Audit of banks as public interest entities: Segmentation and conjuncture of the bank audit market in Ukraine

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An important factor in restoring the confidence of financial consumers in banks is to provide auditors with credible and detailed financial statements and their solvency. This study is a pilot step in clarifying the auditor’s role in ensuring the banks’ reliability as public interest entities in Ukraine. It is aimed at investigating the segmentation of the banking audit services market in Ukraine and its comprehensive characteristics. Structural and dynamic analysis were applied to investigate market, regional and branch concentration, as well as main trends in bank audit market development within the data and registers of the Audit Chamber of Ukraine (ACU) and 75 annual reports of Ukrainian banks. Key aspects of the bank audit market in Ukraine are highlighted: the potential of the bank audit market, the ability of auditors to provide audit services and current characteristics of market conjuncture. Bank audit market is highly segmented: this study differentiates strong segments of international audit networks, associations and alliances, including Big 4 companies and the segment of weak Ukrainian audit companies. Kyiv and Kyiv region are the dominant economic active regions in terms of the regional bank market concentration and the presence of international audit networks. The study results are the basis for improving the regulation of the banking audit services market by the National Bank of Ukraine and ACU.

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    • Figure 1. The volume of tasks providing confidence in businesses in all sectors of the economy and financial sector of Ukraine, 2008–2019, UAH mln, excluding VAT
    • Figure 2. Share of tasks providing confidence in business entities in the financial sector, the total volume of services for 2008–2019, %
    • Figure 3. Structure of financial institutions that are customers of audit services, the share in the total volume of services provided in 2019, %
    • Figure 4. Audit portfolio of Ukrainian banks of B4 companies
    • Figure 5. Audit portfolio of Ukrainian banks of the mid-tier audit companies
    • Figure 6. Audit portfolio of Ukrainian banks of Ukrainian audit companies
    • Table 1. Some incidents related to the banks’ audit in Ukraine in 2015–2019
    • Table 2. Dynamics of audit entities entitled to conduct a statutory audit of the financial statements of public interest companies
    • Table 3. IANAA in the bank audit market as public interest entities
    • Table 4. Ukrainian companies in the bank audit market as public interest entities
    • Table 5. Characteristics of audit statements of Ukrainian banks as public interest entities
    • Table A1. Number of assurance tasks performed by audit firms on behalf of financial entities
    • Conceptualization
      Victor Sukhonos, Serhiy Makarenko, Viktoriia Levkulych
    • Project administration
      Victor Sukhonos, Yulia Serpeninova
    • Supervision
      Victor Sukhonos, Galina M. Kolisnyk
    • Writing – original draft
      Victor Sukhonos, Serhiy Makarenko
    • Writing – review & editing
      Victor Sukhonos, Yulia Serpeninova, Viktoriia Levkulych
    • Data curation
      Yulia Serpeninova, Galina M. Kolisnyk
    • Formal Analysis
      Yulia Serpeninova, Galina M. Kolisnyk
    • Validation
      Yulia Serpeninova, Galina M. Kolisnyk
    • Funding acquisition
      Serhiy Makarenko
    • Investigation
      Serhiy Makarenko
    • Methodology
      Serhiy Makarenko, Viktoriia Levkulych, Galina M. Kolisnyk
    • Resources
      Serhiy Makarenko
    • Software
      Serhiy Makarenko, Viktoriia Levkulych
    • Visualization
      Viktoriia Levkulych