Do you know how many Ukrainians work as accountants? The answer is more than 1 million! There is a good reason why the country needs so many accountants.
Accounting in Ukraine is a highly complex task due to the country’s complicated tax laws and overall administrative system. Foreigners often complain that they do not understand it, and so highly qualified accountants are needed to drift through these muddy waters.
Accounting in Ukraine is very much document-driven and requires more human resources than in the west. Accountants spend a lot of their time dealing with the tax authorities face to face than doing real commercial accounting. In fact, tax authorities also keep accountants very busy by making lots of “special requests.” One also often hears that an accountant can either focus on foreign languages or on accounting content, but focusing on both would be too complex.
However, the role of an accountant in Ukraine is undergoing a radical change and this division may not be relevant much longer.
Until recently, an accountant – now often referred to as “a Soviet-style accountant”– was an employee who entered data into an accounting program called 1C. Such accountants generated lots of reports each quarter for the state authorities by applying purely technical tax knowledge.
The position of chief accountant was a very high rank in the hierarchy of the company.
Bureaucracy governed the company and the management had to listen to what the accounting department had to say. In the best cases, the accounting department and management did not communicate with each other. In the worst cases, the accountants accused management of not doing business in the correct, auditable form, while the management argued that the internal tax and accounting regulations were too convoluted for any business to take place.
Instead of communicating with each other to reach a win-win situation, it looked more like a lose-lose situation. Fortunately, this is becoming less common now.
Modern accountants are consultants, speaking at least one foreign language and studying the International Financial Reporting Standards, or IFRS, in the evening. There is a new generation of accountants with ambitions to play in the International Accounting League.
What has changed? While previously accounting and reporting were mainly done for the state authorities, today they are a tool for financial analysis in a more competitive business environment.
Accountants in large Ukrainian companies and in western organizations operating in Ukraine have to provide their management with numbers that are based not only on tax documents, but on reality. Accountants need coordination and organizational skills to cope with the document flow and to end the month with reliable figures.
Nowadays, an accountant is also a consultant, advising the director on possible actions and their financial impact. Their accounting and tax policy plays a big role in profit and tax planning for the company, and overall there is more choice than ever between different accounting and tax rules.
Currently Ukraine has more than 30 accounting standards. Many of them are similar to the IFRS, but traditionally they relate more to theory than practice. Now many accountants identify and apply the new possibilities that the Ukrainian Accounting Standards grant, for example about cash reserves for banks.
Furthermore, the modern accountant is also a technical master. The standard accounting program 1C provides many options to map out costs, profits and other corporate financials. To use these options, an accountant also needs to understand the business he or she works for. Communication and analytical skills therefore have a high value.
Accountants no longer have to choose between deep professional knowledge or language skills. But knowledge of English definitely helps because it provides a door into discussions at the international level that help accountants to understand their trade better.
We are observing that, step by step, Ukrainian accounting is getting closer in practice to substance rather than form. In addition to the characteristics of the modern accountant mentioned above, we are seeing more and more ambitious and talented candidates.
But becoming a qualified accountant in Ukraine with the above profile is much more difficult than to work as a typical SAP-accountant in the West.
Identifying them is not always easy, and in practice we see that Western managers often have problems choosing the right people, since accounting and financial experts from the West usually have very little idea about the rules of Ukrainian accounting.
Ulf Schneider is managing director of Ukraine Consulting as well as affiliated consulting firms in Belarus, Germany, Kazakhstan and Russia. He can be reached at [email protected]. Sven Henniger, is director of the group in Kyiv and a newly opened up office in Minsk. He can be reached at [email protected].
