While the Russian state audit institution has been expelled from international audit organisations, the Ukrainian audit institution or Accounting Chamber of Ukraine (ACU) continues to work under difficult conditions in the besieged capital as the war rages on for the 16th day with no cease-fire in sight.
As has been reported in a previous article, the European Court of Auditors (ECA) has strongly condemned the Russian invasion of Ukraine and called on intergovernmental organisations such as INTOSAI and its European counterpart EUROSAI to terminate the participation of the Russian supreme audit institution (SAI) in the organisations.
“Everyone at the institution stands firmly behind the Ukrainian people”, ECA said in a statement issued on its website and social networks. “These are dark times for Europe. Now more than ever, the EU needs to show unity.”
INTOSAI operates as an umbrella organization for the external government audit community, with full members from 196 countries. It is a non-governmental organization with special consultative status with the Economic and Social Council (ECOSOC) of the United Nations. The Russian SAI, or as it is called the Account Chamber of the Russian Federation, has acted as chair of INTOSAI since 2019.
ACU Chairman Dr. Valery Patskan urged already on the first day following the Russian invasion on 24 February all INTOSAI members to call on their governments to influence Russia to stop the aggression against Ukraine and remove the Russian SAI from the presidency of INTOSAI and eventually to expel it from the organisation.
INTOSAI did not take any political position but as a result of the appeals from ECA and ACU, and with the support of the governing board of EUROSAI, it decided on 4 March to relieve the Russian SAI from the chairmanship and transfer the de-facto conduct of its operations to the vice-chair Brazil until it takes over the chairmanship in November 2022.
“This was not the only goal set by the ACU,” Mykhailo Tolstanov, Director of the International Cooperation Department of ACU, told The Brussels Times in an email interview. “We intend to use all possible measures to isolate Russia from the world community completely, both in INTOSAI and EUROSAI, until its aggression against Ukraine stops.”
He added that already in 2019, the ACU chairman, Dr. Valeriy Patskan, proposed to INTOSAI to set up a Task Force (TF) to audit the assessment of losses from military conflicts, referring to Russia´s annexation of Crimea and the military conflict in the East of Ukraine. Other countries that have also become victims of wars suffer from financial, economic, social, demographic and other losses.
“For such countries special performance audits are needed to examine the use of funds allocated for measures to eliminate the consequences of military attacks - reconstruction of destroyed infrastructure, assistance to victims, social protection of refugees etc,” he added. It would require ECA´s support but ACU, which unfortunately has experience of war, is prepared to contribute to such a task.
Before the Russian invasion, did you have any contacts with the Russian SAI or cooperate with them?
It might come as a surprise now, but in the past ACU cooperated with the Russian auditors in different ways, Tolstanov replied. He exemplified with joint and parallel audits in the framework of INTOSAI and EUROSAI, among others on the Chernobyl shelter fund, the adaptation to climate change and other common audits.
In fact, ACU signed agreements on bilateral cooperation with the SAIs of Russia (in 1998) and Belarus (2001) and there was regular sharing of experience before the annexation of Crimea. But that became almost impossible after 2014. Ukraine could not even participate in INTOSAI´s congress in Russia in 2019.
“The first steps made by EUROSAI, INTOSAI, ECA and some SAIs to support Ukraine and take restrictive measures against Russia's SAIs after its large-scale invasion need to be further expanded and strengthened.”
Is it still possible and safe to work at your offices at ACU in Kyiv?
The main office of the ACU is in Kyiv, where more than 350 employees work. There are also thirteen territorial branches, which are in regional centres, and in total they have more than 100 staff members, ACU Board member Dr. Vasyl Nevidomy explained.
“From the very first day of the invasion, we were exposed to air strikes and shelling and threatened by sabotage groups. A significant number of residents left the city on their own, others by trains via special evacuation routes. One of the most important types of public transport, the subway, is currently not fully operational, as it serves as a bomb shelter.”
“Now on average, the air alarm sounds in the capital of Ukraine up to ten times a day, and the inhabitants spend 8-9 hours a day in shelters, including night-time. In addition, a curfew was set from 8 pm to 7 am, which was extended on certain days of the war due to the danger.”
The situation is also difficult in the territorial branches located in the regions where the invasion took place, particular in the Kyiv, Donetsk and Kharkiv administrative regions. The threat of air strikes and the periodic announcement of air raid sirens occur throughout Ukraine. Therefore, it is difficult to say whether there is a satisfactory level of security in these cities.
On the very first day of the invasion, the ACU decided to organize work under martial law, using remote work and on-line conferences. Measures were also taken to ensure the storage and protection of official documents, valuables, and vehicles.
The work in war time is mostly about completing the audits which were started before the invasion. ACU´s board reconsidered yesterday the annual plan and decided to postpone some audit tasks. Some of ACU’s personal has been mobilised into the army or joined the local territorial defence units, setting a personal example by patrolling the city and serving at checkpoints.
What kind of audits do you carry out? Does it include performance auditing?
In accordance with its statues, the ACU may conduct both financial and performance audits, as well as other activities, such as analyses and special inquiries, Dr. Vasyl Nevidomy replied. Financial audits are in line with international standards and based on a Financial Audit Manual which was tested in 2019.
Currently, ACU is focussing on strengthening financial audits and covering all part of the state budget, but they were still a minor part of the planned activities for 2022.
In the 2022 audit plan, performance audits accounted for more than 70 % of the work, which was in line with the trend in recent years. They do not only assess economy, effectiveness and efficiency, but also include elements of compliance audits as these currently are not identified as a separate type of audit in the legislation. Work on developing a detailed performance audit manual based on international standards is still ongoing.
ACU also conducts large-scale system-oriented audits, such as analyses of the social protection system and the effectiveness of the use of funds for primary health care. A first of its kind audit was the audit of the use of funding to the Verkhovna Rada of Ukraine - the Ukrainian Parliament.
In its statement on Friday morning (11 March), the European Council meeting in Versailles acknowledged the European aspirations and the European choice of Ukraine and invited the Commission to submit its opinion on Ukraine´s application join the EU. How do you see ACU’s role in Ukraine’s path to EU membership?
“ACU´s role is quite clear in the path of Ukraine to EU,” Mykhailo Tolstanov replied. “The ACU plays an important role in the public finance system and our potential in promoting the country's European integration is therefore significant.”
“Alignment with the EU acquis, EU standards and best European practise implies significant changes in all spheres of life, and, accordingly, significant financial resources for their implementation. The ACU audits will help ensure the efficient use of funds, provide expert analysis of the activities carried out and allow to identify problems and suggest ways to solve them.”
The ACU has already now sufficient capacity to conduct financial and performance audits of financial assistance provided to Ukraine by the EU and other international organizations. The ACU contributes to the improvement of budgetary discipline and public administration reform, providing an example of an effective and modern state institution.
As a first step, the ACU expects to be accepted as a member of the Contact Committee of the Supreme Audit Institutions of the European Union, which provides the forum to discuss and address matters of common interest relating to the EU. The candidate countries participate in its meetings as observers but cooperate also in their own Joint Working Group on Audit Activities (JWGAA).
In a letter on Friday (11 March) to the heads of INTOSAI´s members, ECA President Klaus-Heiner Lehne condemned Russia´s invasion of Ukraine. On behalf of the EU Contact Committee, he urged all SAIs to stand united for peace and solidarity with Ukraine.
“The EU Contact Committee hereby expresses its solidarity with and support for the people, the state and the institutions of Ukraine, in line with the values promoted by the European Union and its Member States, notably to enhance peace and justice, and to provide unconditional support to the foundations of freedom, democracy and sovereignty.”
The Brussels Times