How long will the quarantine last from the point of view of Draft Law No. 3275?
Terms of mandatory publication of financial statements and audit report are postponed through quarantine.
On Monday 30 March 2020, the Verkhovna Rada of Ukraine voted Draft Law No. 3275 dated 29 March 2020“On Amendments to Certain Legislative Acts Aimed to Provide Additional Social and Economic Guarantees in Connection with the Spread of Coronavirus Disease (COVID- 2019)”.
Among other things, the Draft Law amends the Law of Ukraine “On Accounting and Financial Reporting in Ukraine”, which regulates the reporting requirements, including the procedure and terms of its publication:
- Section V “Final Provisions” of the Law of Ukraine “On Accounting and Financial Reporting in Ukraine” (Bulletin of the Verkhovna Rada of Ukraine (BVRU), 1999, № 40, Article 365) to supplement the new paragraph 12of the following content:
“1-2. Persons responsible for timely and full submission and disclosure of financial statements as defined in Article 11 of this Law shall be exempt from liability for breach of terms of publication of financial statements for 2019 or consolidated financial statements for 2019 together with audit report if such reporting is made public during the period of quarantine established in order to prevent the spread of coronavirus COVID-19 disease on the territory of Ukraine, or within 90 calendar days from the day following the day of completion of such quarantine, but not later than December 31, 2020, and for companies that are securities issuers, within the period established by paragraph 7 of Section VII “Final Provisions” of the Law of Ukraine “On Securities and Stock Market”, but not later than December 31, 2020.
Thus, companies that belong to the category of medium and large companies (not issuers), which in accordance with Article 14 of the Law “On Accounting and Financial Reporting in Ukraine” are obliged to publish reports for 2019 together with the audit report no later than June 1, 2020, now they can do it within 90 days from the day following the end of the quarantine.
If the quarantine is not extended after April 24, 2020, the term of publication of the reporting for 2019 together with the audit report is not later than July 24, 2020.
It is also interesting that legislators, having tied the terms of publication to 90 calendar days after quarantine, provided a limiter “but not later than December 31, 2020”. This means that even without changing paragraph 26 of Draft Law No. 3275, quarantine can theoretically be extended until the end of September.
The procedure for reporting companies belonging to the category of securities issuers is also changed due to reference to the date of the general meeting of shareholders.
Issuers must publish within 5 working days after this meeting (para. 29 of Draft Law No. 3275). The issuing companies are required to hold the 2019 Annual General Meeting of Shareholders within a period not later than three months from the date of completion of the quarantine (para. 30 of Draft Law No. 3275).
Anyway, taking into account the postponement of the publication, it is advisable for the owners and management of companies to review the current costs of conducting an audit or transition to IFRS. Kreston GCG, understanding the needs of customers in the current conditions, is ready to offer relevant services in the field of audit and consulting at a cost more attractive than providers from among the companies of the Big Four. Detailed information on the audit process in quarantine conditions can be found on our website.