A survey by IFC, a member of the World Bank Group, has found that 71 percent of Ukrainian respondent companies are not aware of official guidelines on the use of internal audits, indicating a strong need for internal audit assistance.
The survey, conducted in the spring of 2008 with the assistance of the National Bank of Ukraine and the All-Ukraine Institute of Internal Auditors, also found that 79 percent of companies did not know whether Ukrainian guidelines for internal control practices were in line with international standards.
The low level of awareness was reflected in company practices, with only 39 percent of real-sector respondents having an internal control department and only 48 percent having an internal audit department. Ukraine’s banking sector showed greater awareness, because the National Bank of Ukraine has issued clear guidelines for internal audit and control.
Internal control is essential for improving a company’s corporate governance. It provides reasonable assurance regarding the achievement of objectives in effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations. Internal auditing also plays an important role in evaluating the effectiveness of control systems, and contributes to a company’s effectiveness.
The survey results show a growing demand for internal audit and internal control services. Sixty percent of companies surveyed believe strong internal control systems will improve their ability to attract external financing, and 67 percent plan to invest in improving their systems in the next two years. Investors operating in Ukraine also view internal control and internal audit as important to their investment decisions, with almost 50 percent indicating that adequate audit and control systems reduce investment risk.
IFC hopes to launch full-scale program in Ukraine in the coming months to help companies improve their internal audit and control systems.
A full electronic version of the survey report can be downloaded from IFC Web site: IAIC_StudyFinal_Eng.pdf
Ukraine has been a shareholder and a member of IFC since 1993. As of June 30, 2008, IFC had invested around $988 million in 42 projects in the country. IFC’s investment program focuses on Ukraine’s financial, agribusiness, energy efficiency and cleaner production, and infrastructure sectors. IFC also offers advisory programs in Ukraine on leasing, agribusiness, mortgage finance, energy efficiency, and improving the business environment. For more information, visit www.ifc.org/ukraine
IFC, a member of the World Bank Group, creates opportunity for people to escape poverty and improve their lives. We foster sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to businesses and governments. Our new investments totaled $16.2 billion in fiscal 2008, a 34 percent increase over the previous year. For more information, visit www.ifc.org.