Draft bill #10044 of September 14, 2023 

Cosponsors: a group of 28 MPs from the Servant of the People faction with Pavlo Frolov as the first signatory 

Status: the bill is under review by the dedicated parliamentary committee 

Who is affected: the Accounting Chamber and the Verkhovna Rada 

Summary of the bill: 

Status of the Accounting Chamber 

  • the Accounting Chamber on behalf of the Verkhovna Rada will control not only the revenues and spending from the government budget of Ukraine but will control all public funds. That will include auditing of local budgets, state and municipal enterprises, and international financial, humanitarian, and technical assistance 
  • the Accounting Chamber will conduct a financial audit of the Annual Report on the Use of the Government Budget of Ukraine and prepare an Audit Report based on its results. The Audit Report will have to be submitted no later than October 1 of the year following the reporting year to the Verkhovna Rada, the President of Ukraine, and the Cabinet of Ministers 
  • the Accounting Chamber will check how political parties use funds allocated from the government budget to finance their statutory activities 
  • the Accounting Chamber will become financially independent: its volume of funding will be decided by the Verkhovna Rada Budget Committee, not the Ministry of Finance. 

Accounting Chamber Decisions 

  • when the Chamber is making a decision or preparing a conclusion, a member of the Chamber will have no right to abstain from voting 
  • a decision by the Accounting Chamber made upon receiving a complaint about the audit report will have to be taken into account by the administrative body of a higher level and/or subjects under audit 
  • parliamentary committees will have to consider the recommendations from audit reports at their meetings and assess whether the recommendations have been sufficiently implemented by subjects under audit 
  • the parliamentary control over the implementation of decisions and audit reports by the Accounting Chamber will be carried out by the Verkhovna Rada as well as the dedicated parliamentary committees within their mandate 
  • the Accounting Chamber will be able to appeal to the President of Ukraine with a proposal to suspend the act by the Cabinet of Ministers of Ukraine if it does not comply with the Constitution of Ukraine. Also, it will get the right to appeal to the Cabinet of Ministers of Ukraine or the President with a reasoned proposal to cancel the act of the Cabinet of Ministers or the President if it does not comply with the laws of Ukraine. 

Composition of the Accounting Chamber 

  • the number of members of the Accounting Chamber will be reduced: the Chamber will consist of a Chair and eight members instead of 13 members 
  • the term of office of a member of the Accounting Chamber will amount to seven years without the right to be appointed again. Currently, the term of office is 6 years 
  • the Accounting Chamber will be recognized as operational if more than half of its members are appointed (5 persons) 
  • to apply for the position of Chair or member of the Accounting Chamber, the candidate should be a citizen of Ukraine not younger than 30 years, speak Ukrainian and one of the official languages of the Council of Europe, have a higher education (a master’s degree or higher), total work experience not less than 7 years, work experience in the field of state financial control, audit, accounting, economics, finance, or law not less than 5 years, and have an impeccable business reputation 
  • the Chair of the Accounting Chamber will be appointed by the Verkhovna Rada based on the proposals from parliamentary factions. Candidates for this position will be preliminarily considered by the Budget Committee of the Verkhovna Rada. 

State Auditors 

  • to conduct external state audits, the positions of state auditors will be introduced in the Accounting Chamber 
  • appointment to the position of a state auditor for the first time will be decided by the Chair of the Accounting Chamber for a term not exceeding three years under contract granted based on the results of an open competition or by transfer from another position in the Accounting Chamber 
  • members of the Accounting Chamber will no longer conduct audits in person but will perform the function of strategic management. Audit reports will be approved by the relevant department heads. 

Audit of the Accounting Chamber 

  • the Accounting Chamber will carry out an internal audit of its activities. An external financial audit of the Accounting Chamber’s reports will be conducted annually by an auditing entity designated by the Verkhovna Rada 
  • an external evaluation of the Accounting Chamber’s compliance with international state audit standards will be conducted at least once every five years. Also, the audit may be requested by the Accounting Chamber or Verkhovna Rada addressing members of INTOSAI (International Organization of Supreme Audit Institutions). 

External State Audit 

  • while conducting external state audits, officials who will be part of the Accounting Chamber’s auditing team will have the following rights: 
    • have free access to any premises and storage facilities of the subject under audit 
    • receive and study information, original documents and other materials, data, databases, and extracts from documents 
    • record audio, photo, and video on the premises of the subject under audit or during interviews/communication with the staff of the subject under audit 
    • access documents and materials containing confidential information 
    • request oral and written explanations about the subject under audit from any person if the head of the audit team so decides 
    • make use of experts and specialists, convene relevant meetings 
  • Ukraine will introduce INTOSAI standards (regarding the independence of members, access to information, financial and managerial autonomy, etc.) 
  • it will be impossible to challenge in court the decisions by the Accounting Chamber regarding the approval of audit reports and recommendations contained in these reports. A court will have no power to stop the external state audit and/or prevent the Accounting Chamber from exercising its powers 
  • until the mandate of the Accounting Chamber is expanded in the Constitution, the external state audit of the revenues and use of public funds by government bodies of the Autonomous Republic of Crimea and local self-government bodies will be carried out only at the request of the Verkhovna Rada of the Autonomous Republic of Crimea, oblast, raion, rural, township, or city council or the head of a village, township, or city. 

What is right: 

  • work of the Accounting Chamber will become more efficient and independent. In particular, thanks to the introduction of the state auditor position, the procedure for appointing and dismissing members of the Accounting Chamber, and a wider overall mandate for the Chamber 
  • the bill implements international auditing standards. 

What is wrong: 

  • the Constitution does not grant the Accounting Chamber the power to audit all public funds 
  • the prohibition to challenge in court the decisions of the Accounting Chamber on the approval of audit reports violates the Constitution of Ukraine and the European Convention on Human Rights. Everyone is guaranteed the right to challenge in court the decisions, actions, or omission of bodies of state power, bodies of local self-government, officials, and officers 
  • the bill grants the Accounting Chamber the right to appeal to the President of Ukraine to suspend the act by the Cabinet of Ministers if it does not comply with the Constitution. It can also appeal to the Cabinet of Ministers or the President with a reasoned proposal to annul the act by the Cabinet or the President if it does not comply with the laws of Ukraine. These changes violate the Constitution regarding the mandate of the Accounting Chamber and the separation of powers. The Accounting Chamber carries out control on behalf of the Verkhovna Rada over the revenues and spending of the government budget. Therefore, it cannot interfere with the legislative activities of either the President or the Cabinet of Ministers. Without changes to the Constitution, no other powers can be granted to the Accounting Chamber 
  • the requirement to have 150 votes from MPs to start the procedure of dismissing the Chair of the Accounting Chamber is unconstitutional. Each MP has the power to initiate any considerations regarding issues under the mandate of the Verkhovna Rada. Exceptions from this rule are explicitly defined in the Constitution.