Episode 2 of Season II of “Budget Talks” explores the role of Ukraine’s State Audit Service during wartime.
How is the State Audit Service different from the Accounting Chamber? What do auditors uncover during inspections of reconstruction projects?
What’s going wrong with recovery efforts in Zaporizhzhia — and why are some enterprises blocking auditors from entering?
In this episode, Victor Maziarchuk, Head of the Fiscal Policy Research Center, speaks with Dmytro Shevchuk, Deputy Head of the State Audit Service, about wartime audits, blocked inspections, and the most revealing findings from the field.
VICTOR
Welcome to Budget Talks — the podcast where we explore how the budget works, how public money is spent, and who’s responsible for making it happen. This podcast is made possible with support from the International Renaissance Foundation, as part of the project “Effective Public Finance Management: New Opportunities for Government.”
Today, we’re diving into one of the hottest topics in Ukraine right now — reconstruction. We’re talking about billions in public spending, and everyone wants to know: are those funds being used efficiently? Are they reaching the right places?
In Ukraine, the State Audit Service — plays a unique role. It’s not just about “audit” in the narrow sense. It also includes inspections, revisions, and monitoring — all aimed at strengthening financial accountability. So today, we’re joined by Dmytro Shevchuk, Deputy Head of the State Audit Service of Ukraine.
Dmytro, welcome to the podcast.
DMYTRO
Thanks! Happy to be here.
The Story of DASU: From a '90s Boogeyman to a Modern Institution
VICTOR
Let’s start with your institution. It’s a really interesting one — and, I’d say, quite non-standard. Here’s what I mean: In Ukraine, there’s the Accounting Chamber — the external auditor — and there’s your agency, the State Audit Service. We’ve talked off-mic about how DASU is neither the Accounting Chamber nor internal audit. So, can you walk us through what your service actually does, and what its main functions are?
DMYTRO
Sure. Back in 1993, Ukraine’s Parliament adopted the Law on the Fundamentals of State Financial Control. That’s the legal foundation of what we now call DASU. At the time, it was known as the Kontrolno-Reviziine Upravlinnya (KRU) — the Control and Revision Department. And for a long time, people were kind of afraid of it.
VICTOR
Right — “The scary KRU inspectors.”
DMYTRO
Exactly. You’d hear things like, “Better fix things now — KRU’s coming in three years.” Originally, KRU was part of the Ministry of Finance. Later, it became a separate institution, tasked with oversight — ensuring funds were spent properly. Its main tool was the revision — a post-factum check to find irregularities, assign blame, and hold people accountable. But by the late 1990s, it became clear that simply punishing people after the fact wasn’t enough. There was a growing realization: we needed to improve the system before things went wrong. That’s where audit comes in. When the Financial Inspectorate was renamed the State Audit Service in 2014, it wasn’t just a rebranding. It signaled a shift: more focus on forward-looking audits, not just backward-looking revisions.
So, what’s the difference?
Revision looks at the past: What went wrong? Who did it? Where did the money go? What was bought?
Audit looks at the present and future: How is the system functioning? What needs to change to avoid repeat problems?
State Audit Service vs. Accounting Chamber: What’s the Difference?
VICTOR
That’s a really important distinction. People often confuse your service with the Accounting Chamber — especially when both of you check the same things. Like the COVID-19 relief fund — both DASU and the Accounting Chamber conducted audits there. Can you explain how your roles differ?
DMYTRO
Sure. Let’s use that COVID fund example. Both our agency and the Accounting Chamber reviewed it — and yes, there were legal and procedural reasons for that. We were checking legality — were funds used according to the law? The Accounting Chamber was checking overall effectiveness — did the spending achieve its goals? International partners actually wanted both perspectives — kind of like getting a second opinion in medicine. They wanted a full picture.
The core difference is structural:
We represent the executive branch of government and report to the Cabinet of Ministers.
The Accounting Chamber is a fully independent body, even from Parliament. While Parliament selects its members, the Chamber makes its own decisions. That’s important because it affects how and what we audit. The Accounting Chamber can develop its own audit plans, choose what to focus on, and act independently. In contrast, DASU is part of the executive — we may receive assignments from the Prime Minister or Cabinet, and we have to follow those directions. It’s not that we can’t conduct independent audits — we do — but we’re also expected to respond to specific government needs.
VICTOR
So the PM can’t just call up the Accounting Chamber and say, “Check this project for me”?
DMYTRO
Exactly. That would be political interference in an independent body. Nor can he assign that task to internal auditors within ministries — their job is internal oversight.
VICTOR
Let’s zoom out a bit. Ukraine’s financial control system has three levels:
The Accounting Chamber (external oversight)
The State Audit Service (national-level control)
Internal audit units in each ministry
Ideally, this three-tiered system ensures not just proper spending, but also effectiveness and goal achievement — both by agencies and government as a whole.
DMYTRO
Exactly. Imagine you’re the Prime Minister…
VICTOR
Thanks, but I’d rather not. Maybe just an advisor?
DMYTRO
Fair enough. Let’s say you’re advising the PM, and he wants to check on road construction or — let’s say — reconstruction projects. Who can he turn to? Gathering internal auditors from every ministry? That’s a logistical nightmare. They’re scattered, overloaded, and have their own mandates. Plus, they might not have the capacity to take on such a large investigation. What about the Accounting Chamber? Again, no. They’re independent — they can consider the request, but they’ll still apply their own risk-based approach.
So what’s left? According to international standards, this would require an agreed-upon procedures audit — where the government defines specific questions or indicators and needs timely, ongoing updates. That’s where we come in. DASU sits between internal audit and the Accounting Chamber — a hybrid control tool.
VICTOR
In other words, high-level officials want a tool that doesn’t just punish, but gives them a real picture of what’s happening — so they can make informed decisions.
DMYTRO
Exactly. Politics come and go. Problems stay. Someone has to dig into the reality and say, “Here’s what’s actually happening.”
Who Actually Checks the Quality of Reconstruction?
VICTOR
Let’s talk about reconstruction — especially in the early stages. There were a lot of scandals. Did the government ask DASU to check how things were going in places like the Kyiv region? Did you audit water supply projects, road construction, that sort of thing?
DMYTRO
Yes, that’s actually a very interesting topic. In recent years, DASU has become one of the main oversight bodies for construction — more so than Ukraine’s formal building inspection agencies. A while back, we created a specialized unit for construction control within DASU. And instead of staffing it with auditors, we hired actual engineers and construction experts.
Their job? Know the building codes. Know the standards. Understand the industry inside out. At first, we sent them to assist with audits of big companies like Naftogaz and Energoatom. But over time, we realized they could lead more comprehensive inspections, especially in reconstruction. Eventually, the agency we now call the Restoration Agency (formerly Ukravtodor) reached out and asked us to help. They wanted an in-depth review — what we called a centralized audit — to check regional infrastructure projects, especially roads. Some areas had already been reviewed, but others hadn’t. So we picked up where earlier audits left off. We looked at how to improve efficiency, costing, and budgeting for road construction. Then, as Ukravtodor was rebranded as the Restoration Agency, their focus expanded from roads to civil and even industrial construction. We showed, in practice, that auditors can effectively inspect construction projects. At the same time, journalists started doing investigations — especially about what was going wrong in Kyiv Oblast.
VICTOR
Right — scandals not just in Kyiv region but beyond. Let me ask: are there any interesting findings you’re able to share from those audits? I know many of your reports feed directly into criminal investigations, especially around construction. But are there cases you can talk about publicly — things worth highlighting?
DMYTRO
Sure. Let me share some key takeaways from our inspections. When 2022 started — especially during the early stages of liberation — reconstruction had to begin almost immediately. There wasn’t much time for procedures or paperwork. People needed homes, fast. So, naturally, some processes were skipped or rushed. And while the intentions were good, this urgency also created room for problems.
Some used personal connections to win contracts. Others inflated costs, cut corners, or just did poor-quality work. About a year or so ago, after some investigative reports surfaced, we launched a series of audits in places like Irpin, Bucha, and Borodianka. Our goal wasn’t just to find violations, but to understand why they were happening — and how to prevent them. For example, one of our major audits focused on the Department of Regional Development within the Kyiv Regional Administration.
We found real issues:
Inflated prices
Poor construction quality
Unfinished work
Projects approved without consulting local residents
And here’s where it got interesting:
During the audit, we also conducted community surveys to get direct feedback from the people affected.
VICTOR
Wait — you did actual surveys?
DMYTRO
Yes. According to the Cabinet resolution that governs audits, we’re allowed to gather public input. So I asked our team to develop a questionnaire and conduct in-person surveys. It wasn’t easy — it was winter, and people don’t always want to talk on the street. But it gave us valuable insights. We followed up by checking, photographing, and documenting the problems. Then we issued demands to the contractors to fix them. And in many cases — thankfully — they did. We had one case where a roof beam was resting on rotten wood, and a door frame wasn’t even properly installed. I mean, you’d think that’s basic construction. But it wasn’t done right.
Technically, this kind of oversight should be the job of the construction supervision authorities, or the contracting agency itself. But since those mechanisms aren’t always functioning, DASU had to step in.
VICTOR
So you weren’t just looking at whether money was used effectively — You were also checking construction quality, because your team had the expertise?
DMYTRO
Exactly. We’ve got people with degrees in civil engineering, people who’ve worked in construction firms or government oversight bodies.
That’s what made our hybrid audit teams so effective — combining:
Financial auditors
Construction experts
Procurement specialists
Together, they could review documents, contracts, blueprints — and then go to the site, inspect the work, and demand corrections.
VICTOR
How did the residents react? Were they satisfied?
DMYTRO
In some places — yes. In others, unfortunately — no. Some contractors were no longer around. Some simply refused to cooperate. In certain regions, contracting agencies wouldn’t even acknowledge that they were using public funds.
It’s ironic: The honest ones — who let us in, who admitted there were problems — sometimes faced more pushback. But the ones who blocked us? Who teamed up with shady contractors and refused entry? They often faced no consequences.
“Welcome to Zaporizhzhia — Where Auditors Aren’t Welcome”
VICTOR
Sounds like… Zaporizhzhia?
DMYTRO
Exactly. Let’s talk about the Zaporizhzhia case. About a year ago, Parliament passed changes to the law making it a criminal offense to block auditors or inspectors during official reviews. Before that, refusing entry was basically a slap on the wrist — we’d file a police report, and that was that. Now, not letting DASU in is a crime — and a serious one. It can disqualify someone from holding public office or running for election. But apparently, that didn’t stop some officials in Zaporizhzhia.
VICTOR
So, what exactly happened in Zaporizhzhia?
DMYTRO
Well, when we showed up to conduct an audit — the local officials literally refused to let us in. We had an official letter assigning our audit team. We followed all the legal protocols. And still — nothing. They just shut the door. What’s worse is that they tried to spin it as: “Oh, these are just some inspectors, not real auditors.” Or: “We’re not required to let them in.” But this wasn’t just oversight — it was obstruction.
This wasn’t a private company. This was a government-funded reconstruction project with taxpayers’ money. We followed up. We sent reminders. We involved law enforcement. Eventually, we had to escalate it to the Cabinet of Ministers — and even then, it wasn’t easy. In the end, the State Audit Service issued an official report stating that the local authorities blocked access, which is now considered a criminal act under Ukrainian law.
When Investigative Journalism and Public Auditing Work Together
VICTOR
You mentioned earlier that some of your work began in response to journalistic investigations. How often do journalists trigger audits at DASU?
DMYTRO
Quite often, actually. We monitor the media closely. If a reputable outlet publishes a well-documented investigation — and there’s enough evidence or public concern — we take notice. In fact, we’ve formalized this. We can initiate an audit based on public interest, media coverage, or citizen complaints. And it’s not just about catching someone red-handed. It’s also about restoring trust.
For example, say a news story reveals that a new school building already has cracks in the walls. People start asking:
– Who approved this project?
– Who built it?
– Was the money stolen?
That’s where we come in. We step in, investigate, and — if there’s something there — we make it public. Our goal isn’t just to punish people. It’s to help the government understand what went wrong and prevent it from happening again.
VICTOR
How do you balance that? You’re part of the executive branch — but you’re also supposed to expose problems within it. Isn’t that politically sensitive?
DMYTRO
It can be. There are definitely times when someone will say, “Let’s not make this public. Let’s keep it quiet.” But we have a principle: If it’s public money, the public has the right to know. We don’t publish every audit report right away.
Some have to go through internal reviews. But our default is transparency. In the end, our credibility depends on it. If people — whether in Kyiv, Kharkiv, or a small village — don’t trust us, we’ve failed. That’s why I always tell our team: Don’t be afraid of the press. Work with them. Because a journalist may expose a problem — but we can fix it.
VICTOR
And I think that approach works. For example, we’ve looked at spending patterns in different oblasts — and sometimes, the price per square meter varies wildly. It’s one thing to see that in a report. But when it’s backed by a DASU audit — that gives it real weight.
DMYTRO
Exactly. And it also helps us build standards. Let’s say one community built a school for ₴20 million, and another built a similar one for ₴40 million. What’s going on there? We can now create benchmarks — realistic estimates — and share them with local governments. That way, when they launch new projects, they can compare their plans to actual market data, not just what some contractor tells them. And that saves money — and trust.
VICTOR
Can this data be made public? I mean — could we see a dashboard that shows price comparisons across the country?
DMYTRO
That’s exactly where we’re heading. Right now, we’re developing internal tools for data analysis — but our goal is to make them open. Imagine an interactive map where you can click on a region and see:
– What projects were built
– How much they cost
– Who the contractor was
– Whether there were violations
That’s the future we’re working toward.
International Partners and the Need for Independent Oversight
VICTOR
Let’s talk about international partners. You’ve mentioned that donors and foreign governments pay close attention to how public money is used — especially funds for reconstruction. How involved is DASU in overseeing international aid?
DMYTRO
We’re very involved — and our role is expanding. International partners want two things:
Transparency
Results
They want to know:
- Is the money actually being spent on what was promised?
- Are the outcomes measurable?
- Is there independent oversight?
Some partners — like the EU — have their own audit systems.But many rely on us to verify what’s happening on the ground. That’s especially true when we’re talking about budget support — where funds go directly into Ukraine’s treasury and are then distributed through government programs. In those cases, our audit reports are shared with both Ukrainian officials and international donors.
VICTOR
So in a way, you’re helping build credibility — not just internally, but with the outside world.
DMYTRO
Exactly. Take, for example, the European Investment Bank or the World Bank. They might fund a major road or water project. They’ll hire independent evaluators — but they also want confirmation from Ukrainian institutions. When DASU steps in with a well-documented audit, it sends a strong message: “Yes, Ukraine has mechanisms in place. Yes, we’re watching. Yes, we care.” And that helps unlock future funding, which we desperately need.
VICTOR
Let’s go deeper on that. There’s a common narrative that corruption is the main barrier to international funding. Do your audits help reduce that perception?
DMYTRO
They absolutely do. Corruption thrives in the dark. What we’re trying to do is turn on the lights.
I’ll give you an example. We had a case where a community received funding from an international donor to build housing for internally displaced people. On paper — everything looked fine. But our auditors visited the site and found serious violations:
- Low-quality materials
- Delays
- A contractor with a shady background
We flagged it. The donor was informed. Corrective actions were taken. And here’s the important part — instead of pulling the plug on future funding, the donor increased cooperation. Because they saw we were being honest. That’s what builds trust.
Auditing the Prozorro Procurement System
VICTOR
Let’s shift gears for a moment. A lot of public procurement in Ukraine now runs through Prozorro — our open e-procurement platform. Does DASU audit Prozorro-based tenders? Or do you focus more on what happens after the contract is awarded?
DMYTRO
Great question. Yes — we audit Prozorro tenders. In fact, we have an entire unit dedicated to monitoring high-risk purchases. We use a combination of:
Automated red-flag systems
Manual review of suspicious contracts
Follow-up inspections
And we don’t just look at formal compliance. We ask:
Was the specification written in a way that excluded competition?
Was there price manipulation?
Were there hidden connections between the buyer and the supplier?
VICTOR
So your approach isn’t just legalistic — it’s also analytical?
DMYTRO
Exactly. We want to understand the intent behind the actions. Let me give you a classic example. A school announces a tender for meat supplies. They write the specification to include only one very specific cut, with delivery required every morning at 7:15. Only one company applies — and they win. Legally, maybe it’s all clean. But functionally — it’s a closed process, designed to benefit one player. That’s what we’re trying to catch.
VICTOR
Do you cooperate with the Prozorro team directly?
DMYTRO
Yes — we have a very constructive relationship. They’ve developed great analytical tools. We use those to identify risk indicators, flag potential issues, and prioritize our audits. It’s a true partnership — government and civil society working hand in hand.
VICTOR
That’s great to hear. In a few years, it seems Ukraine has gone from “no system” to having one of the most transparent procurement platforms in the world. And DASU’s role — as the independent checker — gives the system real teeth.
DMYTRO
That’s the goal. Transparency without oversight is just a mirror — it reflects what’s happening, but it doesn’t fix anything. Our job is to take that transparency and turn it into accountability.
What a Typical DASU Audit Looks Like — and How Communities Respond
VICTOR
Let’s go back to the ground level. Suppose you launch an audit in a small town or village. What does that actually look like? How many people go? What do they do?
DMYTRO
Good question. It depends on the scope — but usually, a DASU audit team is 3 to 5 people.
They arrive with official credentials and a clear audit plan. We always start by reviewing documents:
What contracts were signed?
Who was the contractor?
How was the money allocated and spent?
Then we move to on-site inspection. We don’t just sit in the office. We go to the school, the shelter, the water tower — whatever was built. And if we find inconsistencies, we issue an official report with clear recommendations and deadlines. Sometimes that’s the end of it. But if we uncover serious violations — embezzlement, fraud, non-performance — we escalate it to law enforcement.
VICTOR
How do local authorities usually react?
DMYTRO
It varies. Some are nervous, especially if they’ve never been audited before. Others are cooperative — they see us as a partner. But there are also cases where people are openly hostile. There’s still this old-school mindset that auditors are the enemy. We’re trying to change that — to show that we’re here to help. Yes, we find problems. But we also help solve them. We’ve had mayors call us later and say: “Thanks for pointing that out. We fixed it — and avoided a much bigger issue down the road.” That’s when we know we’re making an impact.
Working with MPs, NGOs, and the Public
VICTOR
Let’s talk about cooperation with MPs and civil society. Do you get many requests from them to audit specific programs or municipalities?
DMYTRO
All the time. And legally, we’re required to consider any official request from a Member of Parliament. We also get requests from anti-corruption watchdogs, local NGOs, and journalists. We treat them seriously. Of course, we have limited resources — we can’t audit everything. But if the request is grounded in facts and public interest — we prioritize it. And sometimes, a well-prepared NGO report can actually trigger an entire audit.
VICTOR
That’s encouraging. Because it means oversight isn’t just top-down — it can also come from the bottom up.
DMYTRO
Exactly. Our best audits happen when there’s local involvement. We recently audited a shelter project in a small town. The NGO there had collected complaints, photos, and invoices. They handed it all over — and that made our job so much easier. That kind of partnership is essential. We’re not everywhere. We’re about 2,000 auditors for the whole country. But with the help of citizens, we can multiply our reach.
Auditing in a Country at War
VICTOR
Final question. How has the full-scale war affected DASU’s work?
DMYTRO
In many ways. First — our staff. Several of our auditors joined the military. Some volunteered. Some were drafted. Some didn’t come back. Second — access. Some regions became too dangerous for audits, especially during heavy fighting. Third — the nature of spending changed. Huge sums started flowing into defense, reconstruction, humanitarian aid. That meant we had to shift priorities fast. But we didn’t stop. We kept auditing — even in war. And that’s something I’m proud of. Because yes, we’re fighting an external enemy. But we can’t ignore internal threats — like waste, abuse, or corruption. If we lose control over our finances, we risk losing trust — both at home and abroad. And in a war for survival, trust is everything.
VICTOR
Dmytro, thank you for this conversation. I’ve worked in public finance for years — and I honestly believe that DASU plays a crucial role in Ukraine’s recovery. You’re not just “finding violations.” You’re helping build a culture of responsibility. So thank you to you, your team — and everyone who supports this work. This has been Budget Talks — Subscribe, share, and stay tuned for more. Most importantly — thank you to Ukraine’s defenders, without whom this work would not be possible.
This episode was translated from Ukrainian and adapted into English with the help of artificial intelligence. The text has been reviewed to preserve the meaning and natural flow of the conversation.