Outsourced Accounting

Accounting is generally expected to be a process of transactions documentation, input and reporting. The Ukrainian reporting environment presumes three statutory streams - financial, tax (VAT and Corporate tax) and statistical.

The financial reporting is regulated by Ukrainian National Accounting Standards (NASs) which are in general based on their international counterparts - International Financial Reporting Standards (IFRSs). The remaining gaps and differences may become significant only for quite big and diversified businesses and refer to such specific areas of accounting as financial instruments, leasing, provisions, assets impairment, mergers, minority interest, goodwill, etc.

The VAT and Corporate tax (CT) reporting is regulated by separate and quite complicated legislation which deals with transactions or events that have actually taken place. The Ukrainian tax law is quite in line with the philosophy of taxation applied in majority of the European countries but there are, of course, some important particular features.

The set of statistical reports is of purely technical nature and industry oriented.

The statutory financial reporting in Ukraine is represented by 5 (five) generally accepted reports:

• Balance Sheet;
• Income Statement;
• Cash Flow Statement;
• Statement of Changes in Capital; 
• Notes to the above financial statements.

Every National Accounting Standard has got a separate clause related to requirements for information disclosure. But at the same time the Notes to financial statements have a statutory format which is quite simplified and just do not allow to satisfy all disclosure requirements. This fact, without any doubt, should be regarded as key weakness of Ukrainian financial reporting environment.

The statutory tax reporting in Ukraine comprises the following returns and reports:

• VAT return;
• Corporate Tax return;
• Other direct taxes reports related to particular industry or business activity.

Alt offers the service of outsourced accounting which is always client oriented. There are three driving factors for accounting function to be successful: proper organization, communication and discipline. Being your accountants, we try to understand the culture of the business, its corporate structure, internal control system and become an integral part of it.

For the potential client it is very important to understand that we are an independent service but not a part of your management team. The management governs your business taking management decisions and we take them through our accounting system to provide you with the results of those decisions. We can consult management but can not take responsibility for their decisions. Please apply for the draft version of our standard Accounting Engagement Letter and it will help you to go through all the controversial issues and risks associated with outsourced accounting function.

As your accountant, Alt is capable of performing the following challenges:

• customize and maintain a proper accounting software that fits perfectly the type of activity and scale of your business;
• prepare and file the statutory financial reporting in compliance with the NASs;
• prepare and file a set of statistical reports;
• prepare and file VAT and Corporate Tax returns;
• introduce a system of tax planning and foreign currency transactions hedging;
• prepare a reconciliation statement between financial profit before taxation and taxable profit in the CT return;
• calculate deferred tax asset and/or liability;
• restate the statutory final accounts into the format of IFRSs, US or UK GAAP incorporating the effect of necessary adjustments, if any;
• prepare a detailed explanatory note on differences in treatment of particular material balances and transactions by the NASs, IFRSs, US or UK GAAP;
• prepare management and corporate reports in the format and currency that you specify;
• develop a set of periodical (daily, weekly, monthly) reports with key accounting data needed to the management for taking operational decisions;

The majority of our clients for accounting service is represented by just set up large or medium-sized companies with foreign capital. There is no surprise that such companies prefer to postpone the formation of internal accounting department until their businesses have settled down on the Ukrainian market with more or less clear prospects. But as their business is growing to the extent that outsourced accounting function is no longer cost effective, we guarantee the smoothly and controlled transition period. We will certainly do our best to pass over all our records, source documents, accounts balances' details and reporting files.

We assist our clients in finding professional internal accountants, training them and delegating uninterrupted accounting process. The 75% of our clients for accounting service become our audit clients as they grow enough to form an internal accounting department.