Kyrgyz Republic

AccountingThe financial reporting framework in the Kyrgyz Republic is established by the Law on Accounting No. 76 of 2002, as amended most recently by Law No. 93 of 2021. The law sets out the accounting and financial reporting requirements for entities in the jurisdiction and introduces a differential reporting framework based on public interest and entity size. Public interest entities (PIEs) and large entities are required to apply IFRS Accounting Standards, while medium-sized entities are required to apply the IFRS for SMEs Accounting Standard. Small entities may apply simplified accounting rules established by the Government of the Kyrgyz Republic and may elect to apply the IFRS for SMEs. The law also contains specific provisions for Islamic financial institutions and provides for electronic filing of financial statements and audit reports through a public depository framework.

IFRS Accounting Standards and the IFRS for SMEs are adopted in the Kyrgyz Republic by reference. According to the IFRS Foundation’s jurisdiction profile, IFRS Standards as issued by the IASB are required for all domestic publicly accountable entities, including listed entities, banks and other financial institutions licensed by the National Bank of the Kyrgyz Republic, investment funds, insurance companies, and non-state pension funds. Russian-language translations are used in practice and are published by the financial market regulator, while Kyrgyz-language translations have been under development.

AuditingThe audit framework is established by the Law on Auditing Activities No. 147 of 2021, which replaced the previous audit law. Under the law, PIEs and large entities are subject to mandatory statutory audit, while other entities may be audited on a voluntary basis or where required by sector-specific legislation. The law requires audits to be conducted in accordance with International Standards on Auditing as issued by the IAASB and introduces a modernized framework for audit regulation, quality assurance, ethics, and public oversight.

The Service for Regulation and Supervision of the Financial Market under the Ministry of Economy and Commerce of the Kyrgyz Republic serves as the authorized state body for audit regulation. The 2021 audit law provides for quality assurance reviews on a risk-based cycle and establishes a public oversight mechanism through the Council for Public Oversight of Audit. The reform of the accounting and auditing framework was supported through the Kyrgyz Audit and Financial Reporting Enhancement Project (KAREP), which the World Bank reports substantially improved the statutory framework and institutional arrangements for corporate financial reporting and auditing.

In the Kyrgyz Republic, the audit profession is regulated at the state level, while other professional accountants generally participate in the profession on a voluntary basis through membership in professional accountancy organizations (PAOs). The current legal framework is centered on the Law on Auditing Activities No. 147 of December 3, 2021, which governs audit activity, supervision of audit, external quality control, and the legal basis for professional auditor associations. Recent World Bank analysis also notes that significant amendments were made in 2021 to the accounting framework and that operational and regulatory processes to implement those reforms were still being established at the time of the review.

The Service for Regulation and Supervision of the Financial Market under the Ministry of Economy and Commerce of the Kyrgyz Republic serves as the authorized state body responsible for audit regulation. Under the audit framework, the regulator maintains the public register of auditors and audit organizations and oversees key elements of audit regulation, including qualification, registration, quality assurance, and disciplinary arrangements for auditors. The regulator’s website continues to publish the list of auditors and identifies the Service as the competent authority.

The 2021 audit law modernized entry requirements for auditors. It establishes a qualification certificate for auditors, requires at least three years of relevant experience, and introduces a three-tier professional qualification framework aligned with International Education Standards. According to the World Bank ROSC, the first two levels are envisaged to be administered by accredited PAOs and universities, while the third-level examination is to be organized by the state regulator. The same ROSC noted that, at the time of its assessment, this new qualification framework was not yet fully operational.

The 2021 law also provides a stronger institutional basis for the role of professional auditor associations. It envisions mandatory membership of auditors in a professional audit association and establishes the legal basis for accreditation of professional auditor associations, as well as a Council for Public Oversight of Audit. However, the World Bank reported that although these legal provisions had been enacted, elements of the new oversight architecture had not yet been fully operationalized at the time of the ROSC assessment.

Other categories of professional accountants are not comprehensively regulated at the state level and may join PAOs voluntarily. The World Bank ROSC states that there is no state regulation relating to investigative and disciplinary procedures for accountants who are not PAO members, and IFAC’s jurisdiction profile similarly indicates that accountants in the jurisdiction may voluntarily join a professional organization and become subject to its regulations. Based on the publicly available information reviewed, I would not state that mandatory certification of accountants has been implemented for the wider profession at this stage.

The Union of Accountants and Auditors (UAA), an IFAC Associate, is the largest PAO in the Kyrgyz Republic and was formed in 2019 through the merger of the Chamber of Accountants and Auditors and the Union of Accountants and Auditors. UAA membership is open to individuals holding the Certified Accounting Practitioner (CAP) or Certified International Professional Accountant (CIPA) designations, which it offers. UAA is also one of the professional associations accredited in the jurisdiction and participates in dialogue with the regulator on issues affecting the profession.

Audit oversight arrangements in the Kyrgyz Republic are established under the Law on Auditing Activities No. 147 of December 3, 2021. The Service for Regulation and Supervision of the Financial Market under the Ministry of Economy and Commerce of the Kyrgyz Republic serves as the competent authority responsible for the regulation and oversight of the audit profession.

Under the framework, the state regulator is responsible for key elements of audit oversight, including the licensing and registration of auditors and audit firms, maintenance of the public register of auditors, establishment of qualification requirements, administration of professional certification examinations, and monitoring compliance with applicable auditing, ethical, and quality management standards. The regulator also oversees the implementation of initial professional development (IPD) and continuing professional development (CPD) requirements established in legislation and conducts quality assurance reviews as well as investigative and disciplinary procedures for auditors.

The 2021 Audit Law introduces a public oversight system through the establishment of a Council for Public Oversight of Audit. The Council is intended to provide independent oversight of the audit profession, including aspects of quality assurance and the effectiveness of the regulatory framework, with representation from government authorities, the business community, and academia.

According to the World Bank’s 2022 Report on the Observance of Standards and Codes (ROSC), while the legislative framework for public oversight has been established, elements of the new oversight arrangements, including the operationalization of the Council for Public Oversight and full implementation of quality assurance mechanisms, were still in progress at the time of the assessment.

Professional accountancy organizations (PAOs) in the Kyrgyz Republic operate within a framework in which the audit profession is subject to state regulation, while membership in PAOs for other professional accountants remains largely voluntary. The Law on Auditing Activities No. 147 of 2021 provides a legal basis for the accreditation of professional auditor associations and envisages mandatory membership of auditors in an accredited association; however, publicly available information indicates that the full implementation of these provisions remains in progress.

Multiple professional associations exist in the jurisdiction and are accredited by the Service for Regulation and Supervision of the Financial Market under the Ministry of Economy and Commerce of the Kyrgyz Republic, although limited public information is available on several of these organizations.

The Union of Accountants and Auditors (UAA)

The UAA, one of the associations accredited by the SSRSFM, was founded in 1999 with the support of the USAID/Pragma Corporation and unites accounting technicians, junior accountants, preparers of financial statements, chief accountants, and auditors on a voluntary basis. Membership is open to individuals holding the Certified Accounting Practitioner or Certified International Professional Accountant designations, which it offers. The UAA develops annual CPD programs for its members and the wider profession. In addition to membership in IFAC, the UAA is a member of the Eurasian Council of Certified Accountants and Auditors. To achieve efficiencies and to build further capacity of the accounting profession in Kyrgyz Republic, in 2019 UAA merged with the Chamber of Accountants and Auditors (CAA). The merger was supported by the Strengthening the Capacity of the Accountancy Profession in the Kyrgyz Republic (2016-2020) project implemented by the Institute of Chartered Accountants of England and Wales (ICAEW) under the UK Department for International Development (DFID)-funded IFAC Professional Accountancy Organization Capacity Building Program. The CAA was established in 2001 as the result of a merger of four previously existing professional accountancy organizations and provided trainings and CPD courses.

The Law on Auditing Activities No. 147 of December 3, 2021 establishes the legal framework for quality assurance (QA) review systems in the Kyrgyz Republic and requires auditors and audit firms to comply with applicable quality management standards and to undergo periodic QA reviews.

Responsibility for the design and implementation of the QA review system rests with the Service for Regulation and Supervision of the Financial Market under the Ministry of Economy and Commerce of the Kyrgyz Republic. The regulator is responsible for conducting QA reviews, establishing methodologies, and enforcing compliance with applicable standards.

Under the previous framework, a QA system had been established and operated by the regulator; however, a moratorium on QA reviews had been introduced pending the adoption of the new audit law. According to the World Bank’s 2022 Report on the Observance of Standards and Codes (ROSC), implementation of the QA system under the revised legal framework, including risk-based approaches and strengthened oversight arrangements, was still in progress at the time of the assessment.

With respect to applicable standards, publicly available information indicates that the jurisdiction has historically applied quality control standards based on International Standard on Quality Control (ISQC 1). As of the date of this assessment, there is no clear evidence that the International Standards on Quality Management (ISQM 1 and ISQM 2), issued by the IAASB and effective internationally from December 2022, have been formally adopted or implemented in the Kyrgyz Republic.

Current Status: Partially Adopted

In the Kyrgyz Republic, responsibility for initial professional development (IPD) and continuing professional development (CPD) is shared among several institutions, including the Ministry of Education and Science, higher education institutions, and the Service for Regulation and Supervision of the Financial Market under the Ministry of Economy and Commerce of the Kyrgyz Republic.

The Law on Auditing Activities No. 147 of December 3, 2021 establishes the IPD and CPD requirements for statutory auditors. Under the framework, candidates seeking to obtain an audit qualification are required to have a university degree in a relevant field, complete a minimum of three years of practical experience, and pass professional examinations administered under the oversight of the state regulator. The regulator is also responsible for licensing auditors, approving CPD providers, and overseeing compliance with CPD requirements, while the delivery of CPD programs is delegated to professional accountancy organizations (PAOs).

The 2021 Audit Law introduces a revised, three-level professional qualification framework intended to align more closely with International Education Standards (IES). According to the World Bank’s 2022 Report on the Observance of Standards and Codes (ROSC), the first two levels of the qualification are expected to be delivered by accredited PAOs and universities, while the final level, required for audit certification, is to be administered by the state regulator. At the time of the ROSC assessment, this new qualification framework had been established in legislation but was not yet fully operational.

Other categories of professional accountants are not comprehensively regulated at the state level and may voluntarily join a PAO and be subject to its educational and professional requirements. The Union of Accountants and Auditors (UAA), an IFAC Associate, requires its members to hold a university degree, have relevant practical experience, and obtain the Certified Accounting Practitioner (CAP) or Certified International Professional Accountant (CIPA) designation. UAA also develops and delivers CPD programs for its members and the wider profession.

Efforts to align accountancy education with IES have been supported through international development initiatives. A three-level professional qualification syllabus and supporting learning materials aligned with the 2021 IES were developed under the Strengthening the Capacity of the Accountancy Profession in the Kyrgyz Republic (2016–2020) project implemented by the Institute of Chartered Accountants in England and Wales (ICAEW) with funding from the UK Department for International Development (DFID). In addition, the World Bank, through the Kyrgyz Audit and Financial Reporting Enhancement Project (KAREP), has supported ongoing efforts to modernize accounting education and strengthen collaboration with universities.

Overall, while progress has been made in recent years, particularly through the introduction of a new qualification framework and updated curricula, the accountancy education system in the Kyrgyz Republic is not yet fully aligned with the International Education Standards.

Current Status: Partially Adopted

The Law on Auditing Activities No. 147 of December 3, 2021 authorizes the Government of the Kyrgyz Republic to establish auditing standards applicable in the jurisdiction. Historically, the Government’s Resolution No. 470 of 2008 required the application of International Standards on Auditing (ISA) for all statutory audits.

In practice, however, the implementation of ISA is based on translated versions of the IAASB Handbook that are not up to date. According to publicly available information and the World Bank’s 2022 Report on the Observance of Standards and Codes (ROSC), the Russian translation of the 2016–2017 IAASB Handbook has been applied in the jurisdiction. While ISA are intended to be applied as issued by the IAASB, no consistent use of an official Kyrgyz-language translation has been confirmed.

Although International Standards on Auditing and related standards, including the International Standards on Quality Management (ISQM 1 and ISQM 2), are available in Russian, there is no clear evidence that a version of the IAASB Handbook aligned with the latest standards has been formally adopted and fully implemented in the Kyrgyz Republic.

Accordingly, while ISA are required in principle, the standards applied in practice are not based on a current version of the IAASB Handbook.

Current Status: Not Adopted

The Law on Auditing Activities No. 147 of December 3, 2021 requires auditors to comply with ethical requirements; however, it does not, based on publicly available information, establish the direct application of the latest International Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants (IESBA). The law provides a basis for the adoption of ethical standards through the authorized state body, the Service for Regulation and Supervision of the Financial Market under the Ministry of Economy and Commerce of the Kyrgyz Republic.

Historically, no national Code of Ethics aligned with the IESBA Code had been formally adopted. While efforts have been made, with support from the World Bank, to translate more recent versions of the IESBA Code into the Kyrgyz language, there is no clear evidence that a current version of the IESBA Code has been formally adopted and implemented at the jurisdictional level.

Accountants in the Kyrgyz Republic, other than statutory auditors, are not subject to comprehensive ethical requirements established in law and may voluntarily join a professional accountancy organization (PAO) and be subject to its rules. The Union of Accountants and Auditors (UAA), an IFAC Associate, requires its members to comply with a Code of Ethics based on an earlier version of the IESBA Code (2010 version adopted in 2014). However, this Code is not publicly available, and there is no indication that more recent revisions of the IESBA Code have been adopted or implemented by the organization.

There is no publicly available information indicating that other accredited professional associations in the jurisdiction have adopted or enforce ethical requirements aligned with the latest IESBA Code.

Accordingly, while ethical requirements exist in principle, there is no evidence that a current version of the IESBA Code has been adopted and implemented in the Kyrgyz Republic.

Current Status: Not Adopted

Under the Law on Accounting No. 76 of 2002, as amended (including 2021 amendments), public sector entities in the Kyrgyz Republic are required to apply public sector accounting standards established by the Ministry of Finance. The law provides a basis for the application of International Public Sector Accounting Standards (IPSAS) in the jurisdiction.

The Ministry of Finance is responsible for setting accounting standards for the public sector and has led efforts to align national standards with IPSAS. However, based on publicly available information, including the IFAC/CIPFA International Public Sector Financial Accountability Index and the World Bank’s 2022 Report on the Observance of Standards and Codes (ROSC), public sector accounting in the Kyrgyz Republic is implemented using national standards that are partially aligned with IPSAS and applied on a partial accrual basis.

While IPSAS are referenced in the legal framework, there is no clear evidence that IPSAS as issued by the IPSASB have been fully adopted and implemented. Instead, national standards incorporating selected elements of IPSAS continue to be applied in practice.

Accordingly, IPSAS are not fully adopted in the Kyrgyz Republic.

Current Status: Not Adopted

Investigation and discipline (I&D) arrangements for auditors in the Kyrgyz Republic are established under the Law on Auditing Activities No. 147 of December 3, 2021. The Service for Regulation and Supervision of the Financial Market under the Ministry of Economy and Commerce of the Kyrgyz Republic is the competent authority responsible for the regulation of auditors, including oversight of investigation and disciplinary processes.

Under the legal framework, the state regulator is responsible for investigating non-compliance with applicable laws, regulations, and professional standards, and for imposing disciplinary measures and sanctions where appropriate. The law also provides a basis for enhanced institutional arrangements, including the involvement of professional auditor associations and the establishment of a public oversight system.

The 2021 Audit Law introduces provisions requiring auditors to be members of accredited professional associations and envisages that such associations establish internal investigation and disciplinary mechanisms and report violations to the regulator. However, based on publicly available information, including the World Bank’s 2022 Report on the Observance of Standards and Codes (ROSC), the implementation of these arrangements, including coordination between the regulator and professional associations and the full operationalization of I&D processes, remains in progress.

Historically, an I&D system had not been fully established due to legal and resource constraints. While reforms supported by international development partners, including the World Bank and ICAEW, have aimed to strengthen regulatory capacity and address gaps in investigation and discipline, there is no clear evidence that a comprehensive I&D system aligned with international best practices has been fully implemented.

Other categories of professional accountants are not regulated at the state level and may voluntarily join a professional accountancy organization (PAO) and be subject to its rules. The Union of Accountants and Auditors (UAA), an IFAC Associate, has established an I&D system for its members; however, based on available information, the system is not fully aligned with the requirements of SMO 6. There is no publicly available information indicating that other professional associations in the jurisdiction have established I&D systems aligned with international benchmarks.

Accordingly, while investigation and disciplinary mechanisms exist in principle, a comprehensive system aligned with SMO 6 has not been fully established or implemented in the Kyrgyz Republic.

Current Status: Partially Adopted

The Law on Accounting No. 76 of 2002, as amended (including 2021 amendments), establishes a differentiated financial reporting framework in the Kyrgyz Republic based on the size and public importance of entities.

Under the law, International Financial Reporting Standards (IFRS Accounting Standards) as issued by the International Accounting Standards Board (IASB) are required for public interest entities (PIEs), including listed companies, banks and other financial institutions, insurance companies, investment funds, and non-state pension funds. Small- and medium-sized entities are required to apply the IFRS for SMEs Accounting Standard, while micro-entities and sole proprietors may apply simplified accounting rules established by the Government or may elect to apply the IFRS for SMEs.

The IFRS Foundation’s jurisdiction profile indicates that IFRS Accounting Standards as issued by the IASB are required for all domestic publicly accountable entities without modification. IFRS for SMEs is also required for other entities within the scope defined by law.

Financial institutions operating in accordance with Islamic banking principles may apply Islamic financial accounting standards as permitted under national legislation.

IFRS Accounting Standards are adopted in the Kyrgyz Republic by reference. While the law requires application of the current version of IFRS, in practice, implementation has relied primarily on Russian-language translations. There is limited publicly available information on the availability and consistent use of official Kyrgyz-language translations of IFRS and IFRS for SMEs.

Current Status: Adopted

Relevant Organizations

• Ministry of Education and Science of the Kyrgyz Republic
• Ministry of Finance of the Kyrgyz Republic
• State Service for Regulation and Supervision of Financial Market (SSRSFM)
• HYPERLINK "http://oba.clan.su/index/0-2"Union of Accountants and Auditors (UAA)

Relevant Legislation

• Law on Accounting No. 76 of 2002 (as amended, including 2021 amendments)
• Law on Auditing Activities No. 147 of 2021
• Government Resolution No. 470 of 2008 on Adoption of ISA

Relevant Publications

• IFRS Foundation, IFRS Application Around the World: Jurisdictional Profile – Kyrgyzstan, August 2021
• World Bank, Report on the Observance of Standards and Codes—Accounting and Auditing: Kyrgyz Republic, 2022.