CONSULTING IN FINANCIAL REPORTING: DISTINGUISHING IT FROM AUDIT AND ANALYSIS IN THE CONTEXT OF IFAC INDEPENDENCE STANDARDS

Abstract

This article examines the differentiation between financial reporting consulting, auditing, and financial analysis within the strict independence standards established by the International Federation of Accountants (IFAC) and the IESBA Code. To fill academic and legal gaps, the paper provides an original conceptualization of «financial reporting consulting.» A systematic comparison of these fields is conducted across three sets of evaluation criteria: conceptual, regulatory, and sanction-related. The research demonstrates that the defining criterion for professional differentiation is the mandatory requirement for the service provider’s absolute independence.
Furthermore, the «grey area» of overlapping professional services is modeled using Euler diagrams, explicitly encompassing due diligence, ESG verification (incorporating the ISSA 5000 standard), asset valuation, and transformation consulting. The paper details the manifestation of five fundamental threats to independence within this unregulated domain: self-interest, self-review, advocacy, familiarity, and intimidation. It emphasizes that the lack of a specialized national regulatory framework for consulting in Ukraine creates an institutional vacuum, weakening compliance control mechanisms.
Based on the findings, practical risk-mitigation recommendations are formulated for the audit services market. These include creating internal service registries for audit firms, introducing income structure disclosures for regulators (such as APU and OSNAD), and establishing stricter compliance evaluation criteria for corporate clients to protect audit objectivity during European Union integration.