A tax compliance review (known in Ukraine as a tax audit) is an independent review of whether taxes have been correctly calculated and paid. The aim is to identify errors, assess tax risks and determine how to address them.
We review the agreed taxes for the defined periods: we compare the figures in filed returns with accounting data and source documents, recalculate tax figures and identify discrepancies.
Our auditors perform tax compliance reviews as agreed-upon procedures engagements under International Standard on Related Services (ISRS) 4400 (Revised). Our report describes the procedures performed, the factual findings and the discrepancies and tax risks identified, and sets out our recommendations, without an audit opinion. We agree on the taxes, periods and procedures with you when we sign the agreement.
Only your organization’s management decides on any further corrections. If both parties agree, we can help implement these corrections or later check that you have made them correctly.
What is a tax compliance review
A tax compliance review checks whether tax liabilities are correctly determined, tax accounting is properly maintained and tax returns are correctly prepared. An organization orders it to identify errors and tax risks in advance, assess their possible consequences and decide whether corrections are needed.
The review may cover all of the organization’s taxes or only some of them, for example VAT or corporate profit tax, for one or several periods. We set out the results in an agreed-upon procedures report.
In Ukraine, the term “tax audit” is also used for tax audits carried out by the State Tax Service of Ukraine (STS). A tax compliance review by UHY Prostir is an independent review commissioned by the client, not an inspection by a tax authority. It doesn’t exempt the company from STS tax audits and doesn’t guarantee that the tax authority will agree with its results. A tax compliance review also doesn’t replace a financial statement audit and doesn’t involve expressing an audit opinion on the financial statements.
How we can assist you
Organizations contact us when management or owners want to make sure that taxes are calculated correctly, tax returns agree with the accounting data and there are no material errors or risks in tax accounting. A tax compliance review also helps assess tax risks before an STS tax audit, the sale or purchase of a company, or bringing in an investor.
In particular, clients come to us with the following tasks:
- Prepare for a tax audit — assess the accuracy of calculations and returns and the risk of additional tax assessments and penalties, especially if the company is included in the STS schedule of planned tax audits.
- Review prior-period accounting — after a change of chief accountant or of the company that kept the books.
- Check data after moving to new accounting software — make sure the data was transferred correctly and agrees with the filed returns.
- Carry out tax due diligence — assess tax risks before selling or buying a company or bringing in an investor.
- Meet a parent company or investor requirement — obtain an independent review of tax calculations.
- Check the taxation of specific transactions — if there are doubts about how they were recorded or about figures in filed returns.
- Monitor tax accounting on an ongoing basis — carry out periodic reviews to identify and correct errors in time.
Our services
We perform a tax compliance review under an agreement as an agreed-upon procedures engagement. Depending on your task, it can include the following services.
Corporate profit tax and VAT review
We check that income and expenses are correctly determined for corporate profit tax purposes, including the periods of recognition and the related adjustments. We analyze the accrual of VAT liabilities and the formation of input VAT (the Ukrainian tax credit).
Review of taxes and the unified social contribution on salaries and other payments to individuals
We check the calculation of personal income tax and military levy on salaries and other payments to individuals, and how they are reported. In a comprehensive review, we also check the unified social contribution (USC), Ukraine’s mandatory state social insurance contribution. It’s not a tax, but its calculation and reporting are controlled by the STS.
Tax due diligence
We assess a company’s tax risks before its sale or purchase or before bringing in an investor: we review tax returns and accounting for prior periods and identify possible additional tax assessments.
Review of specific transactions and contracts
We analyze how the substance, terms and documentation of specific transactions and contracts affect the tax figures. We give separate attention to transactions with a higher risk of claims from the tax authority.
Service fees
We set our fees on a case-by-case basis after clarifying the task and reviewing the initial data. Our fees are based on:
- the taxes and the period to be reviewed;
- the volume and complexity of transactions;
- the condition, completeness and availability of documents;
- the scope of the calculations required;
- the required timeline and urgency;
- the format, length and language of the report.
After we receive your request through the website form, we’ll send you a questionnaire or contact you to clarify the details of the engagement. We set out the scope of services, fees and timeline in our proposal and record them in the relevant agreement. You pay any additional costs only after we’ve agreed on them with you.
Getting started
- Tell us what you need
Submit a request or contact us. Describe the task and when you need the result. If your parent company or investor has requirements for the review, please send them to us. - Provide information for a proposal
We’ll discuss the details with you. This helps us define the taxes and period to be reviewed, the procedures required and the timeline. - Review our proposal
You’ll receive a list of services, a description of the expected outcome, fees and a timeline. We’ll discuss your questions and agree on the terms. - We sign the agreement
We send you a draft agreement with the agreed terms, in Ukrainian and English if needed. You review it and return it with comments or confirmation of your approval. We agree on the final version, sign the agreement and move on to planning our cooperation.
Our process
After the agreement is signed, we carry out the tax compliance review in the following stages.
- Planning the review and gathering the necessary information
We send you a list of the documents needed and exchange them in the way set out in the agreement. We learn about the company’s business, its accounting and its tax regime. We identify the transactions and figures that need particular attention and plan the sample for testing. - Performing review procedures
We organize the accounting data we receive into structured datasets. For this, we use automated tools: they help us quickly process and compare large volumes of information, and our specialists review and assess the results.
We analyze the accounting data and source documents according to the planned sample and, where needed, test specific transactions in full. We recalculate tax figures and compare them with the filed returns. We discuss any questions with your team during the work and request explanations and additional documents where needed. - Preparing the report
We describe the procedures performed, the factual findings and the discrepancies and tax risks identified, and attach our calculations and recommendations. The report doesn’t contain an audit opinion. - Discussing the results with management
We explain the results of the review, answer questions and discuss possible corrections. The client’s management decides whether they’re needed. Under a separate arrangement, we can help implement these corrections or later check that you have made them correctly.
What you can expect
Depending on the agreed scope of services, you’ll receive:
- An agreed-upon procedures report covering the agreed taxes and periods, describing the procedures performed, the factual findings and the discrepancies and tax risks identified, with our recommendations and without an audit opinion.
- Calculations of tax figures and a list of the discrepancies identified.
Why clients choose UHY Prostir
We combine our experience in Ukraine with the international experience of the UHY International network to serve Ukrainian and international clients.
- Independence, integrity and objective professional judgment.
- In business since 2003.
- A member of UHY International, a global network of specialists in audit, tax and consulting: 340 offices in 95 countries and over 10,000 professionals.
- Doing business abroad: if you already have a business in another country or plan to open and grow one, we can assist by connecting you with our UHY International office in that country, where you can discuss registration, accounting, tax and audit matters.
- Remote collaboration where the nature of the engagement allows.
- Communication and document preparation in Ukrainian and English.
