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Audit of Diia.City Residents

Audit of Diia.City Residents

Diia.City residents are companies and businesses that have registered in a special legal regime created as part of the Diia.City initiative of the Ukrainian government.

This regime serves to support and develop IT industry in Ukraine by providing certain tax, labor and other benefits intended to stimulate the growth of the technology sector, attract investment and innovation. Residency in Diia.City offers opportunities to optimize business activities, reduce bureaucratic obstacles and increase competitiveness at the international market.

Under the Law of Ukraine No. 1667-IX “On Stimulating the Development of the Digital Economy in Ukraine” dated 15.07.2021 (further — the Law No. 1667-IX), Diia.City residents are obliged to submit annually, no later than June 1 of the year following the reporting year, to the authorized body (the Ministry of Digital Transformation of Ukraine) a report on compliance with the requirements set forth in Article 5 of the Law No. 1667-IX for the period from January 1 to December 31 of the previous calendar year (annual compliance report).

The annual compliance report shall be accompanied by an independent opinion submitted by the audit entity based on the results of verification of the statements of the Diia.City resident set forth in its annual compliance report.

The independent opinion must be submitted by an audit entity that, under the Law of Ukraine "On the Audit of Financial Statements and Auditing", has the right to conduct a statutory audit of financial statements and has the appropriate qualifications and experience (audit entities listed in sections 3 and 4 of the register).

Audit of Diia.City residents must be conducted following the requirements of international standards on auditing

The annual report of a Diia.City resident must contain the information required to be disclosed in accordance with Articles 13 and 5 of the Law 1667-IX.

An independent opinion, provided by the audit entity, certifies the correctness of such data under the Law 1667-IX.

At first, compliance with the criteria is checked:

  • carrying out by the Diia.City resident of the relevant activities (computer programming, consulting on informatization, computer equipment management activities, release of computer games and other programs, provision of online software products, educational activities in IT, cybersecurity, etc.)
  • compliance of the Diia.City resident with all the requirements set forth in Article 5 of the Law No. 1667-IX
  • the amount of the average monthly remuneration to employees and gig specialists (if any) for each calendar month of the reporting period — not less than EUR 1,200
  • the average number of employees and gig specialists (if any) of a Diia.City resident for each calendar month of the reporting period — at least 9
  • the amount of the legal entity's qualified income is at least 90 percent.

Various international standards may be used to prepare an audit report, including the following:

  • ISAE 3000 “Assurance Engagements Other Than Audits or Reviews of Historical Financial Information”
  • ISA 700, “Forming an Opinion and Reporting on Financial Statements”.

Both standards allow to regulate assurance engagements in the context of an audit.

The first standard is not directly related to the audit and is applied in the preparation of financial statements.

The second standard provides for the review of all financial statements in the context of verifying business development prospects.

One important thing is that the audit is conducted upon a report submitted by the Diia.City resident to the Ministry of Digital Transformation. Thus, the resident must ensure the accuracy and completeness of the information contained in the report.

Audit is an important component of the monitoring compliance system by Diia.City residents with the requirements of Law No. 1667-IX.

The fact that a Diia City resident fails to submit or delays the submission of a compliance report and/or independent opinion to the Ministry of Digital Transformation by more than 20 business days from the date of expiry of the deadline for submission of the relevant documents is grounds for losing the Diia City resident status.

Starting from 2025, if the audit results indicate that the resident does not meet the established criteria, the Ministry of Digital Transformation may decide to cancel the resident status (this rule will be applied in order to maintain the status in 2025 based on the results of the 2024 reporting).

BDO LLC offers high-quality audit services for Diia.City residents, providing comprehensive support and a professional approach. Our team of qualified auditors uses advanced techniques and technologies to ensure the accuracy and reliability of the company's financial statements. Contact us for a detailed consultation, and our experts will assist you in determining the best audit and consulting services for your business in Diia.City.

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