On October 24, the Parliament’s Budget Committee reviewed draft law No. 10044-d, aimed at improving the work of the Accounting Chamber, for its second reading. As a result, it recommended that parliament adopt the draft law in its entirety. The draft law was also supported by representatives from the Ministry of Finance and the Accounting Chamber who were present.
Recently, the International Monetary Fund identified reforming the Accounting Chamber as one of the structural benchmarks that Ukraine must complete by the end of December 2024. Thus, parliament has just over two months remaining to consider the draft law in the session hall.
In its analysis of the draft law’s text after the first reading, TI Ukraine noted several positive changes aimed at enhancing the Accounting Chamber’s capacity, including the introduction of a risk-oriented approach to audit planning, increased financial support, and improved monitoring of the implementation of the body’s recommendations. However, key issues regarding the competitive selection of candidates for Accounting Chamber members, its political independence, and the separation of powers from other bodies remain unresolved. We have submitted our recommendations to the parliamentarians for their consideration and finalization.
At the meeting, the Budget Committee reviewed over 1,200 proposals and amendments to draft law No. 10044-d submitted by MPs, of which only 19 were considered. These proposals were presented by the committee representatives at the meeting, allowing for familiarization with the changes to the draft law before the second reading.
Some of the changes relate to the establishment of an advisory group of experts for the selection of candidates for positions on the Accounting Chamber and for conducting a competitive selection process. We recommended that the draft law define the requirements for advisory group members, their rights and obligations, and the grounds for early termination of their powers. The proposal to extend the competition period was also taken into account.
To limit interference in the activities of the Accounting Chamber, parliament will remove its authority to make decisions regarding unscheduled audits. Regarding the members of the Accounting Chamber, the draft law will exclude disciplinary offenses or gross neglect of duties as grounds for early dismissal to minimize external impact on them. However, at the committee meeting, no proposals were made to amend the Law “On the Legal Regulation of Martial Law”. Therefore, the risk of early dismissal of Accounting Chamber members due to distrust by Parliament will likely remain.
The issue of the number of members in the body was not addressed during the discussion of proposals for the draft law. In the first reading, it was proposed to reduce the number of members to 11, despite the body’s additional powers. Under these circumstances, after the adoption of the draft law, an additional 6 members will be elected according to the new procedure, as 5 members of the Accounting Chamber have already been appointed.
It is also proposed to expand the powers of the Accounting Chamber to include auditing consolidated financial statements at the state level. This audit will encompass data from key managers of state budget funds, state enterprises, banks, and information on state assets and liabilities. At the same time, the committee rejected the proposal, which aligned with our recommendation to separate the powers of the Accounting Chamber and the NACP regarding the monitoring of the legal and targeted use of funds by political parties.
Before the second reading, parliamentarians also proposed changing the approach to external financial audits to once every three years and conducting external assessments of the Accounting Chamber every three years for the first ten years following the law’s enactment.
The analysis of the changes announced at the committee suggests that the draft law will likely incorporate some of our recommendations aimed at improving the competitive procedure for selecting members of the Accounting Chamber. However, the committee discussions did not address the issue of maintaining the number of members, despite the increase in powers, changes to the procedure for selecting candidates for the head of the body, and the possibility of early dismissal of Accounting Chamber members. This suggests that risks to the body’s political independence persist.
We will continue to monitor the progress of draft law No. 10044-d and will prepare an analysis of the updated text and submitted proposals following their publication.
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The analysis of the changes announced at the committee suggests that the draft law will likely incorporate some of our recommendations aimed at improving the competitive procedure for selecting members of the Accounting Chamber.
