Audit risk assessment

To start a business and assume that it will never face risks is quite a mistake. There is no business that does not take risks. Depending on the direction of business, there may be fewer or more of them. To some extent, auditing is also a risk. After completion of the audit, such risks as entrepreneur and auditorial risks may arise.

The essence of entrepreneurial risk is that there may be a conflict between the auditor and the client, even if the audit’s conclusion is positive. As a result, there is a risk that the auditor’s work will fail. The entrepreneurial risk of the auditor depends significantly on the following: possible lawsuits against the auditor; its competitiveness (professionalism); time of audit; financial condition of the client and his business operations; competence and knowledge of the staff and administration of the company, etc.

Audit risk is an assumed risk that an auditor may draw inaccurate or erroneous conclusions in his own analysis. 

Audit risk components include:

Acceptable risk – a relatively acceptable risk in the process of verifying business transactions in order to collect and systematize data that confirm certain verification actions and procedures and allow (from an auditor’s point of view) existing levels of control risk (that is, when it is not at maximum, but decreased). If an auditor determines for himself a lower level of audit risk, it will mean that he wants to be more confident that his financial statements are not materially or fundamentally wrong. The level of acceptable risk of audit may be influenced by:

  • auditor’s competence;
  • the financial condition of the company;
  • trust (its level) of customers to the financial statements;
  • scale of business and institutional-legal form of activity of the client;
  • form of business ownership and its distribution in the authorized capital of the client;
  • the nature and amount of its obligations;
  • internal (own) control of the enterprise;
  • bankruptcy probability.

An internal or integral risk is an auditor’s assumption that there may be an inaccuracy in the financial statements and that it may be greater than an acceptable amount for internal control. When determining the level of such an internal economic risk, the internal control is not taken into account, as an independent element, it is already part of the audit risk. In assessing this component, the auditor should take into account:

  • the direction and features of the client’s business;
  • the integrity and integrity of the company’s management;
  • the motives of the client’s behavior;
  • the results of previous audits;
  • primary and repeated audit;
  • relationships with dependent and subsidiary enterprises;
  • non-standard operations;
  • professionalism and knowledge of the accounting staff;
  • account balances and amounts by reporting line
  • quantity and composition of customer’s operations, etc.

Control risk (control risk) – auditor’s assumption that errors or inaccuracies in financial statements that are above the allowed amount will not be corrected or detected during the company’s internal control. The auditor seeks to determine the assessment of the efficiency of the internal control processes of the company (client) at a level that is below 100% (maximum), perceiving this as an element of the audit plan.

Non-detection (search) risk – the degree to which the auditor is prepared to accept that the audit information to be collected and analyzed does not reveal errors (if any) that are higher than the allowed amount. This level of risk is determined by the number of certificates the auditor has planned to collect.

According to the audit activity standard «Materiality and audit risk», audit risk includes control risk, internal business risk and non-detection risk.

In practice, two main methods are used to assess audit risk:

  1. evaluative (intuitive);
  2. quantitative.

The evaluation (intuitive) method of assessing audit risk is the essence of this method in that, based on their knowledge and practice of working with clients, auditors determine audit risk based on the accounts of general or individual operations as high, probable, and unlikely. This assessment is used in future audit planning.

The quantitative method of assessing audit risk is the essence of this method in that many audit risk models are assumed to be quantified. The practicable model of audit risk can be represented by the formula:

Ar = Br * Kr * Pr


  • Ar is audit risk;
  • Br is an inherent risk;
  • Kr – control risk;
  • Pr – The risk of non-detection.

According to the methodology, the audit risk assessment should begin with a list of identified risks of maladministration, assessing their likelihood and significance of consequences. In the next stage, these risks relate to organizational units, existing controls, and positions of the company’s employees. The controls are then evaluated for intended effectiveness, and then the actual effectiveness of the controls is validated by the test results. At the end, the residual risks of significant distortion and the auditor’s response to them are identified.

The method proposed here for assessing the risks of bad faith is not the only one. Different methodologies and approaches can be applied, either completely or at the stage level.

But in any case, three important circumstances need to be taken into account:

  • Industry and scale differences, as well as other factors make it impossible to simplify the evaluation process for all organizations, so constantly need to adjust their approaches depending on the activities and characteristics of the enterprise, which is audited.

The more difficult the chosen evaluation method is, the more difficult it will be to apply it in practice.

An assessment of any risk of maladministration as substantial and at the same time a lack of adequate action by the auditor is considered a clear violation of auditing standards.

The nature of the audit risk is that there is a risk that the auditor will form an erroneous or inaccurate conclusion as a result of not noticing policy distortions in accounts or conclusion. But the audit risk can be calculated: to do this, it is needed to make an assessment of all its components, which reflect both the specificity of the activity of the audited company and the method used for testing. To reduce the identified audit risk (if it exceeds an acceptable value) the intensification of the control procedures is used.

Name: Natalia

Surname: Osadcha


Phone: +380443830000

Company address: 10 Redutnaya Street, Kyiv, Ukraine

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Consulting services: market analysis of Ukraine

In view of the dynamic and changing financial industries in Ukraine, the question of consulting services and risk auditing is especially acute for all spheres of business. The relevance of many related issues changes very often, in the process of the adoption of new laws, foreign investment and introduction of privatization in different directions of the country’s economy.

Common types of consulting services that are provided in Ukraine

Currently, the variety and quality of consulting services offered by Ukrainian companies are quite wide and include many areas:

  • Cash flow management and accounting.

The due to transition of a country’s market system to an international one substantial related issues emerge. It relates both to domestic financial policy and to its extrapolation from the laws of other countries with which business is conducted. In order to manage the company’s finances efficiently, a sufficient amount of relevant knowledge is needed for the interaction of the firm with the international market and compliance with all the intricacies of monetary policy and economy.

  • Administrative Consulting.

Up-to-date service for both established and existing companies on the market. It is aimed at review and optimization of business management, increase of efficiency of enterprise functioning, training of managerial positions and working personnel. This service is especially in demand for companies that are seeking to expand or change the scope of their activities, including entering the international market.

  • Investment Advisory Services.

Since investment is one of the key areas in the conservation and enhancement of resources, it is highly relevant for the domestic economy of most companies. Enterprises seek to invest both earnings and unused assets, which can then bring them profit, as well as expand their reach by investing in them. The more actively and correctly involved a firm’s finances are, the more potential it has in a dynamic financial market.

  • Outsourcing.

This is a service on competent distribution of load within the company and transfer of some of its functions to external performance. This may be relevant in some cases, for example, if it is not advisable to regularly maintain some executive departments (accounting, human resources, crisis management), seasonal increase in workload or mainstreaming issues in the company’s business process (transition to a new financial accounting system, subsidiary organization, etc.). The modern market provides very wide opportunities for temporary recruitment of personnel and use of the services of specialized companies.

  • Audit services.

Necessary for a number of tasks, such as analysis of personnel skills, efficiency of the personnel structure of the company, management of financial statements, including for the passage of tax audits, review of the relevance of documents circulation within the firm, reliability of the documentary base regarding potential bureaucratic costs. Even if there is an appropriate department within the enterprise, the third-party audit service can be a fresh look at current affairs and give its result.

  • Logistics Consultation.

This category includes all issues related to the practical conduct of business in the company. This applies to data repositories, materials used in the enterprise machinery and software. This type of audit makes it possible to significantly increase the efficiency of the company in the future, as well as to protect its data.

Any entrepreneur understands that it is almost impossible to have sufficient knowledge in all of the above areas and to cover related issues. This is exactly why companies providing consulting services in the market of Ukraine are in demand.

Consulting market analysis in Ukraine

The development of the consulting market in our country dates back to 1990. It was during this period that the young government, or rather its private and public businesses, faced new challenges and had to deal with the newly formed issues. Since then, the consulting market has come a long way and today one can see its full integration with internal business management and its readiness to address issues related, inter alia, to international relations.

The structure and ratio of services has also changed and continues to change. At the moment, the conditional market ratio is as follows:

  • IT-consulting – 35%;
  • Operational consulting – 25%;
  • Strategic consulting – 20%;
  • HR-consulting – 15%;
  • Other – 5%.

As can be seen, most companies turn to consulting agencies for material and technical advice, which is based on internet-technology. Due to the ongoing globalization and the transition of business to the world wide web, the digitalization of enterprises is very active even today.

If we analyze which services are most often used by different branches of enterprises, we can also observe some patterns.

  • IT-consulting.

These services are most interested in those companies whose scope of work implies active contact and interaction at the international level. This is the oil industry, the financial sector, including banking, television and radio communications, wholesale trade, energy, machine-building industry, metallurgy.

  • Operational consulting.

Food the optimization of technological production most commonly these enterprises seek help: processing, textile, heavy industry, trade, construction, and the financial sector, which require complex internal processes and reliable provision of services to consumers.

  • Strategic consulting.

In the environment of a dynamic market, strategic planning is in demand in most areas of consumer goods, engineering, and financial services.

  •  HR-consulting.

Quality personnel and their subsequent effective training are necessary for absolutely everyone without exception, so these services are actively sought by enterprises in various fields of industry and trade, engineering, transport, communications, television and radio communications, IT-sphere, the financial sector, etc.

Other types of advisory services include periodic audits, investments, and administration. Their provision is not as extensive but regular, which is why they occupy a significant share of the market.

As for the ratio of the market share occupied by companies providing this type of service, it is quite difficult to distinguish the ownership of this company by a certain country. More than 70% of consulting companies are Ukrainian, but most of them closely cooperate with foreign organizations. Also, about 10% of the market is occupied by individual referents specializing in a certain direction of consulting.

Problems of development of the market of consulting services in Ukraine

As with any other direction, the market of consulting services in Ukraine has a number of problems related to different features of the state and social system. Among them, the most pronounced are the following:

  • A high level of bureaucracy and the difficulty of involving referents in processes, especially in the case of public institutions or enterprises with a governmental share.
  • A legislated market entity that runs counter to the capitalist order of the market.
  • High levels of monopolization of companies, including state-owned ones, leading to a lack of market development.
  • Poor corporate awareness of consulting agencies and low management literacy.
  • Lack of a culture of consumption of such services as such in Ukraine.
  • The lack of understanding of the clients of the possibilities of referents and the problem with setting their tasks.

It is also worth noting the problem of corruption, because of which many situations, that are solved by consulting agencies, are unleashed in a less moral way. This is a significant drag on the development of the market as a whole because it limits free financial movements between businesses.

The future of consulting companies in Ukraine

Despite all the above, consulting services, though not as fast as they can, continue to develop in our market. Companies are working to offer appropriate service and tailor themselves to the customer as best they can. For example:

  • Work under contract, providing services not once, but for a specified time, being a somewhat of a full-time consultant.
  • Offer advanced opportunities, including not only consultation, but also active implementation of marketing concepts and modern administration.
  • Have a limited staff, resorting to outsourcing in case of personnel deficiency, thus earning on the difference, but risking their reputation.
  • Evaluate real estate, businesses, and automobiles.
  • Provide agents and intermediaries.

That is why in Ukraine it is quite difficult to find a company that would offer only specialized consulting services. This is often done by agencies with multidisciplinary staff.

However, this often comes in addition to the client, who has quite specific requests that are not limited to consulting services. Often the Ukrainian customer wants to get an analysis of the problem, see the possibilities of its solution, direct assistance in this, as well as the elimination of all the consequences of the problem up to the complex protection of the business, and all from one agency. Therefore, law firms are forced to provide a full range of these services in order to withstand competition in the market.

We recommend ordering consulting services at S&P Agency

S&P Legal Agency has been on the market of Ukraine for more than 15 years and has proven to be a reliable and experienced company, that has a great trust among its clients. The company provides a whole variety of services, including:

  • Various juridical services and lawyer services;
  • Legal protection in tax disputes and criminal proceedings;
  • Risk audit and company’s reputation protection;
  • The initiation of judicial disputes and the monitoring of the enforcement of sentences at various levels (pre-trial, judicial or enforcement);
  • Crisis communications;
  • Training and coaching of personnel, etc.

By contacting S&P Agency you can be sure that you will receive the highest level of service, and in the face of the company, you will find a long-term partner for many years to come.

Name: Mykola

Surname: Siutkin


Phone: +380443830000

Company address: 10 Redutnaya Street, Kyiv, Ukraine

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How to evaluate the quality of consulting services

An important condition for the effectiveness and success of a consulting company are positive recommendations from customers who were satisfied with the quality of your company’s services.

The assessment by the client is formed on the basis of a number of indicators. Before ordering a service, the client sets clear goals for himself, according to which he will evaluate the consulting company he has chosen.

The final condition for a level beyond the quality of the services provided is the assessment by the client himself, but it is subjective – at the level of “like or dislike”.

Nevertheless, the quality of providing consulting services has some peculiarities: the main criterion for evaluating the results is a satisfied client. It is important that consulting solutions meet these expectations. Emphasize a number of key elements that determine the quality of consulting services. Important criteria:

  • – accessibility of the company;
  • – competence of the consulting company;
  • – the reliability of the services provided;
  • – reliability of the company;
  • – security of the services provided.

The level of quality of consulting services is significantly influenced by the personnel of the company. There are two ways to evaluate the work of consultants:

  1. economic effect from the work of consultants;
  2. positive changes in the client’s company.

Although it is difficult to appreciate the quality of consulting services, several factors can be distinguished in such an assessment:

Factor #1. General vision. To achieve the planned results, it is important to form a common vision of the problem and its solution between the client and the consultant.

Factor #2. Intensity of cooperation. This factor contributes to the reduction of conflicts of interest. In order to get a solution to existing project problems, consultants often require the participation of the client. Customer support is a prerequisite for the successful implementation of a consulting project.

Factor #3. Confidence. Mutual trust between the client and consultants is one of the key success factors for management consulting.

Factor #4. Project management. Responsible for coordinating work and monitoring the consulting project, the progress of its implementation, for example, through regular meetings of the project teams.

Factor #5. Consultant experience. This is one of the most important factors that has a positive impact on the result of a consulting project.

Factor #6. Provided resources. The result of a consulting project depends on the resources that the client who ordered the consulting can provide. These are both human resources and financial resources, which include not only a certain number of professional employees and money, but also their availability in the project.

Factor #7. Support from the top management of the company. The last important resource is management support for the consulting team. The level of support for a particular consulting project shows the extent to which top management trusts, promotes and motivates its participants.

The methodology for conducting an examination to evaluate consulting services and the effectiveness of their provision provides for a survey or a personal meeting of managers.

The problem of assessing the quality of consulting services, taking into account their multitude, diversity, and areas of use, is associated with a number of tasks that a consulting company must solve, including: determining separate sets of quality indicators for a set of services that correspond to a certain nature of their provision; determining the importance of certain indicators; development of methodological materials for conducting appraisal expertise and providing related information. As a result, it is required to link certain methodological recommendations to the specified nature of consulting services.

Name: Mykola

Surname: Siutkin


Phone: +380443830000

Company address: 10 Redutnaya Street, Kyiv, Ukraine

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Top 7: the most demanded services of a consulting company

When we start doing business, we begin to face various difficulties in tax, reputation and management issues. As the company grows, the number of difficulties increases: how to profitably use the profits, how to attract investors, in which direction to develop your business, how to manage your reputation or remove risks in business.

You can endlessly look for the right solutions yourself and learn from your mistakes, but it’s still better to order a consultation from experienced specialists in order to do everything right the first time and not aggravate the situation. That’s what consulting is for.

Consulting is needed in order to improve business performance: profitability, profitability, efficiency, liquidity, market value. If the company does not have the necessary specialists in its staff, then it should seek advice from external experts and consultants.

The range of issues that can be solved with the help of consulting is quite wide. Sometimes it can be a whole range of tasks, and sometimes it is provided only in a narrow area of ​​business or business activity.

The most popular consulting services from S&P Agency:

Legal consulting. Our company develops and provides legal services to the client along with a risk minimization strategy. Thus, the legal strategy itself and its implementation are fundamentally different from standard legal tools and approaches.

Management of risks. Risk analysis identifies existing and potential risks for the company. The risk management process is based on information and facts, therefore it includes: characterization of assets, identification of threats and weaknesses of the business, determination of the probability of risks, analysis of their impact, determination of the type of risk and the initial action plan to neutralize it. At the end of the risk analysis, the company receives a list of assets at risk, an account of the existing and possible risks that the company faces, and, of course, a list of necessary actions to minimize them.

Risk audit. The service for the development and implementation of a risk minimization strategy includes the classification of the most common risks:

  • financial;
  • reputational;
  • legal;
  • in investment projects, M&A;
  • business processes and partnerships.

Crisis communications. Reputation protection. Brand identity is one of the most valuable intangible assets of a company. Therefore, one of the main goals of the company is to protect the brand identity and maintain its positive reputation in the industry.

Reputation is an intangible concept, but studies show that a good reputation increases the company’s value in the market.

The crisis can have a negative impact on the image of the brand and the company as a whole. Successful companies that understand the value of the brand and reputation of their business hire experts and consultants in crisis communications to protect their own business reputation from various threats and conflict challenges.

PR consulting – includes research, analysis, conclusion and development of strategies by specialists that help companies achieve a high return on their activities.

This type of consulting helps the management of the company in that it contributes to the adoption of optimal business decisions, as well as the formation of the marketing policy of the enterprise. In addition to traditional PR consulting, a legal component is also offered for each research and problem solving. This encourages the use of only permitted business mechanisms and the avoidance of those that are prohibited.

Defense in criminal proceedings. Development of a strategy and implementation of comprehensive protection in criminal proceedings at all stages of the process: at the request of third parties in relation to the company and its officials; at the request of the company in relation to counterparties, employees, officials; participation in various investigative actions against the company, as well as its employees (search, inspection, interrogation).

Comprehensive business protection. S&P Agency conducts a strategic assessment of the effectiveness of the business structure formed by the client. To do this, the company develops and implements on a turnkey basis comprehensive business protection from existing and possible illegal actions of third parties or government agencies.
S&P Agency is a niche consulting company providing risk management, legal, tax, crisis communications and investment security consulting services. During its existence, it has established itself as a reliable and effective strategic partner, business legal and tax consultant.

The experience of S&P Agency allows us to develop and implement unique and highly effective business and investment strategies for our clients, including strategies for managing legal, tax, investment and business risks.

Our goal is to create the most favorable conditions for your business development, increase your rating and recognition as a business. On, and for this we spare neither our strength nor knowledge.

Name: Mykola

Surname: Siutkin


Phone: +380443830000

Company address: 10 Redutnaya Street, Kyiv, Ukraine

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Two S&P Agency Investment Risk Management Lawyers Named to 2022 The Best Lawyers in Ukraine™

Kyiv, Ukraine, 12 November, 2021 – S&P Agency Investment Risk Management is pleased to announce that two lawyers have been included in the 2022 Edition of The Best Lawyers in Ukraine. Since it was first published in 1983, Best Lawyers® has become universally regarded as the definitive guide to legal excellence.

Best Lawyers has published their list for four decades, earning the respect of the profession, the media and the public as the most reliable, unbiased source of legal referrals. Its first international list was published in 2006 and since then has grown to provide lists in over 75 countries.

“Best Lawyers was founded in 1981 with the purpose of highlighting the extraordinary accomplishments of those in the legal profession. After four decades, we are proud to continue to serve as the most reliable, unbiased source of legal referrals worldwide,” says CEO Phillip Greer.

Lawyers on The Best Lawyers in Ukraine list are divided by geographic region and practice areas. They are reviewed by their peers based on professional expertise and undergo an authentication process to make sure they are in current practice and in good standing.

S&P Agency Investment Risk Management would like to congratulate the following lawyers named to 2022 The Best Lawyers in Ukraine list:

  • Nataliia Osadcha – Investment
  • Mykola Siutkin – Litigation, Mergers and Acquisitions Law, and Real Estate Law

Natalia Osadcha is Co-Founder and Partner of S&P Agency Investment Risk Management. For over 20 years, Nataliia has been working in the field of law, risk management, investment, conflict resolution and government relation. She is an author of numerous research and articles on business protection and a creator of numerous investment strategies for a big international corporation in Ukraine.

Mykola Siutkin is Co-Founder and CEO of S&P Agency Investment Risk Management. He has been defending the interests of business in Ukraine in the field of law, business advising, risk management, business conflicts resolution and minimization for more than 18 years. He is also the founder and owner of the LDaily media platform.


About S&P Agency Investment Risk Management

For the past 15 years, S&P Agency is a leading consulting company in Ukraine, which serves the largest foreign players, not only at the stage of entering Ukraine, but also in the process of implementing investment projects and support of everyday business activity. The agency has helped companies to develop unique investment solutions and strategies and to enter and operate in the Ukrainian market transparently and securely. S&P Agency assists large foreign companies in developing their business models and processes in Ukraine, in strict accordance with the high international requirements and standards for transparent business operations. S&P Agency’s main services include legal, risk management, financial audit and government relation.


Name: Mykola

Surname: Siutkin


Phone: +380443830000

Company address: 10 Redutnaya Street, Kyiv, Ukraine

Send a message

S&P Agency lawyer named to 2021 Best Lawyers list

9 June 2020 – S&P Agency is pleased to announce that Mykola Siutkin has been included in the 2021 Edition of The Best Lawyers in Ukraine for his work in Mergers and Acquisitions Law and Litigation. This is the second consecutive year that Best Lawyers has recognized Mykola Siutkin for Mergers and Acquisitions Law. Since it was first published in 1983, Best Lawyers has become universally regarded as the definitive guide to legal excellence.

Best Lawyers has published their list for over three decades, earning the respect of the profession, the media, and the public as the most reliable, unbiased source of legal referrals. Its first international list was published in 2006 and since then has grown to provide lists in over 75 countries.

“Best Lawyers was founded in 1981 with the purpose of highlighting the extraordinary accomplishments of those in the legal profession. After three decades, we are proud to continue to serve as the most reliable, unbiased source of legal referrals worldwide,” says CEO Phillip Greer.

Lawyers on The Best Lawyers in Ukraine list are divided by geographic region and practice areas. They are reviewed by their peers on the basis of professional expertise, and undergo an authentication process to make sure they are in current practice and in good standing.

About S&P Agency

For the past 15 years, S&P Agency has been a strategic business and legal advisor for large foreign companies. The Agency helps companies develop unique investment solutions and strategies, enter and operate in the Ukrainian market transparently and securely. We assist large foreign companies in developing their business models and processes in Ukraine in strict accordance with the high international requirements and standards for transparent business operations.

In 2020, S&P Agency signed a Memorandum of Understanding with Mr. Budiarsa Sastrawinata, Managing Director of Ciputra Group, one of Indonesia’s largest developers and real estate investors in the Asia-Pacific region, and Mr. Jörg Bahren, Director Projects & Investments of RE RISE GmbH International Investments and Development Projects Management Company.

S&P Agency has unprecedented experience in developing unique business solutions and strategies for ambitious organizations striving to turn risks into new business opportunities.

Why our approach is unique? We combine the legal tools and business strategies that our clients need with a strategy of minimizing possible business and investment risks.

Such solutions meet the high standards of transparent business conduct of our clients who are looking for high-tech and safe business solutions in a tough yet profitable business environment – the Ukrainian market.

Without exaggeration, we can state that the S&P Agency team is unique. The combination of legal education and practical experience has empowered us to create innovative, high-tech, and secure business and investment solutions. Outstanding strategic decisions made by the S&P Agency team over the last 15 years have saved billions of dollars for our clients.

We offer clients our unique experience and knowledge to minimize and avoid possible negative consequences and losses in the future, to create a successful business in Ukraine.

Our goal is to find the shortest way to creating a profitable business with minimal risks for our client.

Name: Natalia

Surname: Osadcha


Phone: +380443830000

Company address: 10 Redutnaya Street, Kyiv, Ukraine

Send a message

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