Auditor’s verification of a management report: implementation of European experience in Ukrainian banks in crisis conditions

Inna Makarenko,Serhiy Makarenko

doi:10.21511/afc.03(1).2020.01

Abstract

The research is devoted to the analysis of the European and Ukrainian experience of banks’ management report audit assurance, the disclosure of the national features of such assurance using the case study of 75 state-owned banks, banks with private and foreign capital in Ukraine, and the specific features of audit verification of this report in the current crisis conditions. It was discovered that the requirements of national regulatory documents and guidelines for preparing a management report for banking institutions generally comply with the European approaches, particularly with Directive 2014/95/EU, Directive 2013/34/EU, and Directive 2014/56/EU (Legislation of EU, 2013, 2014). However, specific national requirements for the content of the report and the procedure for its audit are duplicated, intersect, and create inaccuracies in the disclosure of non-financial information by banks. Besides, the requirements for the reflection of the information on the management report in the independent auditors’ report of the studied banks of Ukraine are partially met. The common challenges for accounting and audit support for the management report for Ukrainian and European banks are disclosed in terms of the current crisis caused by global health risks and their economic consequences for banks.

Highlights

A management report, which can be considered the first step for banks in preparing the sustainability reporting, is a new category of Ukraine’s accounting and audit legislation
2019 together with the audit report in case if such on the audit of the financial statements as a whole statements are published during the quarantine and the bank management report in particular, period that was set to prevent the spread of the since they extend the due date of preparation and coronavirus disease COVID-19 in Ukraine, or improve the quality of published audit reports
There is a lack of disclosure of the topic of preparing a bank management report and its audit in scientific sources, which mainly relate to the study of the features of audit assurance of sustainability reporting in the context of ensuring the legitimacy of reporting entities, improving their communication with stakeholders and the reliability of such reporting

Summary

INTRODUCTION

A management report, which can be considered the first step for banks in preparing the sustainability reporting (non-financial reporting), is a new category of Ukraine’s accounting and audit legislation. In 2018, banking institutions first made public and audited management reports, and their preparation and verification covers only 2018–2019 This fact caused certain problematic aspects in the development of a methodology for preparing them and conducting the audit in banks. These aspects became deeper in fiscal 2020, taking into account the crisis state of the Ukrainian economy and the implementation of restrictions on the banking system and financial reporting system, and its assurance due to the restrictive measures to prevent a pandemic. The content of the research is disclosed in such units as literature review, a comparison of the Ukrainian and European regulatory framework for the preparation and audit of a bank management report, specific features of audit reports of Ukrainian banks management, and the specific feature of the audit of this report in crisis conditions

BANK’S

Findings

CONCLUSION