Competition for the selection of audit entities

CONDITIONS OF THE COMPETITION FOR THE SELECTION OF AUDIT ENTITIES ELIGIBLE TO PROVIDE MANDATORY FINANCIAL STATEMENT AUDIT SERVICES

The Supervisory Board of PRIVATE JOINT-STOCK COMPANY "INSURANCE COMPANY "MISTO", as the body entrusted with the functions of the audit committee, announces a competition for the selection of audit entities eligible to provide mandatory financial statement audit services.

The purpose of the competition is to select, on a competitive basis, an audit firm to conduct the mandatory audit of the financial statements of PJSC "IC "MISTO" in accordance with international auditing standards.

Audit entities that meet the requirements set forth in the Law of Ukraine "On Audit of Financial Statements and Auditing Activities" dated 21.12.2017 No. 2258-VIII, who are eligible to provide mandatory financial statement audit services to enterprises of public interest, whose information is included in the relevant section of the Register, and who do not have restrictions related to the duration of service provision to this enterprise, are invited to participate in the Competition.

Client Contact Person: Head of the Finance and Accounting Department - Chief Accountant Tetyana Mandrenko, Tel. тел. (0432) 508 108. 

The financial statements and other public information of PJSC "IC "Misto" are available on the Company's website at the provided link.

CONDITIONS OF THE COMPETITION FOR THE SELECTION OF AUDIT ENTITIES ELIGIBLE TO PROVIDE MANDATORY FINANCIAL STATEMENT AUDIT SERVICES

 I.    GENERAL PROVISIONS

1.1. The procedure for conducting a competition for the selection of audit entities eligible to provide mandatory financial statement audit services for the PRIVATE JOINT-STOCK COMPANY "INSURANCE COMPANY "MISTO" (hereinafter referred to as the Procedure) has been developed in accordance with the requirements of the Law of Ukraine "On Audit of Financial Statements and Auditing Activities" No. 2258-VIII dated 21.12.2017 (hereinafter referred to as the Law) with the purpose of conducting a competitive selection of audit entities eligible to provide mandatory financial statement audit services for the PRIVATE JOINT-STOCK COMPANY "INSURANCE COMPANY "MISTO" (hereinafter referred to as the Competition).
1.2.    Information about the Client:
Full Name: PRIVATE JOINT-STOCK COMPANY "INSURANCE COMPANY "MISTO."
According to the criteria defined by the Law of Ukraine "On Accounting and Financial Reporting in Ukraine", the Company is classified as an enterprise of public interest.
1.3. The main task of the mandatory audit of the Company's financial statements is to have an audit entity conduct a verification in accordance with the requirements of the Law and international auditing standards for the Company's financial statements, specifically: the Statement of Financial Position (Balance Sheet) as of December 31 of the respective year, the Statement of Financial Results (Comprehensive Income Statement), the Statement of Changes in Equity, the Statement of Cash Flows for the year ended on the specified date, and Notes to the financial statements with explanations, along with an independent auditor's opinion regarding compliance with international financial reporting standards and Ukrainian legislation.
1.4.    The selection of audit entities is carried out based on the following principles:

• openness and transparency of the competition;
• maximum efficiency and cost-effectiveness;
• fair competition among participants;
• non-discrimination of participants;
• objective and unbiased evaluation of proposals;
• prevention of corruption and abuse.

1.5.    The Client ensures free access for all participants to participate in the competition in accordance with this Procedure.

II. CRITERIA FOR ENGAGING AUDIT ENTITIES TO PARTICIPATE IN THE COMPETITION

2.1.     Audit services may only be provided by an audit entity that has been granted such a right under the Law and meets the following criteria:

• meet the requirements established by the Law;
• are included in the relevant section of the Register of Auditors and Audit Entities, specifically in the register of audit entities authorized to conduct mandatory audits of financial statements of public interest enterprises;
• the audit firm has a sufficient level of qualification and experience of auditors and personnel involved in providing services in accordance with international auditing standards;
• have a good reputation (no more than three penalties in the form of warnings or suspension of the right to provide mandatory audit services or mandatory audits of financial statements of public interest enterprises applied to the audit firm for two consecutive years);
• can provide a sufficient number of employees at their main place of work to perform mandatory financial statement audit tasks (with at least five auditors working full-time for at least 40 hours per week, except for employees with reduced working hours as defined by law, and with a total staff count of at least 10 qualified employees, of whom at least two must have passed an examination in the area of international financial reporting standards);
• have no violations of the requirements for maintaining the independence of the audit entity, including the auditor, the audit entity, their key audit partners, their owners (founders, participants), officials, and persons involved in providing audit services, including employees of the audit entity and other individuals, as well as close relatives and family members of the aforementioned persons.

1. are not owners of financial instruments issued by the legal entity whose financial statements are being audited or do not have a material and direct interest in deriving benefits from the legal entity, an entity without legal status to which audit services are provided, or a legal entity related to such an entity through joint ownership, control, and management, except those indirectly held through collective investment institutions;
2. do not participate in transactions involving financial instruments issued, guaranteed, or otherwise supported by the legal entity receiving audit services, except for transactions within the scope of collective investment institutions;
3. have not been, during the periods specified in part one of Article 10 of the Law, in employment, contractual, or other relationships with the legal entity receiving the services.

• provide audit services that may lead to a conflict of interest;
• do not have restrictions related to the duration of providing services to the Company;
• have no restrictions on providing services as specified in Article 27 of the Law;
• have a valid civil liability insurance contract for third parties, concluded in accordance with the provisions of the current legislation of Ukraine;
• have experience in providing audit services for financial statements in accordance with international standards and experience in auditing the financial statements of insurance companies;
• have not provided mandatory financial statement audit services to PJSC "IC "MISTO" if the total amount of remuneration received from PJSC "IC "MISTO" annually exceeds 15 percent of the total net income from services provided by such an audit entity over five consecutive years.

2.2. The requirements and criteria for engaging audit entities are specified in the competition documentation (Information Announcement).

III. PROCEDURE FOR SUBMITTING COMPETITIVE PROPOSALS

3.1. The audit committee or the body authorized to perform the functions of the audit committee in accordance with current legislation approves the competition documentation for the selection of audit entities eligible to provide mandatory financial statement audit services.
3.2. After the approval of the competition documentation, an information announcement about the competition is posted on the Company’s website, which must include:

• Client details (name, postal address, phone number, email address);
• Deadline (date and time) for submitting competitive proposals;
• Information about the subject and scope of the audit;
• A link to the Client’s website where the competition documentation is posted;
• Procedure for submitting competitive proposals by participants;
• Information about the location and contact phone numbers.

3.3. Competitive proposals must be submitted by participants to the email address specified in the Information Announcement.
3.4. All documents must be submitted in Ukrainian and signed by an authorized representative of the audit entity. Copies of documents submitted as part of the competition documentation must be certified by the signature of the authorized representative and the company seal (if available).
3.5. Competitive proposals must be submitted within the period specified in the Information Announcement.
3.6. Competitive proposals received by the Client after the submission deadline will not be considered.
3.7. Participants have the right to modify or withdraw their competitive proposal before the submission deadline.
3.8. Each participant may submit only one competitive proposal, which cannot be changed after the submission deadline.                     

IV. REVIEW OF COMPETITIVE PROPOSALS

4.1. The review and verification of participants' competitive proposals are conducted during a meeting of the audit committee or the body authorized to perform its functions by opening the submitted packages.
4.2. Based on the review and verification of proposals, the audit committee or the body authorized to perform its functions makes a decision either to admit participants whose proposals meet the established requirements to the competition or to reject such proposals. Notifications regarding refusal to participate in the competition and the rejection of proposals will be posted on the Client’s website within three (3) working days from the date of such decision.
4.3. After evaluating and analyzing the proposals of participants who meet the competition requirements, the audit committee or the body authorized to perform its functions approves a report on the selection procedure, which outlines the terms of the audit services agreement and selects the person authorized to sign the agreement with the audit entity.
4.4. After the report on the conclusions of the selection procedure is approved, the Supervisory Board prepares proposals for the General Meeting regarding the appointment of the audit entity (entities) to provide mandatory financial statement audit services.
4.5. The General Meeting of Shareholders appoints the audit entity in accordance with the requirements of Article 29 of the Law of Ukraine "On Audit of Financial Statements and Auditing Activities."
4.6. Participants will be informed about the decision to appoint the audit entity to provide mandatory financial statement audit services within five (5) working days from the date of the decision by posting the information on the Client’s official website.
4.7. The competition may be terminated at any stage or declared invalid for reasons specified in the competition documentation, namely:

• absence of a further need to conduct the competition;
• rejection of all competitive proposals;
• submission of fewer than two competitive proposals for participation.