National Association of Accountants and Auditors of Uzbekistan
Associate | Established: 1992 | Associate since 2000
NAAA Uz was founded in 1992 as a voluntary membership organization and is one of the oldest professional organizations in the Republic of Uzbekistan, uniting both accountants and auditors. Its mission is to assist with the development of the accountancy profession and the adoption and implementation of international standards. The mandate of NAAA Uz is to provide assistance to its members by carrying out educational and continuing professional development programs, maintaining a QA review program for its member audit firms, investigating and disciplining its members, providing consulting services, and advising the regulator on the accounting and auditing legislation. In addition to being an Associate member of IFAC, the NAAA Uz is an associate member of the Asian-Oceanian Standards Setters Group (AOSSG).
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
Under the Law on Auditing Activity of 1992, audit firms are required to pass an annual rating review performed by professional accountancy organizations (PAOs). The reviews include obtaining a certificate of passing an external quality assurance (QA) review. As of 2019, there is no legal requirement for a mandatory QA review for auditors other than the abovementioned for audit firms. PAOs, through a Cabinet of Ministers Resolution No. 274 of 2017, are currently authorized to conduct QA reviews of their members on a voluntary basis.
NAAA Uz adopted ISQC 1 (2017) and established a voluntary QA review system for its member audit firms in 2009, based on the relevant rules and regulations of the Institute of Chartered Accountants of Scotland, with the assistance of the Chamber of Auditors of the Republic of Kazakhstan. As part of establishing its QA review system, NAAA Uz translated into Russian ISQC 1, which is not mandatory for application in the Republic of Uzbekistan and distributed it among its members. It also developed training courses for QA inspectors, which have been reportedly ongoing since 2009.
Reviews are conducted by the NAAA Uz External Quality Assurance Committee under the supervision of the association’s Board in accordance with the Methodology for Quality Assurance of Auditing Services developed jointly with the Chamber of Auditors of Uzbekistan. Since 2010, the NAAA Uz has been conducting regular reviews, covering from six to 27 audit firms annually.
In 2019, the NAAA Uz conducted a self-assessment of its QA review system against the requirements of SMO 1 and reported partial compliance. The scope of the systems, the version of ISQC applied, lack of a public oversight authority, among other requirements, fall short of the international best practices.
To support its members with understanding the requirements and implementation of the quality control standards, NAAA Uz reports that it organizes seminars, conferences, and roundtables on the subject and disseminates information on the results of QA reviews on an annual basis. NAAAUz Education Centre conducted six courses and three trainings in 2018, and seven courses and three trainings in 2019.
NAAA Uz reports that in general it raises awareness of the SMO 1 requirements among other stakeholders in the jurisdiction through its representation on the Consultative Board on Accounting and Auditing under the Ministry of Finance. The association actively participated in the consultations regarding introduction of QA reviews as part of annual ratings process that resulted in the amendments to the Law on Auditing Activity introduced in 2013.
Considering that effective January 2020 all auditors and audit firms will be required to undergo external QA reviews conducted by the Ministry of Finance in cooperation with the recognized PAOs and that NAAA Uz’s role in the future QA review system may change, NAAA Uz is encouraged to assist the Ministry with the design and implementation of the QA review system in the jurisdiction in line with the SMO 1 requirements as well as ensuring transfer of its knowledge and experience acquired as part of administering QA review system. The association should also review the results of the self-assessment conducted in 2019 and develop a strategy to bring its QA review system in line with the international best practices as formulated in SMO 1, if the system will continue to exist. Studying experiences of other PAOs in the implementation of the QA reviews is also strongly recommended. The association 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. These requirements are implemented by the Ministry, universities, and professional organizations of accountants and auditors such as the NAAA Uz.
NAAA Uz unites on voluntary basis both accountants and auditors and is responsible for the implementation of the requirements established in law as they apply to members falling under the above categories. To this effect, NAAA Uz reports that it verifies compliance of its members with the CPD and practical experience requirements and reports the results to the Ministry of Finance on an annual basis.
NAAA Uz appears to be an accredited provider for administering auditor training programs, which are prerequisite for taking an auditor certification exam. It also offers educational programs for internal auditors and CAP/CIPA certification. It is not clear whether the association’s educational programming is regularly updated to incorporate changes in international standard-setting and the extent of incorporation of IES requirements needs to be established.
With respect to its members other than auditors and chief accountants of certain enterprises, NAAA Uz reports that it has established a mandatory CPD requirement for all its members and since 2011 has been working to develop the educational scheme for certification of accountants and to promote the establishment of a voluntary national professional accountant certification program. The program appears to have been finally established in 2016 in cooperation with other professional organizations of accountants and auditors. However, it is not clear whether it incorporates relevant IES requirements.
During 2009–2015, the NAAA Uz worked to bring practical experience requirements for its members in line with IES 5 and has monitored fulfillment of the requirement by its members. The association also reports that it works with universities, which provide initial accounting education, as well as with the Eurasian Council of Certified Accountants and Auditors to incorporate requirements of IES into the CAP/CIPA program. It also reports to be working with the Ministry of Finance to bring educational requirements for auditors in line with IES. However, as of 2019, according to the Presidential Resolution No. 3946 On Measures to Further Develop Audit Activity in the Republic of Uzbekistan, the level of professional development of accountancy profession is considered insufficient.
IES do not appear to be translated in the Uzbek language. The association indicates that in 2009 it obtained translation of IES in Russian and was seeking funds to translate the standards into Uzbek. However, as of 2019, IES have not been translated into Uzbek and the Russian translation of IES continues being referred to.
Considering that education of professional accountants is a multi-stakeholder endeavor, staff reiterates its previous recommendation to NAAA Uz to collaborate with other stakeholders in the jurisdiction in bringing educational requirements in line with the revised IES. NAAA Uz should consider raising awareness about the international standards, especially considering the measure outlined in the Presidential Resolution No. 3946 such as the need to review the university curricula; develop a plan to bring it in line with the international best practices in education; include international standards in the curricula; reconsider auditor certification/qualification processes and procedures; and explore modern learning methods and approaches, among other activities. As a first step, in collaboration with other PAOs, universities, regulators, other parties, it is recommended that NAAA Uz develop plans to review the existing requirements in the jurisdiction against those of the revised IES (available in Russian HYPERLINK "https://www.ifac.org/system/files/publications/files/2017-Russian-Handbook-of-International-Education-Pronouncement.pdf" here) and develop a roadmap, with specific actions and defined trimline, for bringing national educational requirements for professional accountants in line with IES.
- SMO 3: International Standards on Auditing
NAAA Uz, which is not directly responsible for the adoption of auditing standards in the Republic of Uzbekistan, has played an important role in promoting the adoption of ISA in the jurisdiction. In 2009, NAAA Uz established a Task Force for Adoption of ISA and 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 creating a roadmap to full adoption of ISA in the jurisdiction and amending the related legal base through its representation in the Consultative Board on Accounting and Auditing of the Ministry of Finance. As of 2019, ISA have not been fully adopted, however, the Ministry of Finance announced in 2018 that ISA will be required for all audits effective January 1, 2020.
NAAA Uz leads the process of translating ISA into Uzbek language and disseminates Russian translations of ISA. In 2011, it established the Group for Translations Reviews, which is responsible for the ongoing translation and review of the standards’ translation into Uzbek. According to the information provided by the NAAA Uz in its 2019 SMO Action Plan, the latest translation of ISA (2013) was completed in November 2014. No plans to translate the most recent version of ISA have been reported as the Russian version of ISA is more widely used. It is not clear, however, what version of the Russian-language ISA is publicly available.
To support its members with the implementation of the applicable auditing standards, NAAA Uz reports that on an ongoing basis it develops training materials for its members and conducts seminars and workshops on ISA, audit methodology, and common challenges identified through its QA reviews. However, apart from general statements, no specific recent activities have been indicated.
Staff reiterates its previous recommendation that NAAA Uz update its SMO Action Plan to indicate its recent and planned activities aimed at achieving compliance with SMO 3, especially those that are aimed at supporting its members with the application of the international standards. With ISA adopted for application in all mandatory audits effective 2020, the association is strongly 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 NAAA Uz 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
As there is no legal requirement for professional accountants in the Republic of Uzbekistan to abide by a Code of Ethics, in 2010 NAAA Uz adopted the 2008 version of the IESBA Code for application by its members.
Following the adoption of the Code, the association reportedly included the requirements of the IESBA Code into its continuing professional development programs and disseminated the Russian translation of the 2010 IESBA Code to its members. Although originally planned for 2013, the IESBA Code has not been translated into Uzbek language. No activities to adopt the most recent version of the Code have been indicated and, apart from general statements, no specific recent activities to support members with the implementation of the existing requirements have been reported either.
Staff reiterates its recommendation to consider adopting the most recent version of the IESBA Code, the 2018 International Code of Ethics, a completely restructured and rewritten Code, at least for the members of NAAA Uz and establish processes to incorporate revisions to the IESBA Code on an ongoing basis. Given non-adoption of the IESBA Code at the jurisdiction level and limited ethical requirements in the existing legislation, NAAA Uz is strongly encouraged to collaborate with other stakeholders involved in the regulation of professional accountants in the jurisdiction, such as other professional organizations of accountants and auditors as well as the regulators, to adopt a requirement for all professional accountants to adhere to the latest IESBA Code of Ethics. Raising awareness about ethical requirements and enhancing activities to support members to abide 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. Finally, NAAA Uz is encouraged to update its SMO Action Plan to indicate its recent and planned activities aimed at achieving compliance with SMO 4.
- SMO 5: International Public Sector Accounting Standards
NAAA Uz 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. In its 2019 SMO Action Plan, NAAA Uz indicates that it uses its best endeavors to promote the adoption of IPSAS and in 2014 completed a translation of IPSAS funded by the United Nations Development Project. No other activities have been reported, however.
NAAA Uz 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. The association is also encouraged to provide in its SMO Action Plan information on the legal framework for public sector accounting and the nature of the existing public sector accounting standards in Uzbekistan. If deemed feasible, NAAA Uz is also encouraged to assist the Ministry of Finance with the reform process and translation of IPSAS/dissemination of the Russian translation to ensure availability of the standards in the local language(s).
- SMO 6: Investigation and Discipline
Under its bylaws, NAAA Uz is empowered to investigate and discipline (I&D) its members and to this effect, in 2010, established the Disciplinary and Appeals Committee, which conducts investigations on a complaints-basis. The NAAA Uz Board has the right to impose disciplinary actions and may expel audit firms should they fail to comply with the National Standards on Auditing and the Code of Ethics. All violations must be reported to the Ministry of Finance. The main disciplinary measure is an off-schedule quality assurance review of the firm in question.
In 2016, the NAAA Uz conducted a partial self-assessment against the requirements of SMO 6, which revealed that the I&D system operated by the association falls short of the SMO 6 requirements. As of 2019, the assessment has not been updated and there is no indication that actions have been undertaken to close the identified gaps.
NAAA Uz reports that it prepares annual reports summarizing the results of the investigative and disciplinary proceedings and communicates the outcomes of disciplinary proceedings to the Ministry of Finance, other professional accountancy organizations, and its members through several communication channels. However, no other information on the implementation of activities or plans to bring the system in line with SMO 6 have been indicated in the SMO Action Plan.
In 2016, it was recommended that the NAAA Uz complete the self-assessment of its I&D system against the requirements of SMO 6, analyze the gaps identified, and develop plans to adopt the missing requirements. However, as of 2019 the recommendation has not been addressed. Staff reiterates the need to complete the self-assessment and to provide information on the legal and regulatory framework underlying the investigation and discipline of all professional accountants in the jurisdiction and to clarify the role of other stakeholders in the process. The NAAA Uz should also consider sharing the revised SMO 6 requirements with other stakeholders that are involved in the investigation and discipline of the profession in order to promote compliance at the jurisdiction level and facilitate collaboration on the establishment of a unified system, if deemed relevant and needed.
- 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. Through a Presidential Decree issued in 2018, listed companies will be required, to use IFRS starting in 2022. However, the due process for adoption and application of IFRS in the jurisdiction is not clear.
With no direct responsibility for the adoption of IFRS in Uzbekistan, NAAA Uz reports that it promotes adoption of the international standards for application in the Republic of Uzbekistan. The association reports that it raises awareness about the importance of IFRS adoption through participation in and organization of roundtables, seminars, and other discussions focused on IFRS. The NAAA Uz also noted that it participated in drafting the amendments to the Law on Accounting, which was finalized and adopted in 2016, and maintains an ongoing dialogue with the Ministry of Finance.
Additionally, the association reports that it has signed a copyright waiver agreement with IFRS Foundation, according to which NAAA Uz is responsible for translation of IFRS into Uzbek language while the Ministry of Finance and the Central Bank are responsible for the adoption of the translated texts of IFRS into the national legislation. According to the agreement, NAAA Uz is expected to provide the translation of the latest updates to IFRS on an ongoing basis; however, the latest translated version of IFRS appears to be that of 2013.
To support its members with the implementation of accounting standards, NAAA Uz provides trainings and incorporated IFRS in its continuing professional development programs. No other details about the trainings and other activities have been reported.
Finally, the association reports to raise awareness of its members and the public on the developments in the international standard-setting area through its website and other communication means. It also participates in the Asian-Oceanian Standard-Setters Group to be involved in the discussions related to IFRS and to share experiences in adoption of IFRS.
NAAA Uz is encouraged to work with other stakeholders to adopt IFRS and IFRS for SMEs as applicable accounting standards in the jurisdiction and to establish ongoing translation processes to ensure that the changes of IFRS are incorporated into national requirements as soon they become available. NAAA Uz should also provide more specific information on the activities it undertakes to support its members and other users of international standards with the implementation of IFRS.
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