Chamber of Auditors of Uzbekistan
Associate | Established: 2000 | Associate since 2013
ChAUz was formally established on August 9, 2000 by the Ministry of Justice of the Republic of Uzbekistan as a voluntary membership organization with the mission of supporting the development of auditors’ professional expertise and protecting their professional interests. As a professional organization of auditors, the Chamber develops training programs for auditors, provides input to the relevant legislative acts, establishes training centers for auditors, develops guidance materials, conducts quality assurance (QA) reviews of its members, investigates and disciplines its members, holds conferences and seminars on accounting matters, and develops and promotes the Code of Professional Ethics for auditors. ChAUz is an Associate of IFAC.
Statements of Membership Obligation (SMO)
The Statements of Membership Obligations form the basis of the IFAC Member Compliance Program. They serve as a framework for credible and high-quality professional accountancy organizations focused on serving the public interest by adopting, or otherwise incorporating, and supporting implementation of international standards and maintaining adequate enforcement mechanisms to ensure the professional behavior of their individual members.
SMO 1: Quality Assurance
The Ministry of Finance is legally entrusted under the Law on Auditing Activity of 1992 to ensure compliance with the licensing requirements, including the requirement to establish quality controls in accordance with the Uzbek National Standards of Auditing issued by the Ministry, which are based on ISA in effect as of 2008.
Under the same law, audit firms are required to pass an annual rating review performed by professional accountancy organizations. The reviews include obtaining a certificate of passing an external quality assurance (QA) review. To fulfill the requirements of the law, ChAUz, adopted ISQC 1 and established QA review systems for its members. The system was developed with the assistance of the Russian Union of Auditors and is based on the QA materials developed by the Institute of Chartered Accountants of Scotland. In 2019, ChAUz reports that, based on the results of a self-assessment, its QA review system is mostly in line with SMO 1 requirements.
Full QA reviews of audit firms are conducted every three years. In case of complaints against the firm, ChAUz reserves the right to conduct an extra review at no cost for the firm. Reviews are conducted by certified auditors who are approved by the External Quality Assurance Committee acting under the supervision of the ChAUz Council.
ChAUz reports that it has been conducting regular reviews since 2009, and that all its members have been required to undergo external quality control since 2015. ChAUz reports that 30 of its member firms passed the review in 2015 and 45 in 2016. No recent information is available.
ChAUz indicates that it has been assisting the regulator with formulating the policies for quality assurance and promoting SMO 1 requirements through its representation on the Consultative Board on Accounting and Auditing under the Ministry of Finance. In 2009, the chamber submitted a proposed QA review program for the jurisdiction to the Ministry of Finance based on its review of experiences of other professional accountancy organizations. In response to the amendments to the Law on Auditing Activity introduced in 2018 assigning the responsibility for QA reviews to the Ministry of Finance, ChAUz indicates that it will continue to participate in the development of the new framework for QA together with the regulator.
To support its members with understanding the requirements and implementation of the quality control standards, ChAUz reports that it organizes seminars, conferences, and roundtables on the subject and disseminates information on the results of QA reviews on an annual basis.
The ChAUz is encouraged to provide an update in its SMO Action Plan on the execution of its proposed actions to comply with SMO 1, including specific examples of activities it undertakes. Considering that effective January 2020 all auditors and audit firms will be required to undergo external quality assurance reviews to be conducted by the Ministry of Finance, ChAUz is encouraged to assist the Ministry with the design and implementation of the QA review system in the jurisdiction as well as ensuring transfer of its knowledge and experience acquired as part of administering its own QA review system. The chamber should also ensure timely availability of the IAASB pronouncements that establish requirements for quality controls in audit firms and appropriate training and education of its members.
SMO 2: International Education Standards
The Law on Auditing Activity of 1992 as amended in 2018, authorizes the Ministry of Finance to establish initial professional development (IPD) and continuing professional development (CPD) requirements for auditors and chief accountants of certain enterprises, which are implemented by the Ministry, universities, and professional organizations of accountants and auditors such as the ChAUz.
The chamber reports to be working with the Ministry of Finance to bring educational requirements for auditors in line with IES via direct consultations and representation in the Ministry’s Consultative Board on Accounting and Auditing. It also reports to be using available translated documents to promote adoption of IES to various regulators. However, apart from general statements, no specific examples have been provided and the status of incorporation of the IES 2015 requirements remains to be established.
Members of ChAUz are subject to the CPD requirements established at the jurisdictional level. Compliance with the CPD requirements is reportedly verified through quality assurance reviews. During 2009–2013, ChAUz indicated that it worked to bring practical experience requirements for its members in line with IES 5. It also reported to monitor fulfillment of the requirements by its members and provide the Ministry of Finance with its findings on an ongoing basis. Specific details on how ChAUz monitors fulfillment have not been provided and the extent of alignment with IES 5 as revised in 2015 is not clear.
As a professional accountancy organization, ChAUz provides input to the auditor training program administered by the training centers accredited by the Ministry of Finance. The chamber reports that the training and CPD programs were last amended in 2011 and therefore the latest revisions to the international standards do not appear to be incorporated in the education programming. It is not also clear whether the voluntary national program for certification of accountants developed by the chamber together with other PAOs, incorporates the revised IES of 2015.
As a matter of priority, ChAUz is encouraged, possibly in cooperation with other stakeholders involved in the education of professional accountants in the jurisdiction, to review the national requirements against those of the revised IES. In this regard, the Accountancy Education Benchmarking Tool developed by the Center for Financial Reporting Reform of the World Bank may be utilized. Specific actions that are measurable and with a defined timeframe need to be developed to bring accountancy education in the jurisdiction in line with the IES. In addition, the chamber should consider disseminating information on the international developments in the area through its website and other communication means and consider ways to establish due processes for incorporation of new and revised international standards in the education programming.
SMO 3: International Standards on Auditing
Under the Law on Auditing Activity of 1992 as amended in 2018, the Ministry of Finance has the legal mandate to set and enforce auditing standards. With no direct responsibility for adoption of ISA, over the last decade the ChAUz has focused its efforts on promoting the adoption of international standards and participating in the translation process.
In 2008, ChAUz prepared and presented to the Ministry of Finance the ISA Convergence Plan for the periods of 2009–2013. It has subsequently cooperated with the Ministry in the process of creating a roadmap for the full adoption ISA in the jurisdiction and amending the related legislation through its representation in the Consultative Board on Accounting and Auditing of the Ministry of Finance. The chamber has also disseminated information about the developments in international standard-setting and put forward recommendations to the regulator based on the results of its quality assurance (QA) reviews.
In 2011, ChAUz joined the National Association of Accountants and Auditors (NAAA Uz) in the Group for Translations Reviews, which is responsible for the ongoing translation process in accordance with IFAC Translations Policy and review of the translations of international standards into Uzbek. The ChAUz reports that the latest translation of 2013 ISA into Uzbek language was completed in November 2014. ChAUz also worked with NAAA Uz to disseminate the Russian translation of ISA and have included it in trainings and other education-related activities. However, there has always been a significant gap between the latest ISA and their translations available for auditors in the jurisdiction.
To support its members with the implementation of the applicable auditing standards, ChAUz reports that it conducts consultations, develops training materials for its members, and organizes seminars and workshops on ISA, audit methodology, and common challenges identified through its QA reviews. Apart from general statements, no specific examples have been provided over the last five years.
With ISA adopted for application in all mandatory audits effective 2020, ChAUz is encouraged to work with other stakeholders in the jurisdiction—such as the Ministry of Finance, other PAOs and universities—to work out a sustainable system for the translation of ISA and ensure adequate preparation of auditors for the standards’ application through updated educational programming. The chamber and other stakeholders may consider obtaining permission of IFAC for the dissemination of the Russian translation of ISA, when there is a gap in translating the standards in the Uzbek language. Reaching out to professional bodies in the region to learn about their experience with a first-time adoption of ISA may be beneficial.
SMO 4: Code of Ethics for Professional Accountants
In the absence of a legal requirement or a regulation issued by the Ministry of Finance for professional accountants to abide by a Code of Ethics, the national professional organizations of accountants and auditors took the lead in introducing ethical requirements for their members who join on a voluntary basis.
In 2005, ChAUz and the National Association of Accountants and Auditors adopted a joint Code of Ethics for their members. The Code was later updated to incorporate the requirements of the 2014 IESBA Code of Ethics. Although ChAUz indicated that adoption of the 2016 version of the IESBA Code was under consideration, no further information is available at the time of writing of this report.
The chamber reports that it included the requirements of the 2014 IESBA Code into its continuing professional development programs and disseminated the Russian translation of the IESBA Code to its members. Apart from general statements, no specific activities have been indicated in the SMO Action Plan.
ChAUz is encouraged to work with other stakeholders in the jurisdiction to promote the adoption of the IESBA Code for all professional accountants. Considering the June 2019 effective date of the 2018 International Code of Ethics, a completely restructured and rewritten Code that includes the important NOCLAR standard issued in 2016, ChAUz, in cooperation with the regulator and other PAOs, is encouraged to develop a plan with a specific timeline for the translation of the Code and its adoption at least for the members of the chamber and other PAOs. Raising awareness about ethical requirements and enhancing activities to support members with abiding with the Code should also be considered. Such activities may include holding seminars and focused trainings, establishing a hotline for confidential questions, and disseminating information on the developments in the area through different communications means, among other activities.
SMO 5: International Public Sector Accounting Standards
ChAUz is not responsible for establishing public sector accounting standards, which are set by the Ministry of Finance. IPSAS have not been adopted; however, a roadmap for the standards’ adoption has been developed and the execution of activities is reported to be underway, with the expected completion date of 2022.
ChAUz indicates that it has focused its efforts on promoting the adoption of IPSAS via workshops and discussions with the Ministry of Finance, including the possibility of implementing a certificate program for public sector accountants in cooperation with the Association of Chartered Certified Accountants (ACCA). The chamber also reports to have been cooperating with the Uzbekistan Supreme Audit Institution to prepare for implementation of IPSAS by developing a methodology for auditing budget organizations and conducting a pilot training for staff.
ChAUZ is encouraged to consider its role in supporting the adoption of IPSAS in the jurisdiction and, if deemed relevant and necessary, develop a plan with specific activities and defined timeline for their execution. For example, ChAUz could consider organizing trainings on IPSAS for its members, if any, that work in the public sector and engaging with universities to incorporate the standards into accounting education curriculum. If deemed feasible, ChAUz is also encouraged to assist the Ministry of Finance with translation of IPSAS to ensure availability of the standards in the local language(s).
SMO 6: Investigation and Discipline
The Ministry of Finance under the Law on Auditing Activity of 1992 has the authority to suspend audit firms’ licenses and certificates in case of infringement of law or misconduct. It remains to be established whether the procedures operated by the Ministry of Finance comply with the requirements formulated in SMO 6.
In addition, ChAUz has established an I&D system for its members under its By-Laws. A Disciplinary and Appeals Committee was established by ChAUz in 2010, which conducts investigations on a complaints-basis. The ChAUz Council imposes disciplinary actions and may expel audit firms should they fail to comply with the National Standards on Auditing and the Code of Ethics as a result of a quality assurance review.
ChAUz conducted a self-assessment of its I&D system against the requirements of SMO 6 in 2015 and updated it in 2019. Limited progress has been made in bringing the system in line with the SMO 6 and no plans to address the shortcomings have been reported. The following gaps were reported: lack of public information on the types of misconduct that may bring about disciplinary actions as well as on the results of the I&D proceedings; members of the I&D committee are only comprised of accountancy professionals; limited cooperation with other authorities; a lack of appeals processes, among others.
ChAUz is strongly encouraged to analyze the results of the self-assessment and to develop an action plan, that is feasible and with a specific timeframe, to address the gaps. The chamber is also encouraged to consider sharing the SMO 6 requirements with other stakeholders that are involved in the investigation and discipline of the profession in order to promote alignment at the jurisdiction level, especially considering adoption of ISA and introduction of a mandatory QA review system in 2020. Greater collaboration and/or establishment of a unified I&D system in the jurisdiction to optimize use of resources and achieve efficiencies could also be considered.
SMO 7: International Financial Reporting Standards
The Law on Accounting of 1996, as amended in 2016, authorizes the Ministry of Finance of the Republic of Uzbekistan to set accounting standards both for private companies and state-financed organizations. Adopted standards represent a modified version of IFRS as they existed in 2008. The Central Bank of Uzbekistan (CBU) requires application of the 2004 version of IFRS for banks and credit institutions, and listed companies are permitted to use IFRS.
With no direct responsibility for the adoption of IFRS in Uzbekistan, ChAUz reports to focus on promoting adoption of IFRS for public interest entities to the Ministry of Finance. It participated in drafting the amendments to the Law on Accounting and reportedly maintains an ongoing dialogue with the Ministry of Finance. ChAUz also reports that it raises awareness about the importance of IFRS adoption through participation in roundtables, seminars, and other discussions focused on IFRS. Nevertheless, as of 2019, IFRS have not been adopted and no timeline has been established.
The chamber indicates that it has been assisting the Central Bank since 2013 with organizing trainings for bank representatives on implementation of IFRS in cooperation with Big 4 firms and other international organizations. Guidance to members is also provided through training on IFRS, seminars/roundtables, and continuing professional development programs. However, apart from general statements, no specific examples have been provided on any of the abovementioned activities.
The chamber also joined the Group for Translations and Reviews to participate in the translation process of the standards, which is led by the National Association of Accountants and Auditors. The latest translated version of IFRS into Uzbek appears to be that of 2013.
ChAUz is encouraged to report on more recent and planned activities aimed at achieving fulfillment of SMO 7, such as engagements with the Ministry of Finance to promote the adoption and implementation of IFRS and IFRS for SMEs as the applicable accounting standards in the jurisdiction and implementation support provided for members. Review of the existing translation processes could also be conducted with a view of identifying possibilities to ensure availability of translated up-to-date IFRS in the jurisdiction in a timely manner.
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