EU financial assistance: whom and how will the State Audit Service check?

28 August 22:13

The Ukrainian government has appointed the State Audit Service (SAS) as the main controller of the use of 50 billion euros of macro-financial assistance provided by the European Union to Ukraine under the Ukraine Facility program. The head of the agency, Alla Basalaeva, said this in an interview with Glavkom, "Komersant Ukrainian" reports.

The condition for this support is compliance with transparency and accountability standards similar to those in the EU member states.

According to Basalaeva, earlier in Ukraine, audits were limited to direct contractors, but the new requirements oblige to control the entire chain of budget spending: from the main contractor to subcontractors and even subcontractors. This approach, she said, may cause discontent in the business environment, but is the norm for European financial oversight practice.

Basalaeva emphasized that one of the main problems is the difficulty of identifying individual contractors working as individual entrepreneurs: in many cases, they simply “disappear” during inspections. Therefore, businesses working with public funding must implement new standards of responsibility and transparency. All participants in the cost chain should be prepared for an audit, and control can cover all stages of the supply of goods or services.

A striking example of risks was the situation with the Ministry of Education program: three suppliers who received more than UAH 88 million under the Ukraine Facility were not available at their legal and actual addresses. This made it impossible to access the primary documentation, and thus to conduct a proper audit.

To prevent such cases, the SASU proposes to include in the terms of contracts a mandatory requirement to provide full access to documentation, facilities, warehouses and premises. In addition, a so-called “audit trail” should be created : in particular, all hidden construction works should be accompanied by photo and video recording. If suppliers fail to comply with these requirements, customers have the right to impose sanctions on them.

Thus, the State Audit Service not only becomes the main financial controller of European funds, but also stimulates the creation of a public resource management system in Ukraine that will meet EU standards.

What you need to know about the Ukraine Facility program

The Ukraine Facility is a new large-scale financial instrument of the European Union to support Ukraine in the context of the war and on its way to EU membership.

It is a €50 billion aid package for 2024-2027, approved by the European Commission and supported by all EU member states. This is not just “survival money” but a system of financing reforms, restoration and modernization of the state.

What is included in Ukraine Facility:

grants – non-repayable assistance;
loans – concessional lending;
investment instrument – funds to attract private capital (guarantees, financial incentives);
technical assistance for institutional capacity and reforms.

Key conditions

Money – according to plan. Ukraine has developed a special document, the Ukraine Facility Plan, which describes reforms, indicators, priorities, goals, and milestones.

Control and transparency. The EU requires a transparent system of monitoring, anti-corruption supervision and audit (the State Audit Service will be in charge of control).

Focus on reforms. The main focus is on preparing for EU accession.

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