“One Contract, One Account”: The State Audit Service Proposes Tighter Oversight of EU Funds in the Defense Sector
22 July 20:03
The State Audit Service of Ukraine proposes introducing new requirements for accounting for European financial assistance in the defense sector. Specifically, these requirements stipulate that fund administrators and recipients will be required to open a single special account for each contract. This was announced by State Audit Service Chair Alla Basalaeva during an official meeting with a delegation from the European Commission’s Directorate-General for Defense Industry and Space (DG DEFIS), according to
“We strongly recommend ‘earmarking’ aid funds and introducing the following mandatory requirement: contractors and contractors in Ukraine who receive EU funds are required to open a separate special bank account for each government contract or procurement agreement,” noted Alla Basalayeva.
According to the Head of the State Audit Service, funds in such an account are earmarked and must be spent exclusively on the fulfillment of a specific contract in accordance with the cost estimate and the terms of the agreement, with a clear prohibition on transferring funds to other bank accounts for purposes not consistent with the contract’s objectives.
The principle of “one government contract—one special bank account” must be applied without exception, even if there are thousands of contracts.
“Only in this way, together with tax and customs authorities, will we be able to clearly monitor and track exactly where the funds are going. For example, whether the money is actually being used for its intended purpose, whether administrative expenses are inflated, whether intermediary firms are involved that lengthen supply chains while simultaneously inflating the cost of components, and so on,” — noted Alla Basalaeva.
The State Audit Service expects that this step will minimize the risk of abuse and simplify audits by European partners, who require strict accountability for every euro allocated to the needs of Ukraine’s defense-industrial complex.
As reported by "Komersant Ukrainian", between March and May 2026, during audits of defense industry enterprises and entities, state auditors had already managed to return 7.3 billion hryvnias to the budget.
In particular, this included excess funds overpaid by government contracting authorities for contract fulfillment, advance payments, and so on.
The State Audit Service launched a large-scale audit of the defense sector on December 23, 2025, in accordance with an urgent directive from the Cabinet of Ministers of Ukraine.
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