An inventory count (інвентаризація) is a check of the actual existence, condition and valuation of a company's assets and liabilities, with documented results. Art. 10 of the Law of Ukraine «On Accounting and Financial Reporting in Ukraine» No. 996-XIV (Закон № 996-XIV) requires it to keep the accounts and financial statements reliable. Key Solutions takes part in counts as a member of your inventory commission and prepares the documents.
+38 (068) 777-14-74 Telegram WhatsApp
In short
- Who it applies to: Ukrainian legal entities of any form, and branches and representative offices of foreign legal entities in Ukraine (Regulation No. 879).
- When it is mandatory: before the annual financial statements, when a custodian changes, after theft, damage or a fire, on liquidation, and when the tax authority requires it during an audit.
- What it produces: count sheets, reconciliation statements, the commission protocol and accounting entries for the period in which the count ended.
- What it costs: depends on the number of locations, the range of items, full or sample scope, and the state of the records. We quote once you have described the site.
- How to start: book a consultation and name the date or event the count is needed for.
What an inventory count is and why a business needs it
A count is the one procedure that physically checks the accounting registers against reality: it counts stock, inspects equipment, confirms cash balances and reconciles settlements with counterparties. Everything else in the books rests on documents, and a document can show goods that have already left the warehouse. Art. 10 of Law No. 996-XIV states the purpose directly: to confirm the existence, condition and valuation of assets and liabilities, which covers the fitness of an asset and its measurement as well as quantity.
The count supports two principles in Art. 4 of the same Law: full disclosure and substance over form. A machine written off on paper but still standing on site breaches both. The tax angle matters just as much: para. 44.1 of the Tax Code of Ukraine (ПКУ) requires tax records to rest on primary documents, registers and financial statements, and count sheets are the evidence that confirms balances on the balance sheet date.
Types of inventory count
- Full: covers all assets and liabilities, including leased property and items held in custody.
- Partial (sample): covers one item, warehouse, account or custodian.
- Scheduled: follows a timetable the company sets itself; the owner or head decides the items and frequency (Art. 10(2) of Law No. 996-XIV).
- Unscheduled: held outside the timetable, for example at the tax authority's request during an audit.
When an inventory count is mandatory
The detailed rules are set by the Regulation on the Inventory of Assets and Liabilities approved by Ministry of Finance Order No. 879 of 02.09.2014 (Положення № 879). Para. 7 of Section I lists the mandatory cases, and the company's own deadlines may not exceed those in the Regulation.
| Trigger | Rule | Scope |
|---|---|---|
| Annual financial statements | Regulation No. 879, paras 6, 7 and 10 of Section I | Full count before the balance sheet date |
| Change of custodian | Regulation No. 879, para. 7 of Section I | Assets in that person's custody |
| Theft, abuse, damage, fire or natural disaster | Regulation No. 879, para. 7 of Section I | Set by the company head |
| Tax authority request during an audit | Tax Code, subpara. 20.1.9 | Fixed assets, goods and materials, cash |
| Liquidation of the company | Regulation No. 879; Art. 166-6 КУпАП | Full count of the company's property |
Special regimes add further cases: monthly counts of ethyl alcohol at excise warehouses in the presence of a tax officer (Tax Code, para. 230.14) and counts on the date of transition to IFRS reporting (Regulation No. 879). For the year-end count, inventories may be counted within three months before the balance sheet date and cash, settlements with the budget and work in progress within two months (para. 10, Section I).
Who organises the count
Organising accounting is the responsibility of the owner or the authorised body or officer (Art. 8(2) of Law No. 996-XIV), and the company head must create the conditions for proper accounting (Art. 8(6)). The chief accountant takes part in documenting shortages and losses from theft and damage (Art. 8(7)).
The inventory commission is set up by order of the company head. It includes management, the accounting function and experienced staff who know the items and prices; Regulation No. 879 expressly allows representatives of an audit firm or of the person keeping the books under contract (para. 1, Section II). Custodians do not sit on the working commission that checks their own assets. The people who draw up and sign count sheets answer for the accuracy of the data (Art. 9(8) of Law No. 996-XIV), so every signature on a sheet carries liability.
How the count is carried out
- Order. The company head appoints the commission and sets the items, start and end dates and the deadline for passing materials to accounting.
- Preparation. Custodians hand in primary documents, accounting fixes the book balances, and stock is grouped for counting.
- Physical check. The commission counts, weighs, measures and inspects in the custodian's presence and fills in the count sheets on site.
- Reconciliation. Accounting prepares reconciliation statements for the items with differences, and custodians explain each one in writing.
- Protocol and entries. The commission records findings and proposals, the head approves them, and the results go into the accounts for the period in which the count ended.
Records and document retention
A count sheet is a primary document, so it must carry the mandatory details listed in Art. 9(2) of Law No. 996-XIV, on paper or in electronic form. The usual set of records is the order, count sheets, reconciliation statements, explanations, the commission protocol and the approval order. Retention periods are set by para. 44.3 of the Tax Code:
- 2,555 days for documents needed for tax control under Arts 39 and 39-2 and para. 141.4 (subpara. 44.3.1);
- 1,825 days for primary documents, accounting registers, financial statements and other documents linked to tax calculations kept by corporate income tax payers, non-profit organisations and legal entities on the simplified system (subpara. 44.3.2);
- 1,095 days for other documents (subparas 44.3.3 and 44.3.4).
Loss, damage or early destruction of documents must be reported in writing to the tax authority within five days (para. 44.5). Failure to keep documents or to provide them to the tax authority carries a fine of UAH 1,020, and UAH 2,040 for a repeat within a year (para. 121.1). Documents not produced by the end of a tax audit are treated as absent when the return was prepared (para. 44.6).
Surpluses, shortages and their consequences
Surpluses are taken into the accounts and shortages are written off, but the tax effect of a shortage depends on whether the company can show it defended its property. For Diia.City residents, property found missing in a count is treated as provided free of charge if its book value exceeds 5% of the relevant group and the company has not reported a crime or has not taken steps to recover compensation from the custodian or insurer (Tax Code, subpara. 135.2.1.6). For VAT payers, a shortage of purchased goods found in a count requested by the tax authority creates output VAT (para. 198.5). The details for stock are on the inventory count of goods and materials page.
The practical rule: writing a shortage off is only half the job. Document the protective steps as well: a report to law enforcement, a claim against the custodian or insurer, an order to recover the loss from the person at fault.
Inventory counts under martial law
Martial law keeps the duty to take inventory and changes how audits run. Documentary and on-site tax audits proceed only where conditions are safe, including safe counting of fixed assets, goods and materials and cash (Tax Code, subpara. 69.2-2, para. 69, subsection 10, Section XX). Companies that operated in combat zones or temporarily occupied territories and cannot produce primary documents may use special rules to confirm their tax reporting (subpara. 69.28).
Important. A company located in an area of hostilities or in occupied territory must take inventory as at the 1st day of the month following the month in which obstacles to accessing its assets, primary documents and accounting registers ended, and reflect the results in the accounts for that period (Regulation No. 879, para. 8 of Section I).
Liability for inventory breaches
| Rule | Breach | Penalty |
|---|---|---|
| Art. 164-2 КУпАП | Late or poor-quality counts of cash and tangible assets, failure to recover losses from the persons at fault | 8–15 НМДГ; 10–20 НМДГ for a repeat within a year |
| Art. 166-6(3) КУпАП | Late, incomplete or improper inventory of property during liquidation | 100–150 НМДГ for officers and persons involved |
| Tax Code, para. 121.1 | Failure to keep documents for the periods in Art. 44 or to provide them to the tax authority | UAH 1,020; UAH 2,040 for a repeat within a year |
Fines under the Code of Ukraine on Administrative Offences (КУпАП) are set in tax-free minimum incomes of citizens (НМДГ); for this purpose one НМДГ equals UAH 17 (Tax Code, para. 5, subsection 1, Section XX).
Fixed assets and goods: how the counts differ
The procedure is the same, and the method differs by object. For fixed assets the commission checks title documents, technical condition and actual use as well as existence. For goods and materials most of the work is a full recount and control of items in transit, in custody and in processing. If the records drift away from reality year after year, the usual next step is restoration of accounting records, and before a tax audit it makes sense to run an audit ahead of the tax inspection so differences are fixed in advance.
How Key Solutions helps
- a draft order and a counting plan agreed with your management;
- our specialists on the commission as audit firm representatives, independent of the warehouse and its custodians;
- count sheets, reconciliation statements and a draft protocol prepared under Regulation No. 879;
- a calculation of the tax effect of shortages and the accounting entries after approval;
- a list of fixes for the records so the next count runs faster.
Choose the row that matches your situation:
| Situation | Service |
|---|---|
| Counting equipment, buildings, vehicles | inventory of fixed assets |
| Counting stock, goods, raw materials | inventory count of goods and materials |
| The books keep diverging from the facts | restoration of accounting |
| A tax inspection is coming | audit before a tax inspection |
Why Key Solutions
- Company
- ТОВ «АУДИТОРСЬКА ФІРМА «КЕЙ СОЛЮШНЗ», a Ukrainian limited liability company, EDRPOU code 39610085. Company details are public in the Unified State Register (ЄДР).
- Contract
- We work under a contract: scope, timing and liability are fixed before the work starts. Client information is protected by professional secrecy (Art. 11 of Law No. 2258-VIII).
- Group
- We are part of Innova Consulting Group: legal matters are handled by legal.ua, crypto-asset taxation by crystal.tax.
- Office
- Our office is at 77 Velyka Vasylkivska St., Kyiv. We serve clients across Ukraine remotely. The specialists who run projects are listed on the Our employees page.
Frequently asked questions
What is an inventory count in simple terms?
It is a check of what the accounting records say against what the company actually has: the commission counts the assets, checks their condition and records the result in count sheets. Art. 10 of Law No. 996-XIV describes it as a check of assets and liabilities in which their existence, condition and valuation are verified and documented.
How often must a company in Ukraine take inventory?
The owner or the company head sets the items and frequency (Art. 10 of Law No. 996-XIV), except where the law makes a count mandatory. Under Regulation No. 879 that includes a full count before the annual financial statements, a count when a custodian changes, after theft or damage, and on liquidation.
Who organises the inventory and who is responsible for it?
Organising accounting is the responsibility of the owner or the authorised body or officer (Art. 8 of Law No. 996-XIV), who must create the conditions for proper accounting. The chief accountant takes part in documenting shortages and losses. The people who draw up and sign count sheets are responsible for the accuracy of the data in them (Art. 9).
Can the tax authority require an inventory count?
Yes. During a tax audit the tax authority may require the taxpayer to count fixed assets, goods and materials and cash, and to record the balances of goods and cash (Tax Code, subpara. 20.1.9). The results are used in that audit and in later tax control.
How long must inventory documents be kept?
Documents needed for tax control under Arts 39 and 39-2 and para. 141.4 of the Tax Code are kept for at least 2,555 days. Corporate income tax payers, non-profit organisations and legal entities on the simplified system keep primary documents, accounting registers and financial statements linked to tax calculations for 1,825 days, and other documents are kept for 1,095 days (para. 44.3). Loss, damage or early destruction of documents must be reported to the tax authority in writing within five days (para. 44.5).
What should a company do when a shortage is found?
Obtain written explanations from the custodian, prepare the reconciliation statement and the commission protocol, approve the results by order, and then document the steps taken to protect the company's property: a report to law enforcement, a claim against the custodian or the insurer, an order to recover the loss. For Diia.City residents, these steps affect the tax treatment of the shortage (Tax Code, subpara. 135.2.1.6).
Plan your inventory count
In your request, name the objects (stock, fixed assets or both), the number of locations and the date the count is needed for. We will reply with the scope, the schedule and the cost.
Book a consultation Order the service +38 (068) 777-14-74 Telegram WhatsApp