Are the losses justified: the State Audit Service responded on how it will audit Ukrzaliznytsia
11 March 13:18
EXCLUSIVE
The State Audit Service of Ukraine will begin auditing Ukrzaliznytsia on March 23. The audit will last until July 1 and is intended to establish the validity of the company’s financial calculations regarding subsidies for passenger transportation. This was reported in an exclusive comment to the publication "Komersant Ukrainian" by the head of the State Audit Service, Alla Basalayeva.
According to her, the audit was initiated by the government and included in the state financial control action plan on the basis of a corresponding order.
“Yes, on March 23,we are starting an audit ofUkrzaliznytsia. We are a government agency, and we have an order from the government — this was the basis for including the audit in the plan of state financial control measures,” Basalayeva said.
What exactly will the State Audit Service check?
As the head of the State Audit Service explained, the audit is related to Ukrzaliznytsia’s appeal to the government regarding the need for state support for passenger transportation.
“From the documents we received, we saw that Ukrzaliznytsia appealed to the government with a request to subsidize passenger transportation because the company is operating at a loss in this area,” Basalayeva said.
She recalled that traditionally, these losses were offset by freight transportation. However, due to the full-scale war, the situation has changed.
“Ukrzaliznytsia compensated for this through freight transportation, but in the context of a full-scale invasion, unfortunately, freight turnover in the railway sector has decreased. Therefore, the company needs government assistance,” Basalayeva explained.
The main purpose of the audit will be to analyze the company’s expenses to determine how reasonable the calculations of the amount of state support are.
“In order to understand how accurate Ukrzaliznytsia’s calculations are in terms of the money that the state should allocate to subsidize passenger transportation, the government has asked us to investigate Ukrzaliznytsia’s expenses,” Basalayeva said.
When will the results be available?
The audit will begin on March 23 and should be completed by July 1.
“In accordance with the government’s instructions, our task is to complete this measure by July 1, so the results will be available soon,” the head of the State Audit Service concluded.
I would like to remind you that following the president’s statement on November 11, 2025, the government adopted a separate decision to audit the activities of state-owned enterprises.
In particular, on November 13, 2025, the Cabinet of Ministers adopted Order No. 1223-r “Issues of comprehensive analysis of the activities of certain entities in the public sector of the economy.” The document provides for additional control over large state-owned companies.
According to the government order, a significant part of the audit is to be carried out by the supervisory board of Ukrzaliznytsia.
It has been tasked with conducting a comprehensive analysis of the control over the activities of the company’s management, involving international auditing companies.
The audit should cover:
- compliance with anti-corruption policy;
- procurement procedures;
- financial and budgetary discipline;
- decision-making procedures for legal transactions;
- effectiveness of the internal control system.
After completing the analysis, the supervisory board must inform the Cabinet of Ministers of the results.
In a separate point of the order, the government instructed the State Audit Service of Ukraine to prioritize the inclusion of audits of large state-owned enterprises in its state financial control plans.
This refers, in particular, to control over:
- the use and preservation of state financial resources;
- management of state property and assets;
- the correctness of determining the need for budget funds;
- the effective use of funds;
- the reliability of accounting and financial reporting;
- compliance with procurement legislation;
- fulfillment of financial plans.
Ukrzaliznytsia on the list of priority audits
The State Audit Service emphasizes that the aforementioned order provides for the priority inclusion of large state-owned enterprises, such as Ukrzaliznytsia, in control plans.
Thus, the audit of the company may be included in the list of priority measures of state financial control, which provide for the verification of the use of state resources and management efficiency.
Ukrzaliznytsia is one of the largest state-owned enterprises in Ukraine and operates under a corporate governance model with a supervisory board.
The government initiated tighter control over the activities of state-owned companies after a series of discussions on the effectiveness of management and financial discipline in strategic state-owned enterprises.
