How EU Grant Expenditure Verification Works in Ukraine: Procedures, Costs and Timelines

Updated: September 2026

International organisations implementing EU-funded projects in Ukraine often work through Ukrainian NGOs, foundations, civil society organisations and other local implementing partners.

When the Grant Agreement requires an independent audit, expenditure verification or agreed-upon procedures, the international organisation may need a qualified practitioner who understands both the donor’s contractual requirements and the Ukrainian accounting, tax and legal environment.

This guide explains how EU grant expenditure verification in Ukraine works in practice, how it differs from a financial audit, what documents may be required, how remote verification can be organised, and which factors affect the cost and timeline of the engagement.

Grant Audit vs. Expenditure Verification: What Is the Difference?

The term grant audit is often used broadly, but different grant agreements may require different types of professional engagements.

Depending on the Grant Agreement, Terms of Reference (ToR) and applicable donor instructions, the required engagement may be:

  • an audit performed under International Standards on Auditing (ISA);
  • contractual expenditure verification;
  • agreed-upon procedures under ISRS 4400 (Revised);
  • another specifically prescribed verification or reporting engagement.

These engagements should not be treated as interchangeable.

Under an agreed-upon procedures engagement performed in accordance with ISRS 4400 (Revised), the practitioner performs the procedures agreed with the engaging party and reports the resulting factual findings.

The practitioner does not express an audit opinion and does not provide reasonable or limited assurance. The intended users consider the procedures performed and the factual findings reported and draw their own conclusions.

For this reason, the appropriate professional standard, scope of work and reporting format should be determined from the actual contractual documentation before the engagement begins.

For EU external actions, the European Commission’s PRAG is an important reference framework, together with the specific Grant Agreement and applicable contractual annexes.

What Can Be Verified in an EU-Funded Project?

The exact scope depends on the Grant Agreement and ToR.

A contractual expenditure verification or agreed-upon procedures engagement may include procedures relating to the following areas.

Financial Report and accounting records

The practitioner may reconcile the Financial Report with:

  • the transaction listing;
  • general ledger or other accounting registers;
  • project accounting records;
  • bank statements;
  • supporting schedules.

This helps establish whether the expenditure reported to the donor can be traced to the underlying accounting records.

Eligibility of expenditure

Reported costs may be examined against:

  • the approved project budget;
  • applicable eligibility rules;
  • the purpose of the expenditure;
  • the project implementation period;
  • other conditions specified in the Grant Agreement.

The applicable criteria should always be taken from the contractual documentation rather than assumed from general audit practice.

Supporting documents

The verification may include review of:

  • contracts;
  • invoices;
  • acceptance certificates and other primary accounting documents;
  • evidence of payment;
  • evidence that goods or services were received;
  • supporting calculations;
  • other documentation required by the donor.

Payroll and personnel costs

Personnel expenditure may require examination of:

  • employment agreements;
  • civil-law contracts;
  • payroll calculations;
  • timesheets where required;
  • allocation of personnel costs to the project;
  • Ukrainian personal income tax and other mandatory payroll charges.

Procurement

Depending on the donor requirements, procedures may cover:

  • procurement thresholds;
  • supplier-selection documentation;
  • competitive quotations or tender files;
  • contracts with suppliers and contractors;
  • justification of procurement decisions;
  • compliance with procedures prescribed by the Grant Agreement.

Foreign currency and cost allocations

The practitioner may also verify:

  • foreign-currency transactions;
  • exchange rates used in project reporting;
  • allocation of shared expenditure;
  • indirect costs where permitted;
  • consistency of allocation methods with the applicable grant rules.

Risk of double financing

Where relevant to the prescribed procedures, the practitioner may examine evidence relating to the risk that the same expenditure has been charged to more than one donor, project or source of funding.

The procedures should not be expanded, reduced or substituted solely on the basis of general audit practice if the donor has prescribed a specific methodology.

Why Ukrainian Supporting Documentation Requires Local Expertise

One of the main practical challenges in expenditure verification is translating Ukrainian accounting evidence into the compliance framework of an international grant.

A Ukrainian implementing partner normally maintains its accounting records within the Ukrainian legal, tax and accounting environment.

The underlying documentation may include:

  • Ukrainian commercial and civil-law contracts;
  • invoices and acceptance certificates;
  • payroll documentation;
  • Ukrainian tax calculations;
  • BAS or other accounting-system exports;
  • bank statements;
  • procurement documentation;
  • electronically signed primary documents.

A single expenditure item reported to the donor may therefore need to be traced through several layers of evidence.

For example:

  • the approved project budget;
  • procurement or supplier-selection documentation, where applicable;
  • the contract;
  • the invoice or primary accounting document;
  • evidence that the goods or services were received;
  • the accounting entry;
  • the bank payment;
  • the amount included in the project Financial Report.

The role of a Ukrainian practitioner is not merely to check whether a document exists. The underlying evidence must be understood in its local accounting and legal context and then assessed against the contractual criteria applicable to the grant.

Working with an International Organisation or Foreign Auditor

The practitioner performing the procedures in Ukraine does not necessarily need to be engaged by the Ukrainian implementing partner.

An international organisation, lead beneficiary, project coordinator or other contracting party may engage a Ukrainian practitioner directly to verify expenditure incurred by its local project partner.

The work may also form part of a wider international verification process.

For example, a foreign audit firm responsible for an overall or consolidated engagement may require procedures to be performed on expenditure incurred by a Ukrainian implementing partner.

In such circumstances, a Ukrainian practitioner may perform the required procedures locally and prepare an English-language report, schedules or factual findings for use within the broader reporting process, subject to the applicable ToR and professional requirements.

The engagement documentation should clearly identify:

  • the entity whose expenditure is being verified;
  • the engaging party;
  • the entity responsible for providing the accounting records and supporting documents;
  • the intended users of the report;
  • the applicable professional standard;
  • the required reporting format;
  • whether the work will be used by another auditor or incorporated into a wider report.

Clear allocation of these responsibilities is particularly important in projects involving several organisations in different jurisdictions.

Can EU Grant Expenditure Verification in Ukraine Be Performed Remotely?

In many engagements, a substantial part of the verification can be performed remotely where this is permitted by the ToR and the nature of the evidence.

A remote workflow may include:

  • a secure electronic data room;
  • electronic Financial Reports;
  • transaction listings;
  • accounting-system exports;
  • electronic bank statements;
  • scanned or digitally signed primary documents;
  • payroll and procurement files;
  • written explanations;
  • online meetings with responsible personnel.

Remote verification does not reduce the evidence requirements.

The practitioner must still have sufficient access to the documentation and information required to perform the prescribed procedures.

If original documents, physical inspection, confirmation or another form of evidence is required by the ToR, the engagement should be organised accordingly.

Confidentiality and Sensitive Information

International and civil-society projects may involve personal data, employee information, beneficiary data or other sensitive information.

The engagement should therefore establish appropriate arrangements for:

  • secure exchange of documents;
  • access rights;
  • confidentiality;
  • storage and retention of working documentation;
  • transfer of information between the parties;
  • communication of findings and reports.

Where appropriate and compatible with the required procedures, personal data may be anonymised or pseudonymised before documents are transferred.

Access to sensitive information should be limited to persons who require it to perform the engagement.

The parties should also determine in advance who is authorised to receive the final report, supporting schedules and other engagement information.

How Much Does EU Grant Expenditure Verification Cost in Ukraine?

There is no single standard fee for expenditure verification.

The cost should be based on the actual scope of work rather than solely on the total value of the grant.

Factors affecting the professional fee may include:

  • the amount of expenditure to be verified;
  • the number and nature of transactions;
  • the verification or sampling methodology prescribed by the ToR;
  • the number of Ukrainian implementing partners;
  • payroll volume;
  • number and complexity of procurement files;
  • foreign-currency transactions;
  • shared-cost allocations;
  • quality and completeness of supporting documentation;
  • reporting requirements;
  • required completion date.

Two projects with similar budgets may therefore require substantially different amounts of professional work.

For example, a project with a relatively high budget but a small number of well-documented transactions may require less work than a lower-budget project involving hundreds of transactions, extensive payroll, multiple procurement procedures and several project partners.

For this reason, the Grant Agreement and ToR should normally be reviewed before a fixed professional fee is agreed.

How Long Does Expenditure Verification Take?

The timeline depends primarily on:

  • the required procedures;
  • transaction population;
  • number of project partners;
  • document readiness;
  • complexity of the identified questions;
  • reporting requirements;
  • availability of responsible personnel;
  • donor reporting deadline.

A typical workflow may include the following stages.

1. Review of contractual requirements

The practitioner reviews the Grant Agreement, ToR, applicable annexes and reporting requirements to determine the engagement type and scope.

2. Receipt of the final reporting package

The implementing partner provides the Financial Report, transaction listing, accounting records and supporting documents required for the engagement.

3. Selection of transactions and procedures

The practitioner applies the verification or sampling methodology prescribed by the ToR and determines which transactions and supporting documents will be examined.

4. Verification of supporting evidence

The selected expenditure is tested against the prescribed criteria and underlying accounting documentation.

5. Clarifications

Questions, missing documents or inconsistencies are communicated to the responsible organisation for clarification.

6. Draft report

The practitioner prepares the draft report, factual findings and required schedules.

7. Final report

Comments are considered and the final deliverables are prepared in accordance with the agreed reporting requirements.

A reliable completion date can therefore only be established after the scope and document readiness have been assessed.

International organisations should ideally appoint the practitioner before the contractual reporting deadline becomes critical. Early involvement provides time to clarify the ToR, organise document access and identify potential documentation gaps before fieldwork begins.

What Information Is Needed to Prepare a Proposal?

An international organisation requesting a quotation should ideally provide:

  • the Grant Agreement or relevant audit/expenditure-verification provisions;
  • Terms of Reference;
  • applicable contractual annexes;
  • prescribed report or verification template, if any;
  • project implementation and reporting period;
  • total project budget or amount of expenditure to be verified;
  • number of Ukrainian implementing partners;
  • approximate number of transactions;
  • main expenditure categories;
  • expected payroll volume;
  • information about significant procurement;
  • required reporting language;
  • deadline for the final report.

These documents make it possible to determine:

  • the appropriate type of engagement;
  • applicable professional standard;
  • scope of procedures;
  • expected workload;
  • realistic timeline;
  • professional fee.

A quotation prepared without reviewing the ToR may not reflect the actual amount of work required by the donor.

Key Points for International Organisations

Before appointing a practitioner to verify expenditure incurred in Ukraine, international organisations should confirm five key issues:

  • What exactly does the Grant Agreement require? Audit, expenditure verification and agreed-upon procedures are different engagements.
  • Which professional standard applies? The standard should follow the contractual requirement rather than the terminology informally used by the project team.
  • Which entity and expenditure are covered? The engagement should clearly define whether it covers one Ukrainian partner, several partners or a wider project structure.
  • What evidence will be available? The practitioner should have sufficient access to the accounting records and supporting documents required by the prescribed procedures.
  • When must the final report be delivered? The auditor or practitioner should be engaged early enough to allow time for document review, clarifications and final reporting.

Need Expenditure Verification or Grant Audit Support in Ukraine?

If your organisation funds, coordinates or audits a project implemented by a Ukrainian partner, ProAudit can review the Grant Agreement and Terms of Reference and determine the appropriate engagement scope.

Based on the contractual requirements, transaction volume and reporting deadline, we can prepare a proposal covering the scope of work, expected timeline and professional fee.

About the Author

Igor Andreev — Auditor and Director of ProAudit

Igor Andreev is a practising auditor specialising in grant-funded projects, expenditure verification, agreed-upon procedures and financial audit in Ukraine.
He is Director of PROAUDIT, a Ukrainian audit firm registered in the Register of Auditors and Audit Firms of Ukraine.

Professional focus: EU and international donor-funded projects, grant audit, expenditure verification, ISRS 4400 engagements, financial audit and donor compliance.