BUSINESS AUDITS

Assistance of enterprises upon audits of state control authorities

Assistance of enterprises upon audits of state control authorities

Accompaniment of business audits in Dnipro

Today in Ukraine, entrepreneurship remains under the supervision of all kinds of state control authorities. And it is worth noting that even complete confidence in the “purity” of one’s business does not guarantee a successful undergoing of such an audit. Taking into account the permanent reform of both the state bodies themselves and the change in the scope of powers of each of them, without qualified legal assistance, there is a great chance to get confused before even scheduled inspections.

And the result of such confusion may be the imposition of quite considerable fines, which not only do not fit into the financial planning of the business, but also significantly knock the bottom out of the enterprise.

In the context of scheduled inspections, the proverb “Forewarned is forearmed” does not work very well. After all, only qualified lawyers can help to qualitatively and professionally “arm” you with such an act as “audit by the state control authority”. Moreover, the accompaniment of audits of the company by internal lawyers is not always sufficient for the complete tranquility of its owners and heads.

“Borysenko & Partners” law firm provides legal assistance in accompaniment of audits of state control authorities in Dnipro and other cities of Ukraine. We render legal services based not only on a thorough knowledge of the law, but also on the many years of experience of each of our lawyer and attorney under accompaniment of audits.

Obviously, the fundamental factor for the visit of one or another inspection body is the type of company activity. It is worth noting that one and the same field of activity is regulated by numerous laws and by-laws, which are adopted, canceled and changed almost as often as the exchange rate changes. Therefore, we strongly recommend that every entrepreneur, regardless of the size of his business, be thoroughly familiar with the list of inspectors who may pay “a visit.” Specialists of our company can provide full legal advice on the activities of the enterprise from a regulatory point of view.

The general regulatory framework for any type of control / supervision is the Law of Ukraine “On the basis of public supervision (control) in the area of economic activity” (hereinafter – Law № 877). So, it defines the main “elements” of audits of state control authorities in Ukraine:

  • entrepreneurs must remember the general requirements for conducting audits, because one violation on behalf of inspectors, which went unnoticed by a representative of a legal entity, can cost a lot to business;
  • types and frequency of audits – as is well-known, inspections are scheduled and unscheduled, the frequency of scheduled inspections depends on the degree of risk from the enterprise conducting its activities; Thus, business entities with insignificant risk are routinely inspected by state bodies no more than once every 5 years, “medium” – no more than once every 3 years, and businesses with high risks, in turn, are checked no more than once every 2 years;
  • timing of the audit: small and medium businesses can be checked within no more than 5 business days, large business – 10 business days.

Schedules of inspections for next year are approved by the majority of inspection bodies by December 1 of the current year. But do not lose sight of the possibility of an unscheduled audit, an exhaustive list of grounds for which is also prescribed in this Law.

Our lawyers and attorneys know the specific scope of the rights and powers of inspectors, as well as the requirements for conducting this or that type of audit. Moreover, each specialist from Borysenko & Partners team can put knowledge to use without prior preparation. We remind you that our “hot line” is always available for calls and prompt legal assistance, because unscheduled inspections of enterprises in Ukraine are far from rare. And considering the “suddenness” of the appearance of inspectors, the risk of “making a lot of blunders” increases at times.

Here we briefly describe the “field of work” of those state control authorities that probably every entrepreneur have at least once heard about.

  1. State Labour Service of Ukraine

Today, the labor inspection (as this body is called “in the old fashion”) is almost the main “thunderstorm” of all business in Ukraine. And this is quite justified – the fines of the labor inspectorate, which are imposed by the decisions of this body, are very significant and often unlawful, which is confirmed by judicial practice. As a consequence, there are “deposits” of lawsuits by legal entities and individual entrepreneurs in administrative courts of cancellation of decisions of the labour inspection.

On May 14, 2019, by a decision of the administrative court, the Decree of the Cabinet of Ministers of Ukraine No. 295 of April 26, 2017, which approved the procedure for control / supervision of compliance with labor laws, was canceled. This means that inspection visits to enterprises by labor inspectors are deemed illegal. To date, business control by a labor inspection is carried out exclusively on the basis of the “general” Law of Ukraine “On the basis of state supervision (control) in the sphere of economic activity”, which we mentioned above.

Although inspection visits are not worth fearing at the moment, State Labour Service of Ukraine can “please” with its attention in the form of the same scheduled / unscheduled inspection, based on the provisions of the above-mentioned Law. By the way, this regulatory document was adopted more than 10 years ago. Therefore, in the near future we should expect at least the initiation of the process of preparing a specific Law, which will regulate the activities of the labor inspection.

In the meantime, business entities still need to be “alert”. Accompanying the audits of the labor inspection by professional lawyers and attorneys of “Borysenko & Partners” law firm is a guarantee of the balanced further conduction of the enterprise’s activities, both during and after the inspection.

  1. Pension Fund of Ukraine

Auditing by territorial authorities of Pension Fund is largely regulated by the aforementioned Law № 877. The main subject of auditing of this state body is the correctness of the calculation and payment by the business entity of insurance contributions for compulsory pension insurance and a unified social contribution for compulsory social insurance. We remind you that inspectors are obliged to carry out their actions exclusively within the framework of those issues that are indicated in the referral to the audit.

As have already been mentioned above, the frequency of inspections depends on the degree of risk from the enterprise conducting its activities. Criteria for determining the degree of risk are approved by the relevant resolution of the Cabinet of Ministers and relate to insurance contributions, changes in information regarding persons who are subject to compulsory state insurance and compliance with legislation on compulsory state insurance.

Based on the results of the audit, an act is drawn up, one copy of which is handed to the businessman in respect of whom the audit was carried out. If the inspectors nevertheless reveal violations in the payment of insurance contributions, then together with such an act, a requirement is also presented to pay the obligations accrued by the Fund, as well as (in some cases) an order to eliminate the violations.

  1. State Architectural and Construction Inspectorate

At the moment, the inspections of State Architectural and Construction Inspectorate in Ukraine are regulated by the relevant procedures for control and supervision, which are approved by resolutions of the Cabinet of Ministers. The difference between two such related concepts as “control” and “supervision” is that the State Architectural and Construction Inspectorate exercises control directly during the preparatory and construction works, and the supervision is the function of State Architectural and Construction Inspectorate for monitoring the authorized bodies, whose activities are somehow related with the control over the construction. Thus, in relation to business entities, the State Architectural and Construction Inspectorate carries out control measures in accordance with the relevant Procedure.

The subject of the audit is statutory compliance with the laws of Ukraine in the field of town-planning activities, building regulations, standards and rules. Inspections of State Architectural and Construction Inspectorate can also be both scheduled and unscheduled. Scheduled inspections are carried out in accordance with the established frequency depending on the degree of risk. Criteria for determining the degree of risk are approved by the Cabinet of Ministers.

The powers of inspectors of the State Architectural and Construction Inspectorate are quite broad. Thus, according to the results of the inspection, in addition to the act, the inspectors have the right to draw up reports on offenses, impose fines, give orders, prohibit the operation of certain already constructed facilities. The audit period is 10 working days and the assistance of a lawyer during this time will be a reliable guarantee of compliance with all applicable legislation, and most importantly, your personal rights and interests.

Specialists of “Borysenko & Partners” law firm have positive experience in accompaniment of inspections of the State Architectural and Construction Inspectorate both in Dnipro and other cities of Ukraine. Urban construction issues are highly complex, however, the lawyers and attorneys of our company are well versed in the procedure for monitoring by the State Architectural and Construction Inspectorate and know about the latest legislative changes regarding state building regulations.

  1. State Service of Ukraine for Food Safety and Consumer Protection

The work of this state body affects many branches of the economy. Thus, State Food Products Safety and Consumer Protection Service (hereinafter referred to as SFPSCPS) controls the quality of food products, plant protection, compliance with sanitary laws, compliance with the requirements for the formation, establishment and application of state regulated prices, also carries out veterinary and sanitary control and supervision, and with what most often business is faced – it controls the observance of consumer rights.

Taking into account the multiplicity of spheres of control of inspectors of this body, the broad legal base that governs all their activities is quite natural. Thus, risk criteria for determining the frequency of scheduled inspections are established by twenty (!) Relevant laws, depending on the item of inspection.

As for unscheduled inspections, this body has a kind of “carte blanche”. After all, one only complaint from a dissatisfied buyer to the SFPSCPS, and the visit of inspectors becomes a very likely event. We also note that an unscheduled inspection, for example, of a labor inspection, should be agreed directly with the central authority – State Labour Service of Ukraine. In turn, the territorial body of the SFPSCPS, having received a complaint from the consumer, is authorized to conduct an unscheduled inspection of the business entity without any approval.

That is why, we recommend you do not neglect the help of a lawyer not only in relations with business partners, but also in relations with consumers. It is usually much more economically advantageous to use legal services on issues of the marketing of products (after all, there are so many regulatory standards) than to pay a big fine after inspection of the SFPSCPS, and what’s even more painful is to get a blow to your reputation.

Direct accompanying support of the audit is a legal service that is distinguished by its preventive nature. There are such absurd situations when, due to the confusion of employees during the inspection, inspectors “magically” find “the goods without the appropriate label with marking, although these goods was not in the store before the inspection. But, seeing your reliable “support area”, namely a competent lawyer or attorney, the inspector will not allow himself excessive and, sometimes, illegal actions.

  1. The State Emergency Service of Ukraine

This governmental agency is the undisputed leader in the number of inspections per year. The subject of inspection of the State Emergency Service of Ukraine (or as it is customary to abbreviate as SES or simply “Fireguard”) is the observance of technology-related and fire protection during business management. The SES audit plan is approved quarterly. The frequency of inspections of SES also depends on the degree of risk of the business entity and is determined according to the criteria approved by the relevant Cabinet of Ministers resolution. The grounds for an unscheduled inspection are generally established in Law № 877.

Fire safety performance is a requirement that applies to the all types of business. In the event that any violations are found at the place of carrying on business, the inspector from the SES along with the act of conducting the inspection also gives an order to eliminate such violations.

We do not talk about abuse of authority by the inspectors, but we do not exclude possible violations of the inspection procedure — conducting an audit without the presence of an authorized representative of the enterprise, non-compliance with the inspection deadlines, groundless unscheduled inspections, and so on.

“Borysenko & Partners” provides a wide range of legal services for business in Dnipro and other Ukrainian cities. And accompanying support of inspections is one of the most demanded practices. Specialists of our law firm are ready to render a professional legal assistance in accompanying support in Ukraine, starting from legal advice up to direct interaction with regulatory agencies.

Accompanying support by lawyers and legal experts of “Borysenko & Partners” law firm is an important element of its successful passing and further balanced entrepreneurial activity.