Recently, the Cabinet of Ministers issued a resolution updating the procedure for procurement audits conducted by the State Audit Service. The amendments primarily aim to simplify the audit process for auditors. Also, the changes will align the audit procedure with current procurement methods, expand the grounds for audits and their suspension, and clarify certain obligations of procuring entities.
New grounds for audits
The list of grounds for procurement audits now includes checking for non-compliance with legal localization requirements and the procurement of goods without using an electronic catalog when its use is legally mandated.
New grounds for suspension of audits
The grounds for suspending audits have been revised and expanded, with new ones added:
- the need for urgent fulfillment of other tasks under the powers defined by the Law of Ukraine “On the Basic Principles of State Financial Control in Ukraine”;
- as a result of force majeure, including during a state of war or emergency in Ukraine or specific localities.
At the same time, suspending an audit based on a reasonable request from a procuring entity will now require approval from the head of the State Audit Service or the relevant territorial office.
Evaluative terms such as “a significant number” of counter-audits and conducting an “appropriate level” of inspection have been removed from the existing grounds.
The requirements for notifying about the suspension of audits have been simplified. Now, auditors only need to send a procuring entity a notice specifying the suspension date, without any requirements for the delivery method, if the audit is suspended for more than three days.
Documents must be submitted within three days upon request from the auditors
The provision requiring procuring entities to submit documents at the request of auditors has been improved. A clear deadline has been established—documents must be provided within three business days from the date of receipt of the request, unless the request specifies a different period, which cannot be less than one business day. It is now stipulated that documents can be submitted in either electronic or paper form.
If the documents are not provided on time, auditors will issue a report on the impossibility of conducting the audit. The consequences of such actions by a procuring entity during an audit are outlined in the same manner as in the audit procedure. In particular, state financial control bodies will notify law enforcement agencies in such cases.
In general, the grounds for issuing such a report have become virtually unlimited, as an audit can be obstructed by any objective circumstances beyond the control of the State Audit Service that make it impossible or hinder its conduct.
Inspections of various procurement methods, in particular in defense
Several additions to the terminology have been made to the procedure to align inspections with specific procurement methods, particularly in the defense sector. Previously, the audit procedure lacked a clear definition of the contracts and procuring entities it applied to. Now, it explicitly applies to contracts resulting from simplified procurements, E-catalog procurements, direct procurements, and defense contracts. It applies to procuring entities as defined by the Law of Ukraine “On Public Procurement” as well as those operating in the defense sector.
Changes in the procedures of the State Audit Service
Most of the amendments pertain to the procurement audit procedure:
- Procurement information may now be analyzed not only based on the location of the authority or procuring entity but also by the location of the procuring entity’s property.
- The audit program can now be approved not only by the head of the State Audit Service, its territorial body, or a deputy head but also by an official authorized by the head of the respective body. The program will no longer be prepared in two copies.
- Previously, amendments to the program could only be made with written approval from the head of the State Audit Service or its territorial body “to study issues in full.” Now, amendments can be made following the program approval process (i.e., approved by the head, deputy, or other authorized person) and within the scope of the “subject being inspected.”
- The procedure for notifying procuring entities about the audit program and any amendments to it is also being revised. An official of the State Audit Service is required to provide a copy of the program only upon request from the procuring entity’s head or deputy head. Previously, a copy of the program was provided against a signature.
- The head or deputy head of the state financial control body is no longer required to sign a referral for audit for each official and qualified specialist involved.
- The obligation of State Audit Service officials to sign the procuring entity’s audit log now depends not on its mere existence but on whether it has been submitted.
This material is funded by the European Union. Its content is the sole responsibility of Transparency International Ukraine and does not necessarily reflect the views of the European Union.
