Accounting Chamber Finds Shortcomings in Seized Assets Management during ARMA Audit

The Accounting Chamber of Ukraine completed the audit of the National Agency of Ukraine for Finding, Tracing and Management of Assets (ARMA) for the period 2022-2023 and the first half of 2024. The audit revealed significant problems in the management of seized assets.

The problems identified by the auditors coincide with what TI Ukraine had defined as the key shortcomings of the Agency’s operation:

• flawed mechanisms for the selection of managers and appraisers of confiscated assets and shortcomings of internal regulations for effective monitoring and control;
•  the lack of complete information about assets in the Unified State Register of Seized Assets, which leads to distortion of data on their value;
• management of seized assets was carried out in the conditions of unregulated relations between the ARMA and the prosecutor’s office and pre-trial investigation bodies at the stage of transfer and acceptance of assets. There is also a lack of tools for effective operation to preserve/increase the economic value of assets.

The Accounting Chamber also noted the positive changes that took place during the audit: an updated accounting policy of the ARMA, a finalized asset management system, as well as a developed draft joint order of the ARMA with the Office of the Prosecutor General on the transfer and acceptance of assets. For our part, we can note that there were no public discussions of the developed draft regulations, so it is difficult to assess their quality.

However, overall, both TI Ukraine and international partners have serious reservations about the Agency’s activities. In the EU enlargement report on Ukraine, the European Commission emphasized the need to reform the ARMA.

Based on the results of the audit, the Accounting Chamber provided recommendations for improving the regulatory framework, enhancing interaction with law enforcement agencies and introducing more transparent mechanisms for managing seized assets.