Financial audit of the Bucha Community: there is no unified reporting at the community level, assets are understated by UAH 1,81 billion

The Accounting Chamber of Ukraine conducted the financial audit of the Bucha Urban Territorial Community for 2025.

The first-ever financial audit of the territorial community in the institution's history was conducted in accordance with international standards. Serhii Kliuchka, Deputy Chairman of the Accounting Chamber of Ukraine, was responsible for the audit.

The audit report was approved at the meeting of the Board of the Accounting Chamber of Ukraine on 28 July.

The audit covered the financial and budgetary reporting of the group of main managers of budgetary funds for the Community’s budget, specifically its key components: the Bucha City Council and the Department of Education of the Bucha City Council. Collectively, these entities accounted for 88,6% of the Community’s budget expenditures for 2025 and 78,5% of all assets recorded on the balance sheets of the group of main managers of budgetary funds.

The total cash expenditures by the group of main managers of budgetary funds in Bucha in 2025 amounted to UAH 1,48 billion. The assets volume covered by the audit totalled UAH 3,25 billion, including the value of land plots leased out and contributions to the capital of municipal enterprises that were not recorded in the financial statements.

Key audit conclusions. Qualified opinion

Based on the audit findings, the Accounting Chamber of Ukraine provided a qualified opinion that, except for the cumulative effect of the identified misstatements, the financial and budgetary reporting of the group of main managers of budgetary funds fairly and in all material respects reflects the financial state of play of the Bucha Urban Territorial Community as of 1 January 2026, as well as its financial outcomes and cash flows for 2025.

Lack of Community’s consolidated financial statements

Currently, the Community has one representative and five executive bodies of local self-government – main managers of budget funds. Each of them is a separate legal

entity, keeps accounting records and independently submits financial statements to the Treasury bodies within the limits of its own assets, income and expenses.

At the same time, a unified consolidated financial statement, which would reflect all assets, liabilities and financial outcomes of the Community, is not prepared. Because of this, there is no holistic view of the property and the general financial state of play of such a Community. Therefore, the allocation of assets and liabilities of the Community between the reporting of several legal entities and the lack of integral information about resources complicates the control over property management, leads to less transparency and weak accountability of the executive (representative) bodies of the Community to its residents.

Value of the assets is understated

The audit revealed that, due to deficiencies in internal control, formalistic approach to establishing accounting policy and insufficient staffing of accounting departments the total value of assets reported in the financial statements of the group of main managers of budgetary funds was understated by UAH 1,81 billion.

In particular, the following was not reflected in the balance sheet of the Bucha City Council:

• land plots leased out owned by the Community with a normative monetary valuation of UAH 1,14 billion;
• contributions to statutory, share and additional capital of municipal enterprises totalling UAH 671,8 million;
• capital investments in progress amounting to UAH 22,8 million, in particular the expenditures on the improvement of fixed assets and the cost of property received but not yet put into operation;
• six vehicles worth UAH 10,26 million, which were unjustifiably decommissioned based on documents that did not actually confirm the termination of ownership rights to these vehicles;
• Inventories worth UAH 9,6 million.

Due to errors in calculating depreciation, the book value of certain fixed assets belonging to the Bucha City Council and the Department of Education was overstated by a total of UAH 31,4 million.

Other misstatements in the reporting of local educational institutions

The financial statements of the Department of Education do not record inventories amounting to UAH 2,9 million, while current accounts receivable are overstated by UAH 15.3 million due to the double recording of an prepayment paid to a contractor.

Additionally, the Department of Education did not record in its financial statements two apartments that were recorded in an off-balance-sheet account at zero value.

Specific deficiencies were identified in the accounting records of the Bucha Lyceums No. 3 and No. 9. The Lyceum No. 3 retained fully depreciated fixed assets – unfit for further use – worth UAH 2,63 million on its balance sheet. The Lyceum No. 9 did not calculate depreciation for low-value non-current tangible assets totalling UAH 1,8 million.

Reporting of transfers

Due to a lack of regulatory clarity, the financial statements of the Bucha City Council do not record its economic transactions (transfers) for the allocation of UAH 309 351,34 thousand to the accounts of recipients (municipal enterprises and institutions under its jurisdiction).

Some of the misstatements were eliminated during the audit

In the first half of 2026, the auditees eliminated a significant part of the identified errors and misstatements.

In particular, the Bucha City Council:

• reinstated six vehicles worth UAH 10,26 million;
• recorded capital investments in progress of UAH 22,8 million and inventories of UAH 9,6 million;
• calculated the wear and tear of certain fixed assets;
• adjusted the classification of assets and liabilities;
• made amendments to the accounting policy.

In addition, the Department of Education:

• excluded double-reported accounts receivable totalling UAH 15,3 million from the balance sheet;
• recorded inventories for UAH 2,9 million;
• following the implementation of an automated accounting system, adjusted the accumulated wear and tear by UAH 11,17 million out of the UAH 29,42 million identified during the audit.

Recommendations based on audit findings

According to the audit findings, the Accounting Chamber of Ukraine made recommendations to the Cabinet of Ministers of Ukraine, the Bucha City Council, the Department of Education and the Lyceums No. 3 and No. 9.

In particular, it is recommended to:

• the Cabinet of Ministers of Ukraine to assign to the relevant central executive bodies preparation of proposals for the legislative regulation of the formation of consolidated financial statements for the territorial community, and to the
• Ministry of Finance of Ukraine the regulation of the procedure for reflecting in the financial statements of the main manager of budget funds allocations completed as transfers to recipients under its jurisdiction;
• the Bucha City Council to reflect in its accounting records and financial statements the land plots leased out with a normative monetary valuation of UAH 1,14 billion, the actual value of contributions to the additional capital of subordinate municipal enterprises as of the financial statement formation date, as well as determine the procedure for accounting for financial investments in their statutory, share or additional capital.
• the Department of Education to calculate additional depreciation on fixed assets amounting to UAH 18,25 million, ensure the automated transfer of accounting data to financial statement forms, and conduct a valuation of two apartments with the subsequent recording of their value in the accounts;
• the Lyceums No. 3 and No. 9 to bring the accounting of fixed assets and capital investments in progress into line and strengthen internal control over the comprehensive recording of assets.

The deadline for the implementation of the recommendations to the Bucha City Council, the Department of Education and educational institutions is set until 31 December 2026.

Bucha City Mayor Anatolii Fedoruk who participated in the meeting generally agreed with the findings and recommendations of the Accounting Chamber of Ukraine. He noted that the formation of consolidated financial statements for territorial communities and certain issues on accounting required legislative regulation.

The decision and report of the Accounting Chamber of Ukraine have been sent to the Verkhovna Rada of Ukraine and its Committee on the Organization of State Power, Local Self-Government, Regional Development and Urban Development, with a recommendation to consider them at а Committee meeting. The decision and report have also been sent to the Bucha City Council, the Department of Education, and the Bucha Lyceums No. 3 and No. 9 for consideration and implementation of the recommendations.