UKRAINE: ERNST & YOUNG CONSIDERS ITS APPRAISAL OF UKRZALIZNYTSIA PROPERTY OBJECTIVE

Ukrainian News Agency, Kyiv, Ukraine, Thursday, June 19, 2008

KYIV - Ernst & Young, a limited liability company in Kyiv and part of the group of the Ernst & Young international company providing auditing and consultation services, considers its appraisal of fixed assets of the State Railway Transport Administration (Ukrzaliznytsia) in 2007 objective despite the claim of the Main Control and Auditing Department. Ukrainian News learned this from the report of Ernst & Young.

"We think we have conducted the appraisal in a fair manner and objectively, in compliance with the appraising standards applied in Ukraine and internationally," the report reads.

Ernst & Young stressed that Ukrzaliznytsia's property in Dnipropetrovsk, the subject of the department's claim, was appraised as part of fixed assets of the railway companies belonging to the structure of Ukrzaliznytsia, and with the only aim of reflecting them in financial statements of these companies.

"The appraisal of fixed assets of railway transport enterprises, which are parts of Ukrzaliznytsia, has been made exclusively with the aim of including them in financial statements, and with no other," the report reads.

Ernst & Young noted that this appraisal of fixed assets was made based on information available as of the moment of appraising operations.

Ernst & Young is ready to cooperate with the Main Control and Auditing Department and answer any questions about the appraisal at Ukrzaliznytsia.

As Ukrainian News earlier reported, chairman of the Main Control and Auditing Department Mykola Syvulskyi announced on June 17 that during an audit of financial and business operations at Ukrzaliznytsia it was established that Ernst & Young appraised the five-storey administrative building of the Prydniprovska Railway Company with a total floor space of 19,600 square meters, situated in Dnipropetrovsk downtown, at UAH 0.4 million in 2007.

Meanwhile, the residual value of the building was UAH 5.1 million, and in the second half of 2006 the railway administration performed capital repairs in the building that cost it UAH 19.9 million.

Syvulskyi said that the State Property Fund department in Dnipropetrovsk region qualified the appraising report by Ernst & Young as not corresponding to the requirements of the regulatory acts on property appraisal.

The Main Control and Auditing Department also requested the State Property Fund to revoke the appraising license of Ernst & Young.

Ernst & Young is among the international leaders in terms of audit, taxation and law, consultative support during business deals and consultations on business management.