Goods-less Transactions: What Forensic Economic Examination Shows

“On paper the goods exist, yet no one ever saw them move.” That, in a sentence, is a goods-less transaction. Proving that a supply or a job existed only in the documents — methodically, not “by eye” — is the task of forensic economic examination. Below I explain how a goods-less transaction differs from a real one with defective paperwork, which primary documents I analyze, by what indicators I record goods-lessness, and where the boundary of my competence lies.

What a goods-less transaction is and how it differs from defective documents

A goods-less (fictitious, “paper”) transaction is one reflected in the documents and accounts for which there was no real movement of goods, works or services. The documents exist; the economic fact behind them does not.

It is critical not to conflate two phenomena that practice constantly mixes up:

• A real transaction with defective documents. The goods were delivered, the work performed, the money paid — but the primary records carry flaws: a missing detail, the wrong signature, an error in a date or a name. The transaction happened and produced its result; only the paperwork “limps.”
• A goods-less transaction. The transaction never happened; the documents merely imitate something that did not.

The difference is fundamental. A defect of form can often be cured or explained by further evidence; the absence of the transaction itself cannot. That is why I am careful with wording: a flaw in the mandatory details does not make a transaction goods-less, and a flawlessly prepared set of documents does not prove one was real.

The legal anchor is the concept of a business transaction. Under the Law “On Accounting and Financial Reporting in Ukraine,” a business transaction (hospodarska operatsiia) is an action or event that changes a company’s assets, liabilities or equity. No real change in the assets, no transaction — however many documents “accompany” it.

Legal framework: why the “paper” must match reality

The claim in goods-less cases is framed not as “it was drawn up incorrectly” but as “the figure in the reporting has no real transaction behind it.” This rests on several provisions.

• The Law “On Accounting,” Article 9 — sets the mandatory details of a primary document: its name and date, the enterprise’s name, the content and volume of the transaction with the unit of measurement, and the positions and signatures of the responsible persons. But a primary document records a fact that has already happened. A document behind which there was no fact is, in essence, not a primary document at all, even if it formally carries every required detail.
• The Tax Code of Ukraine (PKU), Article 44 — a taxpayer must support its tax-reporting data with primary documents, accounting registers and other records. No support, no basis for the figure.
• PKU, Article 198 — the right to a VAT tax credit is tied to the real acquisition of goods or services. A goods-less transaction confers no such right, because no acquisition took place.

So goods-lessness is not abstract “fraud” but a concrete economic mismatch: a declared figure (expenses, tax credit, a balance) has no real business fact behind it.

What the examination itself rests on

The work of a forensic economic expert is governed by the Law “On Forensic Expert Examination,” and the ordering and conduct of studies by the Instruction on forensic examinations and expert studies (Ministry of Justice Order No. 53/5). An examination always runs within a specific proceeding: in a criminal one, under the Criminal Procedure Code of Ukraine (KPK); in tax disputes, under the Code of Administrative Procedure (KAS); in commercial or civil ones, under the Commercial Procedure Code (HPK) or the Civil Procedure Code (TsPK). Whatever the process, the expert works only with the materials provided and only within their specialty — accounting, tax-accounting and reporting documents — and may not go beyond the case file or their own competence.

Which documents the expert analyzes

I work “from the bottom up” — from the primary document to the registers and reporting — looking at each level not for formatting errors but for traces (or their absence) of a real movement of goods.

• Outgoing and incoming delivery notes — who handed over what, to whom, how much and when.
• Consignment notes (tovarno-transportni nakladni, TTN) and route sheets — by what means the goods physically moved. A missing TTN in a supply case is one of the most telling signals.
• Acceptance acts for works and services — though an act alone, where no resources could have performed the work, proves little.
• Warehouse and quantity records — stock cards, incoming and outgoing warehouse documents, inventory lists: whether the goods physically “passed” through the warehouse.
• Turnover-and-balance sheets, account cards and analyses, the general ledger — how the transaction is reflected systemically and whether it agrees with the primary records.
• Contracts, specifications, bank statements — the terms of the transaction and the reality of the settlements.

Often the comparison of primary records with registers yields the key result: the transaction sits in the accounts but no primary document supports it, or the document exists yet the warehouse records show no physical movement.

Signs of goods-lessness: what the expert looks at

No single sign is a “verdict”; the conclusion is built on the totality. Typical markers I check against the materials provided:

Sign	What it shows
No TTN / no transport confirmation	Goods were supposedly moved, but the physical movement is confirmed by nothing
No warehouses or storage space	There was physically nowhere to store the declared volume of goods
No staff, equipment or capacity	The supplier lacked the resources to perform the supply or the works
Break in the supply chain	The counterparty did not itself acquire what it “sold”: the goods “appear” from nowhere
Mismatch of volumes	Declared volumes exceed storage, transport or production capacity
Timing inconsistencies	Goods “sold” earlier than acquired; document dates contradict one another

Break in the supply chain

Along the chain of suppliers, goods “appear” at a counterparty that neither acquired nor produced them. By comparing incoming and outgoing documents in the materials provided, the expert shows that an outgoing supply is not backed by any real acquisition. An important caution: the expert works only with the case file and does not “gather” counterparty data independently.

Mismatch of volumes and capacities

The most convincing conclusions often come from simple physical arithmetic. If the documents show thousands of tonnes “passing” through a small warehouse in a month, while the transport, staff and space cannot bear this, the volume refutes itself. So I compare the declared volumes with the available resources, the warehouse balances and the transport capacity.

Why the focus shifted to Articles 212 and 191 of the Criminal Code

For a long time, many “paper” transaction cases were built around Article 205 of the Criminal Code of Ukraine (KK) — “Fictitious entrepreneurship.” That article was decriminalized (removed from the KK in 2019), so a counterparty’s “fictitiousness” alone ceased to be a separate offence. Investigations shifted to the economic consequences of a goods-less transaction:

• Article 212 of the KK — tax evasion: where a goods-less transaction understated tax liabilities (expenses overstated, a groundless VAT tax credit formed).
• Article 191 of the KK — misappropriation, embezzlement or taking possession of property: where a “paper” supply is used to withdraw real funds from a company.

For the examination, the questions are now framed around specific sums — understated liabilities, a groundlessly formed credit, withdrawn funds — rather than abstract “fictitiousness.” Such proceedings usually run alongside audits by the State Tax Service (DPS) and investigations by the Bureau of Economic Security (BEB), and, where there are signs of money laundering, materials from the State Financial Monitoring Service (Derzhfinmonitoryng).

The boundary of competence: what the expert proves and what they do not

This is the most important point. A forensic economic expert establishes the documentary (non-)support of a transaction — whether it is confirmed by the primary documents and accounting data provided. The expert does not:

• establish intent;
• establish a person’s guilt;
• qualify the act (say “this is evasion” or “this is embezzlement”);
• make a legal conclusion about the “fictitiousness” of an enterprise or a transaction.

So a correct conclusion reads as “the business transaction is not documentarily supported,” or “the primary documents provided do not confirm a real movement of goods,” rather than “the transaction is fictitious and intentional.” “Fictitiousness,” “intent” and “guilt” are a legal and evidentiary assessment made only by the court, weighing the expert’s conclusion together with the rest of the evidence. An expert who crosses this line risks that their conclusion later “falls apart” in the hearing.

Typical investigative mistakes in framing questions

An error in framing a question often makes a conclusion impossible before the study begins. The most common:

1. A question about law or guilt. “Are there signs of tax evasion in the actions?”, “Did the person act intentionally?” — outside the expert’s competence, and a correct expert will not answer it.
2. A request for a legal qualification. “Is the transaction fictitious?” — that is for the court. Correct: “Are the business transactions with counterparty X confirmed by the primary documents and accounting data provided?”
3. An incomplete set of documents. Only tax returns or a DPS audit act — without primary records, TTNs and warehouse accounting. There is nothing to confirm or refute the transaction, and the expert issues a notice of the impossibility of providing a conclusion.
4. An undefined scope. No period or specific list of transactions or counterparties is stated, and the subject of the study “blurs.”

Correct questions, by contrast, are specific and economic: whether certain transactions over a defined period are documentarily supported; whether unsupported transactions changed the declared liabilities, and by what sum; whether the accounting data match the available primary documents.

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Goods-lessness is a conclusion about a totality of documentary mismatches, not about a single missing TTN, and it must be built carefully, within the clear limits of economic competence. If you, as an investigator, lawyer or manager, are preparing a case where the key question is the reality of business transactions, I will be glad to help frame the correct questions and assess whether your documents are enough for a well-founded conclusion.