On 12 May 2011 Parliament of Ukraine adopted the Law of Ukraine On Introduction of Amendments to the Law of Ukraine On Accounting and Financial Reporting in Ukraine (the "Law"). The Law's objective is to harmonize Ukrainian legislation with the EU Regulation No 1606/2002 of the European Parliament and of the EU Council of Ministers of 19 July 2002 regarding the application of international accounting standards. The Law became effective on 11 June 2011.

The Law ensures the possibility of application of the International Financial Reporting Standards (the "IFRS") to the accounting and financial reporting of Ukrainian companies. According to the Law any company (except for certain categories of companies that are obliged to use IFRS) is free to use IFRS in their activity. To start officially using IFRS, such company must inform the State Statistics Committee.

The Law specifically singles out companies that are obliged to use IFRS for the purposes of accounting and financial reporting. Such companies are public joint-stock companies, banks, insurance companies, as well as the companies that carry out certain types of business activities to be defined by the Cabinet of Ministers of Ukraine.

Notably, the above provisions of the Law are in line with the previously introduced provisions of the Law of Ukraine On Securities and Stock Market (as amended of September 2008) that made joint-stock companies liable to disclose information about their activity in accordance with the IFRS.

Finally, the Law contracted the term set out for public joint-stock companies, financial institutions, companies that issued loan securities, bonds etc., and professional participants of stock market for publishing their annual financial reporting and auditor's opinion by shifting the publication deadline from 1 June to 30 April of the year immediately following the reporting year.

In general, the mandatory use of IFRS for certain Ukrainian companies is very important and makes financial reports of Ukrainian business more understandable for international investors.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

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The original publication date for this article was 29/06/2011.