# How to Run a Year-End Inventory Count Before Annual Reporting for 2026

> When can the 2026 year-end inventory start in Ukraine, what goes in the internal order, who sits on the commission and how are unreachable assets treated?

[Home](https://www.uhy-prostir.com/en/index.html.md) › [Insights](https://www.uhy-prostir.com/en/blog-en/index.html.md) › [Expert explainers](https://www.uhy-prostir.com/en/blog-en/articles/index.html.md) · 2026-10-15 · Updated 2026-10-28 · 13 min

Every Ukrainian legal entity, branch or representative office of a foreign legal entity must take a year-end inventory before preparing its annual financial statements. For 2026, fixed assets, goods, materials, receivables and payables are checked from October 1, and cash, financial investments, work in progress and tax balances from November 1. Assets cut off by hostilities or occupation follow a separate rule.

The duty comes from the [Law of Ukraine “On Accounting and Financial Reporting in Ukraine”](https://zakon.rada.gov.ua/laws/show/996-14#n188) and the procedure from the [Regulation on the Inventory of Assets and Liabilities](https://zakon.rada.gov.ua/laws/show/z1365-14) (Ministry of Finance Order No. 879 of September 2, 2014). As of October 2026, the procedure is unchanged from last year.

## When to carry out the year-end inventory

Before annual reporting, a full inventory covers all assets and liabilities, including property leased out, under repair or mothballed, and third-party assets on off-balance-sheet accounts ([paragraph 6 of section I](https://zakon.rada.gov.ua/laws/show/z1365-14#n27)). Deadlines are counted back from the balance sheet date ([paragraph 10 of section I](https://zakon.rada.gov.ua/laws/show/z1365-14#n39)).

| What is checked | When, for a balance sheet date of December 31, 2026 |
| --- | --- |
| Non-current assets and stock (except those listed below), current biological assets, receivables and payables, deferred expenses and deferred income, other liabilities | Within three months before the balance sheet date, i.e., from October 1 |
| Capital investments in progress, work in progress, semifinished goods, financial investments, cash, earmarked funding, unused provisions, tax and social insurance balances | Within two months, i.e., from November 1 |
| Vacation pay provision | As of December 31 ([sub-paragraph 8.2 of paragraph 8 of section III](https://zakon.rada.gov.ua/laws/show/z1365-14#n204)) |
| Cars, vessels and other assets that will be away from the company on the count date | Before they leave |
| Land plots, buildings, structures and other real estate | Allowed once every three years, except for state property |
| Tools, instruments, fixtures (furniture) | By management decision, at least 30% a year, all covered within three years |

The start of the window is fixed: a September count of goods or equipment does not replace the year-end inventory. The end is flexible, but finishing by mid-December lets the accounting team record the results before the close. The head of the company approves the minutes within five working days, and the results go into the period when the inventory was completed ([paragraphs 2 and 3 of section IV](https://zakon.rada.gov.ua/laws/show/z1365-14#n211)).

### If the financial statements are audited

If the statements are [audited](https://www.uhy-prostir.com/en/audit-assurance/audit-of-financial-statements/index.html.md), agree on the stock count date with the auditor before the internal order. Under International Standard on Auditing 501, the auditor attends counts of material stock unless impracticable. For a count on another date, the auditor also checks stock movements to December 31. When attending is impracticable, the auditor seeks other evidence and, failing that, modifies the opinion.

## What the inventory order should include

The head of the company sets up the inventory commission and approves the items, frequency and deadlines by written order ([paragraphs 1 and 3 of section II](https://zakon.rada.gov.ua/laws/show/z1365-14#n52)). Usually this is a single internal order covering:

1. Grounds: the year-end inventory before annual reporting.
2. Scope: assets and liabilities by location and by materially responsible person (MRP, the employee accountable for assets in their custody), with separate lists for assets outside the company, in safe custody or leased.
3. Timing: start and end dates for each group in the table above, plus a site-by-site schedule for several warehouses or stores.
4. The commission’s members and chair, or a reference to the order on the standing commission, plus working commissions for large volumes.
5. Deadlines for passing inventory lists and reports to accounting and for preparing reconciliation statements.
6. The date of the commission’s minutes.
7. How to handle assets in a combat area or occupied territory.

A recurring procedure can go into an internal inventory policy ([paragraph 22 of section II](https://zakon.rada.gov.ua/laws/show/z1365-14#n107)), leaving only the dates and members for the annual order.

## Who sits on the inventory commission

The commission includes representatives of management, the accounting function and experienced employees who know the items, their prices and the source records. It is chaired by the head of the company, a deputy or an authorized head of a business unit; a head who keeps the books personally chairs it ([paragraph 1 of section II](https://zakon.rada.gov.ua/laws/show/z1365-14#n52)).

Outside providers that keep the books under contract can represent the accounting function: an audit firm, a centralized accounting office or a sole proprietor. The Regulation sets no minimum size, so if the director is the only employee, bring an outsourced accountant onto the commission so that the assets are not checked solely by the person accountable for them. Their attendance at the count needs separate agreement, as outsourcing does not cover it automatically.

The full commission counts in the presence of the MRP ([paragraph 1 of section II](https://zakon.rada.gov.ua/laws/show/z1365-14#n56)). The most common mistake we see is leaving the MRPs out and treating the inventory as the accounting team’s job. A member facing a long absence (illness, mobilization, relocation) is replaced by internal order before the count. MRPs cannot sit on a working commission that checks assets in their custody, and the same employee cannot chair a commission checking the same MRPs two years running ([sub-paragraph 2.4 of paragraph 2 of section II](https://zakon.rada.gov.ua/laws/show/z1365-14#n61)).

## How to count and document the results

Before counting, the commission chair signs receipt and issue documents with the note “Before inventory as of (date).” The MRPs confirm in writing that all documents have reached the accounting team ([paragraph 6 of section II](https://zakon.rada.gov.ua/laws/show/z1365-14#n80)). Stock may not be listed from what the MRPs say or from the books without a physical check ([sub-paragraph 4.2 of paragraph 4 of section III](https://zakon.rada.gov.ua/laws/show/z1365-14#n149)).

| Item | How it is documented and what is checked |
| --- | --- |
| Fixed assets, intangible assets, stock, third-party assets on off-balance-sheet accounts | An inventory list with names, quantities and values; for fixed assets, also the inventory number, original cost, accumulated depreciation and useful life |
| Cash on hand, cash documents, strict-reporting forms (serially numbered blanks) | An inventory report; the cash desk is checked under the cash-handling rules in NBU Board Resolution No. 148 of December 29, 2017 |
| Bank balances | Reconciliation with bank statements, recorded in an inventory report |
| Receivables and payables | An inventory report; the creditor sends statements to debtors to confirm the amounts; limitation periods are checked |
| Provisions, allowance for doubtful debts, deferred expenses and deferred income | An inventory report with calculations; the vacation pay provision, including social insurance contributions, is based on unused leave days and average daily pay |

Limitation periods need recalculating this year: [Law No. 4434-IX](https://zakon.rada.gov.ua/laws/show/4434-20) lifted their martial-law suspension from September 4, 2025. Debts past the limitation period go into the inventory report and its attached statement ([sub-paragraph 7.5 of paragraph 7 of section III](https://zakon.rada.gov.ua/laws/show/z1365-14#n197)).

Inventory lists, reports and reconciliation statements are prepared as source documents under the [Regulation on Documentary Support of Accounting Records](https://zakon.rada.gov.ua/laws/show/z0168-95). They can be handwritten or electronic, in at least two copies ([paragraphs 14 and 21 of section II](https://zakon.rada.gov.ua/laws/show/z1365-14#n91)). All commission members and the MRPs sign every correction.

The accounting team then prepares reconciliation statements, valuing surpluses and shortages at book value ([paragraph 20 of section II](https://zakon.rada.gov.ua/laws/show/z1365-14#n102)). The commission establishes the reasons for discrepancies and records its conclusions in the minutes ([paragraph 1 of section IV](https://zakon.rada.gov.ua/laws/show/z1365-14#n210)).

## What to do with assets that cannot be reached

A separate rule applies to companies whose registered address, business units or property were or are in temporarily occupied territory or in combat areas ([paragraph 8 of section I](https://zakon.rada.gov.ua/laws/show/z1365-14#n233)). They take the inventory when authorized staff have safe and unimpeded access to the assets, source documents and accounting registers.

On the day of the decision, check the status of the hromada (Ukraine’s basic local community) in the official [list of combat and occupied territories](https://zakon.rada.gov.ua/laws/show/z0380-25) approved by Ministry for Development of Communities and Territories Order No. 376 of February 28, 2025, and record it in the internal order. Yet safe access, not the status, decides.

Without access, and with no loss of specific property established, no inventory differences arise for it. Once the obstacles are gone, the property is inventoried as of the first day of the following month. If specific property is known to have been stolen, destroyed or damaged, the head can order its inventory as of the day this was established.

Postponing the inventory does not postpone valuation. National Accounting Regulation (Standard) 28 “[Impairment of Assets](https://zakon.rada.gov.ua/laws/show/z0035-05)” (NP(S)BO 28) requires checking at the annual balance sheet date whether non-current assets show signs of impairment, such as physical damage. Micro-enterprises and non-entrepreneurial companies that carry non-current assets without impairment under [paragraph 7 of section I of NP(S)BO 25](https://zakon.rada.gov.ua/laws/show/z0161-00#n33) are exempt ([more on these simplifications](https://www.uhy-prostir.com/en/blog-en/small-enterprise-financial-statements-ukraine-2027/index.html.md)). Under IFRS, IAS 36 requires the same check.

On October 22, 2025, the Ministry of Finance [proposed](https://mof.gov.ua/uk/draft_normative_legal_acts_in_2025-821) separate accounts for assets lost to armed aggression, but as of October 22, 2026, they had not been added to the [Instruction on the Chart of Accounts](https://zakon.rada.gov.ua/laws/show/z0893-99).

## How to record surpluses and shortages

[Section IV of the Regulation](https://zakon.rada.gov.ua/laws/show/z1365-14#n213) sets the rules:

| Finding | How to record it |
| --- | --- |
| Surplus fixed assets and intangible assets | Recognize at fair value ([sub-paragraph 1.5 of paragraph 1 of section III](https://zakon.rada.gov.ua/laws/show/z1365-14#n124)) with a corresponding increase in deferred income |
| Surplus cash, securities, stock and other current assets | Recognize with a corresponding increase in income for the reporting period |
| Stock shortages within natural loss allowances | Write off to expenses by order of the head of the company after offsetting any regrading differences |
| Shortages above the allowances, losses from spoilage | Remove from the balance sheet and charge to those responsible; if none are identified, carry the amount off-balance-sheet until they are found or the case is closed |

If a product has no natural loss allowances, any loss counts as a shortage above the allowance. Regrading differences (mix-ups between similar items) can be offset only for stock with the same name, in identical quantities, for the same period and with the same MRP ([paragraph 5 of section IV](https://zakon.rada.gov.ua/laws/show/z1365-14#n218)). A wider offset can be allowed only by ministries and other executive authorities, for enterprises they manage.

We advise against offsetting based on a similar name alone: a different pack size, manufacturer, item number or unit of measure can mean a different stock item. Record the grounds for an offset in the inventory documents; without them, it is safer to show the shortage and surplus separately.

### VAT on inventory results

For goods bought with VAT, the key question is whether to accrue compensating tax liabilities under [clause 198.5 of the Tax Code of Ukraine](https://zakon.rada.gov.ua/laws/show/2755-17#n4951), that is, VAT the company charges itself on written-off goods. The base is their purchase cost (clause 189.1).

| What happened | VAT consequences |
| --- | --- |
| Goods written off because of shortages or spoilage above natural loss allowances | Compensating tax liabilities are accrued; a consolidated tax invoice (issued by the company to itself) is due by the last day of the write-off period |
| Shortage within natural loss allowances | No liabilities if the cost of the losses is included in the cost of VAT-taxable finished products |
| Shortage in a selective inventory report drawn up at the tax authority’s request during an audit | Compensating tax liabilities are accrued: the Tax Code treats such goods as used outside business activities unless destruction by force majeure is confirmed (last paragraph of clause 198.5) |
| Fixed assets liquidated at the taxpayer’s own decision | A supply at the usual price, but not below the carrying amount ([clause 189.9 of the Tax Code](https://zakon.rada.gov.ua/laws/show/2755-17#n4591)), unless the assets were destroyed by force majeure, their theft is confirmed, or the tax authority has a document showing they were destroyed, dismantled or converted and can no longer serve their original purpose (second paragraph of clause 189.9) |
| Goods destroyed or lost by force majeure during martial law | Clause 198.5 does not apply ([clause 32-1 of subsection 2 of section XX of the Tax Code](https://zakon.rada.gov.ua/laws/show/2755-17#n20097)) |

The first two rows reflect the State Tax Service position in its [ZIR knowledge base](https://zir.tax.gov.ua/main/bz/view/?src=ques&id=31451). For documenting a fixed-asset write-off, see our example on [backup power equipment](https://www.uhy-prostir.com/en/blog-en/write-off-of-backup-power-supply-equipment-by-a-company/index.html.md).

Depending on the situation, destruction or loss is supported by documents from the competent authorities, a Chamber of Commerce force majeure certificate, a Unified Register of Pre-Trial Investigations extract for theft, photos and videos, inventory lists and the property’s source documents. In UHY Prostir’s experience, the most common gap is the link to specific property: the shelling or fire is confirmed, but not what was destroyed, how much and for what amount. So collect and cross-check the documents before the minutes.

## What happens if you skip the year-end inventory

There is no separate fine for the company itself. Officials face a fine of UAH 136–255 for a late or poor-quality inventory of cash and tangible assets ([article 164-2 of the Code of Ukraine on Administrative Offenses](https://zakon.rada.gov.ua/laws/show/8073-10#n1402)). A repeat offense within a year costs UAH 170–340. These cases are heard by the State Audit Service, not the tax authority ([article 234-1 of the Code](https://zakon.rada.gov.ua/laws/show/8073-10#n3862)).

The bigger risk is tax-related. During a tax audit, the tax authority can require a count of fixed assets, goods and materials, and cash ([sub-clause 20.1.9 of the Tax Code](https://zakon.rada.gov.ua/laws/show/2755-17#n8736)). A refusal can lead to an administrative freeze on the company’s property ([sub-clause 94.2.8](https://zakon.rada.gov.ua/laws/show/2755-17#n13958)).

**UHY Prostir** provides [outsourced accounting](https://www.uhy-prostir.com/en/accounting/index.html.md) and [financial statement audits](https://www.uhy-prostir.com/en/audit-assurance/audit-of-financial-statements/index.html.md). If you need help with the inventory order and schedule, reconciliations, inventory lists, discrepancies or the tax consequences of shortages, [contact our team](https://www.uhy-prostir.com/en/contacts/index.html.md).** Iryna Blonska** (Project Manager)

## Frequently asked questions

### Is an inventory required before preparing annual financial statements?

Yes. The Regulation on the Inventory of Assets and Liabilities, approved by Ministry of Finance of Ukraine Order No. 879 of September 2, 2014, makes it mandatory for all legal entities and for branches and representative offices of foreign legal entities. Assets in temporarily occupied territory or in combat areas are inventoried once safe and unimpeded access to them becomes possible.

### When can the year-end inventory for 2026 start?

Fixed assets, goods, materials, receivables and payables are checked no earlier than October 1, 2026. Cash, financial investments, work in progress, semifinished goods, capital investments in progress, unused provisions, tax balances and social insurance balances are checked no earlier than November 1. The vacation pay provision is measured as of December 31, and real estate other than state property can be inventoried once every three years.

### Who sits on the inventory commission?

Representatives of management, the accounting function and experienced employees who know the items being counted, their prices and the source records. The accounting function can also be represented by an outside provider that keeps the books under contract. The commission is chaired by the head of the company, a deputy or an authorized head of a business unit. There is no minimum number of members, but the count is carried out by the full commission in the presence of the materially responsible person.

### How long does the head of the company have to approve the inventory commission’s minutes?

The head of the company approves the minutes within five working days after the inventory is completed. The results are recorded in the accounts and financial statements for the reporting period in which the inventory was completed.

### How is an inventory carried out for assets in temporarily occupied territory?

As long as there is no safe and unimpeded access to the assets, source documents and accounting registers, those assets are not inventoried. Once the obstacles are gone, the inventory is carried out as of the first day of the following month. If specific property is known to have been stolen, destroyed or damaged, the head of the company can order an inventory of that property as of the day these facts were established.

### Must VAT be charged on a shortage found during the inventory?

According to the State Tax Service, goods purchased with value added tax and written off because of shortages or spoilage above natural loss allowances trigger compensating tax liabilities under clause 198.5 of the Tax Code of Ukraine, based on their purchase cost. No liabilities arise within the allowances if the cost of the losses is included in the cost of finished products subject to this tax. The rule does not cover goods destroyed or lost by force majeure during martial law.

## Related insights

- [Compensation for Business Losses: Accounting for Destroyed Goods and Filing with the RD4U Register](https://www.uhy-prostir.com/en/blog-en/destroyed-goods-accounting-vat-rd4u/index.html.md): How to document the destruction of goods in a warehouse, write them off without triggering VAT liabilities, and file a claim with the RD4U Register. (2026-09-01)
- [How Small-Enterprise Financial Statements in Ukraine Change in 2027](https://www.uhy-prostir.com/en/blog-en/small-enterprise-financial-statements-ukraine-2027/index.html.md): From 2027, Ukrainian small and micro-enterprises report on updated Forms No. 1-m, 2-m and 1-ms. See the new lines, new accounts and what to do before 1 January. (2026-10-16)
- [Write-off of Backup Power Supply Equipment by a Company](https://www.uhy-prostir.com/en/blog-en/write-off-of-backup-power-supply-equipment-by-a-company/index.html.md): Generators, uninterruptible power supply systems (UPS), battery packs, and inverters are more than just equipment. (2026-02-22)
- [Statute of Limitations for Tax Audits in Ukraine After 1 August 2026](https://www.uhy-prostir.com/en/blog-en/statute-of-limitations-for-tax-audits-in-ukraine/index.html.md): Which tax periods in Ukraine are closed to audit after 1 August 2026, when the 2,555-day limitation period applies and which audits may still reach 2020–2022. (2026-10-12)

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