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

Abstract

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’ reliabil ity as public interest entities in Ukraine. It is aimed at investigating the segmentation of the banking audit services market in Ukraine and its comprehensive characteris tics. 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 seg mented: this study differentiates strong segments of international audit networks, asso ciations 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 au dit networks. The study results are the basis for improving the regulation of the bank ing audit services market by the National Bank of Ukraine and ACU.