation issues and establishes requirements for tax accounting, which interacts with accounting.
TheCivil Code of Ukraine. The Civil Code contains general provisions on contractual relations and obligations that affect accounting.
The CommercialCode of Ukraine. The Commercial Code defines the legal framework for conducting business activities, including accounting and financial reporting.
International Financial Reporting Standards (IFRS). Ukrainian entities that fall within certain categories are required to apply International Financial Reporting Standards to prepare their financial statements.
Governmental regulatory authorities
The primary governmental bodies that regulate and supervise accounting in Ukraine are:
The Ministry ofFinance of Ukraine. The Ministry of Finance is responsible for developing regulations in the area of accounting and financial reporting, monitoring their compliance and coordinating the activities of other governmental bodies in this area.
TheState Fiscal Service of Ukraine (SFS). The SFS controls compliance with tax legislation, including tax accounting issues that interact with accounting.
TheNational Securities and Stock Market Commission (NSSMC). The NSSMC oversees the activities of companies listed on the stock market, including accounting and financial reporting requirements.
Rights and obligations of business entities in the field of accounting
Business entities have a number of accounting rights and obligations to ensure proper accounting and financial reporting. The main rights and obligations include the following:
Rights of business entities
Theright to choose accounting policies. Businesses have the right to choose the accounting policy that meets their specific characteristics and legal requirements.
Theright to apply IFRS. Companies have the right to apply international financial reporting standards for the preparation of financial statements.
The right toconsultations. Businesses have the right to contact the Ministry of Finance and other accounting authorities for advice and clarification.
Obligations of business entities
Obligation to keepaccounting records. Businesses are required to keep accounting records in accordance with the requirements of the law and to ensure full and accurate reflection of all business transactions.
The obligation to prepareand submit financial statements. Companies are obliged to prepare financial statements in accordance with the established standards and submit them to the state authorities within the specified time limits.
The obligation to keepaccounting documents. Companies are obliged to keep accounting documents for a specified period of time, ensuring their integrity and accessibility for inspection.
The obligation to ensure thereliability of information. Companies are obliged to ensure the accuracy and objectivity of the information reflected in their accounting and financial statements.
Accounting procedure
The accounting procedure in Ukraine includes several main stages:
Preparation of primary documents. Businesses prepare primary documents confirming business transactions, including invoices, bills of lading, certificates of completion, and other documents.
Recording businesstransactions in accounting. Companies record business transactions in their accounting registers in accordance with the chosen accounting policy and legal requirements.
Preparation offinancial statements. Companies prepare financial statements based on accounting data, including balance sheets, income statements, cash flow statements, and other reports.
Submission of financial statements. Companies submit their financial statements to the state authorities within the specified timeframe, ensuring their accuracy and completeness.
Retention ofaccounting documents. Companies keep their accounting documents for a specified period of time, ensuring their integrity and accessibility for inspection.
Protection of rights in the field of accounting
The protection of rights in the field of accounting is carried out through various legal mechanisms that ensure the proper implementation of accounting legislation. The main ways to protect rights include:
Administrative protection. It is carried out by applying to public authorities, in particular to the Ministry of Finance of Ukraine, the State Fiscal Service of Ukraine or the National Securities and Stock Market Commission.
Civil remedies. This includes filing lawsuits for recognition of rights, compensation for damages, recovery of compensation for violation of rights in the field of accounting, cessation of infringing actions, and other claims.
Criminal defense. Certain types of violations of rights in the field of accounting, including falsification of accounting documents or provision of false information, are subject to criminal liability.
Administrative sanctions. Administrative fines and other sanctions may be imposed for violations of accounting rights in accordance with Ukrainian law.
International aspects of accounting
Accounting is international in nature, and many Ukrainian companies use international financial reporting standards to prepare their financial statements. The main international accounting considerations include:
International Financial Reporting Standards (IFRS). Ukrainian entities in certain categories are required to apply IFRS to prepare their financial statements, which ensures high quality and transparency of financial information.
International cooperation. Ukrainian companies may enter into contracts with foreign partners and use international standards and best practices in accounting.
International dispute resolution. International accounting disputes may be resolved through international arbitration or the judicial authorities of the countries that are parties to the dispute.
Conclusion.
Legal regulation of accounting in Ukraine is an important tool for ensuring transparency, reliability and comparability of financial information. It includes the regulatory framework, activities of state regulatory and supervisory authorities, rights and obligations of business entities in the field of accounting, as well as mechanisms for protecting rights in this area. Effective legal regulation contributes to the development of the economy, increases confidence in financial information and ensures a stable legal environment in Ukraine.
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