Banking system of Ukraine

Ukraine has a two-tiered banking system. The National Bank of Ukraine (NBU) is the country’s central bank. Commercial banks, including Ukreximbank, the state export-import bank of Ukraine, and Oschadny Bank, the state savings bank of Ukraine, operate under the authorization and supervision of the NBU.

The banking system in a market-oriented economy plays a triune role.

First‚ the structure of commercial banks administers the system of payments. In developed market relations the colossal number of market transactions is accomplished by way of redistribution of funds between different banking deposits.

Second‚ together with other financial intermediaries, banks direct the savings of the public to firms and commercial enterprises. The effectiveness of the fulfillment of the process of investing funds mostly depends on the capability of the banking system of directing monetary resources to those loan debtors‚ who would find the opportunities to utilize them efficiently.

Third‚ acting in accordance with monetary-credit policy of the central bank‚ the banking system regulates the quantity of money in circulation.

The main functions of the National Bank of Ukraine.

• The National Bank of Ukraine is the central bank

• pursue comprehensive state policy in the domain of monetary circulation, crediting and provision of the stability of the national monetary unit

• enjoy the monopolistic right to issue money into circulation, as well as to issue national monetary marks (bank-notes, coins)

• define currency policy and implements it on the principles of general economic policy of Ukraine

• implement bank supervision over the observance by commercial banks

Commercial banks require a license from the NBU to operate. The NBU has established requirements for capital adequacy, minimum statutory capital requirements and minimum regulatory capital requirements. Most banking services are available in Ukraine, and consumer credit facilities are expanding rapidly. Ukraine’s banking sector has a high level of concentration.

Accounting

Accounting – the process of identification, recording, and communication economic information to permit informed judgments and decisions by users of the information.

Main Functions of Accounting

1. identification of all economic events

2. recording of all economic events (it is done to provide a history of a company's financial activities; in this step economic events are also classified and summarized)

3. communication of information about classified and summarized economic events to interested parties

Financial accounting provides information that is designed to satisfy the needs of external users. Such reporting is usually done in the form of financial statements.

External users are parties outside the reporting entity (company) who are interested in the accounting information.

1. Investors (owners) use accounting information to make buy, sell or keep decisions related to shares, bonds, etc.

2. Creditors (suppliers, banks) utilize accounting information to make lending decisions.

3. Taxing authorities (Internal Revenue Service) need accounting information to determine a company's tax liabilities.

4. Customers may need accounting information to decide which products and from which company to buy.

Managerial accounting provides information that is useful in running a company by internal users. Such reporting is usually accomplished through custom designed reports.

Internal users are parties inside the reporting entity (company) who are interested in the accounting information.

1. A company's senior and middle management uses accounting information to run business.

2. Employees utilize accounting information to determine a company’s profitability and profit sharing.

Bookkeeping – the date-to-day recording of transactions

– is the basis of accounting reports

– the record making part of accounting

Auditing – examining a company’s systems of control and the accuracy (exactness) of its records and looking for errors and possible fraud

1. internal - an audit of a company undertaken by its employees.

2. external - a periodic examination of the books of account and records of an entity conducted by an independent third party (an auditor) to ensure that they have been properly maintained, are accurate and comply with established concepts, principles, and accounting standards, and give a true and fair view of the financial state of the entity.

The objective of financial statements is to communicate information that is useful to investors, creditors and other users in making resource allocation decisions and/or assessing management stewardship. Consequently, financial statements provide information about:

1. an entity’s economic resources, obligations and equity

2. changes in an entity’s economic resources, obligations and equity

3. the economic performance of the entity

Accountants are employed in 3 broad fields: