Kyrgyzstan

Member Organizations

Member Organization Associate Other PAOs

  Union of Accountants and Auditors

Legal and Regulatory Environment

  • Overview of Statuatory Framework for Accounting and Auditing

    Accounting

    The corporate financial reporting framework in the Kyrgyz Republic is governed by the requirements outlined in the following legislation:

    • The Law on Accounting ? 76 of 2002 sets out the main principles of accounting and financial reporting in the Kyrgyz Republic. In February 2013, amendments to the Accounting Law introduced differentiated financial reporting requirements based on size and public importance of the entities. Full IFRS are required for public interest entities, including listed companies, banks, other financial institutions, investment funds, insurance companies, and non-government pension funds. IFRS for SMEs is required for all other entities.
    • Financial institutions operating according to the principles of Islamic banking and finance use Islamic financial accounting standards adopted in accordance with the Kyrgyz law.
    • Small- and medium-sized enterprises (SMEs), sole traders, and micro businesses can apply simplified accounting rules established by the Government of the Kyrgyz Republic or IFRS for SMEs on a voluntary basis.

    Auditing

    • The Law on Audit Activities No. 134 of 2002 sets out general provisions for the practice of auditing. Banks and other financial institutions, insurance companies, issuers of publicly traded securities, and other entities specified by law are subject to statutory audits.
    • The Government’s Resolution on ISA Adoption in Kyrgyz Republic No. 470 of 2008 requires audits to be conducted in accordance with ISA as promulgated by the IAASB. The Russian translation of 2010 ISA is required for application as of 2016.
  • Regulation of Accountancy Profession

    In the Kyrgyz Republic, only auditors are regulated at the state level. The rest of the profession is not formally recognized and is united on a voluntary basis through membership in local professional accountancy organizations (PAOs): the Union of Accountants and Auditors (UAA) and the Chamber of Accountants and Auditors (CAA).

    The State Service for Regulation and Supervision of Financial Markets (SSRSFM) regulates all auditors under the Kyrgyz Government’s Decree on the Regulation of SSRSFM of 2009. The SSRSFM is responsible for: (i) establishing initial professional development (IPD) and continuous professional development (CPD) requirements for audit professionals, licensing, and registration of auditors; (ii) maintaining an auditors’ register; (iii) establishing requirements for professional auditors’ qualification; (iv) administering the professional competency certification examination; (v) enforcing the professional standards approved for application by Kyrgyz auditors; and (vi) conducting quality control reviews and putting in place investigations and discipline processes for non-compliance with the standards and laws of the Kyrgyz Republic. The provision of CPD for auditors has been delegated to the UAA and CAA.

    According to the Law on Audit Activities No. 134 of 2002, candidates wishing to obtain an audit certificate and license and having a university degree in economics/finance must acquire three years of relevant experience, while candidates not holding such a degree must have seven years of relevant experience. Relevant experience is interpreted as “financial analytical and/or controlling-revision” work. Candidates must also pass four examinations in law and taxation, accounting, auditing, and financial analysis. Existing legislation permits the recognition of foreign qualifications only when there is a mutual recognition agreement with the other country. There are currently no such agreements in place.

    The PAOs require their members to have a diploma in accounting from an accredited university and three years of work experience, and hold a Certified Accounting Practitioner or Certified International Professional Accountant certification. The UAA develops annual CPD programs for its members and investigates and disciplines its members. Foreign practitioners who are members of IFAC member organizations can become full members of the UAA without fulfilling any additional requirements. The CAA provides training and CPD programs, and develops study manuals for education centers.

  • Audit Oversight Arrangements

    No independent audit oversight arrangements exist in the Kyrgyz Republic. Auditors are regulated by the State Service for Regulation and Supervision of Financial Markets Republic (SSRSFM) under the Kyrgyz Government’s Decree on the Regulation of SSRSFM of 2009. Its responsibilities, among others, include: (i) licensing and registration of auditors; (ii) maintaining an auditors’ register; (iii) establishing requirements for professional auditors’ qualification and administering the professional competency certification examination; (iv) enforcing the professional standards approved for application by Kyrgyz auditors; (v) conducting quality control reviews and putting in place investigations and discipline processes for non-compliance with the standards and laws of the Kyrgyz Republic.

  • Professional Accountancy Organizations

    The Chamber of Accountants and Auditors (CAA)

    The CAA was established in 2001 as the result of a merger of four previously existing professional accountancy organizations (PAOs): the Chamber of Auditors (created in 1994 and originally designed to be the sole professional body for auditors), the Association of Accountants and Auditors, the Union of Accountants, and the Institute of Professional Accountants. CAA membership comprises 600 individuals as full, honorary, and candidate members. The CAA provides training and continuing professional development (CPD) programs, and develops study manuals for education centers. The CAA is also a Eurasian Council of Certified Accountants and Auditors member.

    The Institute for Accounting and Auditing Development (IAAD)

    The IAAD was established in 2007. Its primary objective is to support the government, the State Service for Regulation and Supervision of Financial Markets, and other state bodies in the further development of, and improvement in, accounting and auditing. Currently, the institute has about 30 members, a majority of them auditors.

    The Union of Accountants and Auditors (UAA)

    The UAA was founded in 1999 with the support of the USAID/Pragma Corporation and provides consulting services and training courses to its members located in three regional branches. Membership is open to individuals holding the Certified Accounting Practitioner or Certified International Professional Accountant designation. The UAA develops annual CPD programs for its members and investigates and disciplines its members. Foreign practitioners who are members of IFAC member organizations can become full members of the UAA without meeting any attestation requirements. In addition to membership in IFAC, the UAA is a member of the Eurasian Council of Certified Accountants and Auditors.

    The CAA and UAA participate in the Expert Council of the State Service for Regulation and Supervision of Financial Markets (SSRSFM) and are consulted periodically on relevant issues facing the profession. They cooperate closely with each other and have recently conducted a joint auditor CPD course co-tendered from the SSRSFM. Both the UAA and CAA have voluntary membership requirements, a similar membership base employed as accounting technicians, junior accountants, preparers of financial statements, chief accountants, and auditors. Recognizing the need to build further capacity of the accounting profession in Kyrgyz Republic, the two PAOs have initiated merger discussions, though they are still at an early stage of development.

  • Projects or Other Information

    In 2008, the World Bank conducted an assessment of the corporate financial reporting environment in the Kyrgyz Republic. The conclusions of the assessment served as a basis for developing the World Bank Center for Financial Reporting Reform Country Strategy and Action Plan for Kyrgyz Republic (CSAP), which was adopted at the national level by a National Coordination Working Group chaired by the State Service for Regulation and Supervision of Financial Markets. It was subsequently approved through a government resolution in March 2014.

    The CSAP sets out a reform program for the accountancy profession through 2020, and is designed to mobilize a donor community to support the reform activities. Those include:

    • Incorporating international standards into the Kyrgyz legislation. This includes establishing mechanisms for ongoing translation and publication of the standards, assigning responsibility to an appropriate national organization, and amending the legislation to reflect this.
    • Clarifying institutional responsibilities for corporate financial reporting and financing arrangements. This involves realignment of responsibilities for key activities (such as auditor certification, training, professional education, and quality assurance) to more effectively make use of organizational capacity and review of funding models.
    • Strengthening institutional capacity (for professional accountancy organizations, the regulator of financial reporting and auditing, and other regulators and supervisory bodies) in line with the realigned responsibilities.

Adoption of International Standards

  • Quality Assurance

    The Law on Audit Activities No. 134 of 2002 introduced the concept of a quality assurance (QA) review system for auditors. The responsibility for developing and implementing the system has been assigned to the State Service for Regulation and Supervision of Financial Market (SSRSFM) under the Kyrgyz Government’s Decree on Regulation of SSRSFM of 2009. As of 2016, however, the QA review system has not been implemented due to resource constraints.

    With the assistance of the World Bank, the SSRSFM plans to establish the system as part of the implementation of the Strategy and Action Plan for the Kyrgyz Republic for 2014–2020.

    Current Status: Not Adopted

  • International Education Standards

    There are several institutions engaged in the regulation of the initial professional development (IPD) and continuing professional development (CPD) for professional accountants in the Kyrgyz Republic: the Ministry of Science and Education of the Kyrgyz Republic, universities, and the State Service for Regulation and Supervision of the Financial Market of the Kyrgyz Republic (SSRSFM). Overall, although some elements of IES requirements appear to be in place in the Kyrgyz Republic, the extent of compliance of national requirements with those of the revised IES is not clear.

    The Ministry of Science and Education develops national IPD standards, while universities and business schools establish national educational standards for accounting education. There is no indication, however, whether the accounting education programs offered by universities are aligned with the requirements of IES.

    The Law on Audit Activities No. 134 of 2002 sets the IPD and CPD requirements for Kyrgyz auditors. The SSRSFM, under the Decree on Regulation of SSRSFM of 2009, is authorized to administer certification exams, license auditors, and provide CPD for statutory auditors. Provision of CPD services for auditors is delegated to a provider who wins the tender for that particular year. The content of the CPD is not specified by law or other regulation.

    Professional accountancy organizations are not involved in establishing IPD and CPD requirements or the provision of CPD services for auditors. They do, however, establish CPD requirements for their members and develop and provide training programs.

    Current Status: Partially Adopted

  • International Standards on Auditing

    Auditing standards in the Kyrgyz Republic are established by the government under the Law on Auditing Activity of 2002. The Government’s Resolution on ISA Adoption in Kyrgyz Republic No. 470 of 2008 requires application of ISA for all audits as promulgated by the IAASB and translated into the Kyrgyz language. There is no official Kyrgyz translation of ISA, and the Russian translation of the 2010 version of ISA—as published on the website of the State Service for Regulation and Supervision of the Financial Market of the Kyrgyz Republic (SSRSFM)—is to be applied.

    With the assistance of the World Bank, the SSRSFM plans to establish processes to translate ISA on an ongoing basis as part of the implementation of the Strategy and Action Plan for the Kyrgyz Republic for 2014–2020.

    Current Status: Adopted

  • Code of Ethics for Professional Accountants

    The current Kyrgyz legislation on accounting and auditing does not establish ethical requirements for professional accountants. The IESBA Code of Ethics has not been adopted by the audit regulator, the State Service for Regulation and Supervision of the Financial Market of the Kyrgyz Republic, or by other relevant parties except the Union of Accountants and Auditors, which first adopted the IESBA Code of Ethics in 2008. It subsequently adopted the 2010 version of the Code, which is being applied as of 2016.

    Current Status: Partially Adopted

  • International Public Sector Accounting Standards

    The Ministry of Finance is responsible for setting accounting standards for the public sector, which are defined in the Statute for Administration and Conducting Accounting of State Budget Entities of 2008 and the Regulations on the Organization of Accounting of State Budget Entities. In general, cash-basis standards, with elements of accrual accounting, are being applied. In 2009, a medium-term plan for the reform of the state finance control system was adopted, which envisages a phased-in transition to IPSAS. A draft strategy to implement the transition is under consideration as of 2016. Translation of IPSAS is expected to take place once the IPSAS implementation strategy has been adopted by the government.

    Current Status: Not Adopted

  • Investigation and Discipline

    The State Service for Regulating and Supervising the Financial Market of the Kyrgyz Republic (SSRSFM), under the Decree on the Regulation of SSRSFM of 2009, is responsible for establishing an investigation and discipline (I&D) process for auditors. The Union of Accountants and Auditors (UAA) reports that the SSRSFM periodically carries out investigations related to violations of professional standards, but no further information is available on this process.

    The UAA, which is a PAO with voluntary membership, reports that it has established an I&D system for its members; however, that system is not in line with SMO 6.

    Current Status: Partially Adopted

  • International Financial Reporting Standards

    The Law on Accounting No. 76 of 2002, as amended in February 2013, introduced differentiated financial reporting requirements based on the size and public importance of the entities. Full IFRS are required for public interest entities, including listed companies, banks, other financial institutions, investment funds, insurance companies, and non-government pension funds. IFRS for SMEs is required for all other entities, except for sole traders and micro businesses, which may apply simplified rules established by the government or may opt to apply IFRS for SMEs.

    Financial institutions operating according to the principles of Islamic banking and finance use Islamic financial accounting standards adopted in accordance with the Kyrgyz law.

    The Law on Accounting requires application of the current version of IFRS as issued by the IASB and translated into the Kyrgyz language. As there is no official Kyrgyz translations of IFRS, the Russian translation of the standards is being applied. The implementation of the adopted standards has been a major challenge.

    With the assistance of the World Bank, the State Service for Regulating and Supervising of the Financial Market has been establishing processes to translate IFRS on an ongoing basis as part of the implementation of the Strategy and Action Plan for the Kyrgyz Republic for 2014–2020.

    Current Status: Adopted

Disclaimer

IFAC bears no responsibility for the information provided in the SMO Action Plans prepared by IFAC member organizations. Please see our full Disclaimer for additional information.

Methodology

Methodology
Last updated: 06/2016
We welcome feedback. Please email compliance@ifac.org

Thank you for your interest in our publications. These valuable works are the product of substantial time, effort and resources, which you acknowledge by accepting the following terms of use. You may not reproduce, store, transmit in any form or by any means, with the exception of non-commercial use (e.g., professional and personal reference and research work), translate, modify or create derivative works or adaptations based on such publications, or any part thereof, without the prior written permission of IFAC.

Our reproduction and translation policies, as well as our online permission request and inquiry system, are accessible on the Permissions Information web page.

For additional information, please read our website Terms of Use. ALL RIGHTS RESERVED.