Uzbekistan

Member Organizations

Member Organization Associate

  Chamber of Auditors of Uzbekistan
  National Association of Accountants and Auditors of Uzbekistan

Legal and Regulatory Environment

• Overview of Statutory Framework for Accounting and Auditing

  Accounting, auditing, and financial reporting requirements in the Republic of Uzbekistan are stipulated in the Law on Accounting of 1996, as amended in 2016, and the Law on Auditing Activity of 1992 as amended in 2018.

  The Law on Accounting establishes basic accounting and bookkeeping requirements for all legal entities in the Republic of Uzbekistan, except for banks and credit institutions, and authorizes the Ministry of Finance of the Republic of Uzbekistan to set accounting standards both for private companies and state-financed organizations. National Accounting Standards adopted by the Ministry are a modified version of IAS as they existed in 2008. Full adoption of IFRS is being considered, although no defined timeline has been established.

  The Central Bank of Uzbekistan (CBU) establishes accounting requirements for banks and credit institutions under the Law on Banks and Banking Activity of 1996. In 2004, the CBU adopted IFRS in existence at the time for application in the financial statements of entities under its supervision. The standards have not been updated to incorporate subsequent changes to IFRS. Prudential reporting rules established by the CBU also fall short of the requirements of IFRS.

  The Law on Auditing Activity of 1992 as amended in 2018 defines the requirements for audit of financial statements of all companies. According to the Law, the following types of entities must have their financial statements audited: (i) banks and other institutions licensed by the CBU; (ii) insurance companies; (iii) all joint-stock companies; (iv) investment and other funds administering monetary investments of the public at large; (v) charities and non-government organizations; (vi) entities where the sole or one of the shareholders is a public sector entity; and (vii) stock exchanges. In addition, any entity may choose to have their financial statements audited.

  Under the Law, the Ministry of Finance has the legal mandate to set and enforce auditing standards. The Uzbek National Standards of Auditing issued by the Ministry are based on ISA in effect as of 2008.

  However, full adoption of ISA has been an objective of the Government of Uzbekistan for the last decade. In 2010, ISA were adopted for application by listed companies effective 2017 through the Decree of the President of the Republic of Uzbekistan No. 1438. The 2013 amendments to the Law on Auditing Activity have further extended the scope of application of ISA by allowing all companies to follow ISA. Finally, on September 19, 2018, the Presidential Resolution No. 3946 On Measures to Further Develop Audit Activity in the Republic of Uzbekistan was adopted which requires all audits to be conducted in accordance with ISA as translated into the Uzbek language and published on the website of the Ministry of Finance effective 2020.

• Regulation of Accountancy Profession

  Auditors and chief accountants of entities subject to mandatory audit are regulated in the Republic of Uzbekistan by the Government. Other accountancy professionals may choose to join professional accountancy organizations (PAOs) on a voluntary basis and be subject to their self-regulation.

  Regulation of Auditors

  The Law on Auditing Activity of 1992 as amended in 2018 authorizes the Ministry of Finance to regulate audit activity.

  In particular, the Ministry is responsible for: (i) certifying auditors; (ii) establishing requirements for professional educational programs and examinations; (iii) licensing and maintaining registries of licensed auditors and audit firms; (iv) establishing continuing professional development (CPD) requirements for auditors; (v) conducting inspections of audit firms; and (vi) suspending audit firms’ licenses and certificates in case of infringement of law or misconduct.

  PAOs, under the same law, may participate in the development of educational programs, examination procedures, and conducting professional examinations; contribute to the development of relevant laws and regulations; perform mandatory ratings of audit firms and quality assurance (QA) reviews of their member audit firms; and investigate and discipline their members. At the time of writing of the report, there is no requirement for auditors to be a member of a PAO.

  Requirements for entering the audit profession are outlined in the Law on Auditing Activity, including the procedures for certification, licensing, and registration of auditors. As mentioned above, the Ministry is responsible for the certification process and operates its own training and examination programs. Candidates are required to have a University degree in economics, obtain practical experience of no less than three years, complete professional training in the accredited training centers, and pass examinations. Holders of certain qualifications such as ACCA, CGA, CAP/CIPA, etc. are exempt from professional training. Following qualification, auditors must fulfill CPD requirements established by the Ministry. Practice licenses are issued by the Ministry of Finance, which also registers auditors.

  Technical standards to be applied by the profession are specified in the Law on Auditing Activity, which requires application of either Uzbek National Standards of Auditing or ISA depending on the type of company and establishes limited ethical requirements.

  On September 19, 2018, the Presidential Resolution No. 3946 On Measures to Further Develop Audit Activity in the Republic of Uzbekistan was adopted that will result in several changes to the regulation of the auditing profession. Effective 2020, the following changes are expected to be implemented in Uzbekistan: (i) all auditors will be required to use ISA; (ii) the Ministry of Finance, in cooperation with recognized PAOs, will be responsible for conducting QA reviews of audit firms that conduct mandatory audits; (iii) all auditors and audit firms will be required to be members of a recognized PAO; and (iv) audit licensing will be conducted by PAOs.

  Regulation of Accountants

  As noted above, chief accountants of enterprises that must undergo mandatory audits are also subject to limited regulation by the Ministry of Finance under the Law on Accounting of 1996.

  The amendments to the Law on Accounting in 2016 introduced initial professional development (IPD) and CPD requirements for chief accountants of entities subject to mandatory audit. In order to practice as a chief accountant of such entities, individuals must have a university diploma and obtain practical experience of no less than three (3) years. In addition, chief accountants are required to undergo annual CPD programs of no less than 20 hours per year. The Central Bank of the Republic of Uzbekistan establishes additional requirements for chief accountants who provide services to entities under its supervision.

  Accountancy professionals other than chief accountants may also choose to join a professional organization of accountants and auditors and be subject to the PAO’s regulation.

  Obtaining professional education is not required for the provision of accounting services. However, PAOs offer voluntary certification programs such as CAP/CIPA and the national certification of accountants, establishing IPD, CPD, and ethical requirements for obtaining and maintaining accounting certifications. PAOs also establishes CPD requirements for all their members, investigate and discipline their members, and conduct voluntary quality assurance reviews. In particular, the Regulation on the Certification of Accountants adopted in 2015 stipulates IPD and CPD requirements for obtaining and maintaining the national certification of accountants (developed by the National Association of Accountants and Auditors, the Chamber of Auditors, and the Federation of Accountants of Uzbekistan) and requires holders of the certification to be a member of a PAO, follow a Code of Ethics, and fulfill mandatory CPD requirements.

• Audit Oversight Arrangements

  As of the date of the assessment, there is no independent audit oversight system in Uzbekistan. Auditors are regulated by the Ministry of Finance under the Law on Auditing Activity of 1992 as amended in 2018.

  In particular, the Ministry is responsible for: (i) certifying auditors; (ii) establishing requirements for professional educational programs and examinations; (iii) licensing and maintaining registries of licensed auditors and audit firms; (iv) establishing continuing professional development (CPD) requirements for auditors; (v) conducting inspections of audit firms; and (vi) suspending audit firms’ licenses and certificates in case of infringement of law or misconduct.

  At the time of writing of the report, there is no requirement for auditors to be a member of a PAO. In accordance with the Law on Auditing Activity, professional organizations of auditors participate in development of educational programs and examination procedures, conduct professional examinations, contribute to the development of relevant laws and regulations, perform mandatory ratings of audit firms, perform voluntary quality assurance reviews of their member audit firms, and investigate and discipline their members.

  On September 19, 2018, the Presidential Resolution No. 3946 On Measures to Further Develop Audit Activity in the Republic of Uzbekistan was adopted which will result in several changes to the auditing profession. Effective 2020, the following regulatory changes are expected to be implemented in Uzbekistan: (i) all auditors will be required to use ISA; (ii) the Ministry of Finance will be responsible for conducting QA reviews of audit firms that conduct mandatory audits; (iii) all auditors and audit firms will be required to be members of professional accountancy organizations (PAOs); and (iv) audit licensing will be conducted by PAOs.

• Professional Accountancy Organizations

  The Chamber of Auditors (ChAUz)

  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.

  The Federation of Accountants of Uzbekistan (FAU)

  FAU, formerly known as the Federation of Accountants, Auditors and Consultants, was established in March 2014 as a voluntary membership organization to unite accountants in business. According to its Charter, its purpose is to assist with the development of the accounting profession and the adoption and implementation of international standards. FAU is not a member of IFAC.

  The National Association of Accountants and Auditors (NAAA Uz)

  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).

• Projects or Other Information

  In September 2018, the Government of the Republic of Uzbekistan through the Presidential Resolution No. 3946 On Measures to Further Develop Audit Activity in the Republic of Uzbekistan outlined the priority areas for regulation and supervision of auditors. The resolution identified the following factors that lower the quality of financial reporting in the jurisdiction:

  • lack of trust in audit firms and low awareness of importance of auditor work;
  • unhealthy competition, including damping, leading to low quality of audit services and reliability of audit opinions;
  • insufficient education and professional development of auditors and resulting low prestige of the profession;
  • lack of efficient systems of external quality assurance and investigation and discipline; and
  • partial adoption of ISA.

  Consequently, the Government developed a Work Program, which envisions, but is not limited to, the following activities:

  • create an effective system of QA review, implemented by the Ministry of Finance in collaboration with the recognized professional accountancy organizations (PAOs);
  • effective January 1, 2020 oblige organizations that satisfy two of the following criteria to undergo mandatory audits: (i) with net assets over 100, 000 minimal wages; (ii) revenue over 200,000 minimal wages; and (iii) over 100 employees;
  • effective January 1, 2020, require application of ISA in all audits;
  • develop criteria for recognition of PAOs and require mandatory membership of all auditors in such organizations. Recognized PAOs are to be involved in representing national profession internationally, including their involvement in the activities of IFAC; and
  • review the university curricula and develop a plan to bring it in line with the international best practices in education; include international standards in the curricula. Review and improve auditor certification/qualification processes and procedures.

Adoption of International Standards

• Quality Assurance

  The Ministry of Finance is legally entrusted under the Law on Auditing Activity of 1992 as amended in 2000 to establish quality control requirements for audit firms in accordance with the Uzbek National Standards of Auditing issued by the Ministry, which are based on ISA in effect as of 2008.

  As of 2019, quality assurance (QA) reviews are required only for audit firms as part of undergoing an annual rating review. Reviews are conducted by professional accountancy organizations (PAOs).

  The National Association of Accountants and Auditors (NAAA Uz) reported in 2019 that the Cabinet of Ministers Resolution No. 274 of 2017 also allows PAOs to carry out QA reviews of all their members (both audit firms and individual auditors) on a voluntary basis.

  To fulfill the requirements of the law, professional organizations of auditors, such as NAAA Uz and the Chamber of Auditors (ChAUz), have adopted ISQC 1 and established QA review systems for their respective members. Both organizations report partial compliance of their systems with the requirements of SMO 1. 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.

  The Presidential Resolution No. 3946 On Measures to Further Develop Audit Activity in the Republic of Uzbekistan also acknowledges that the existing system of quality control of auditors’ work is inefficient and limited in scope. It is envisioned that effective 2020 all auditors and audit firms will be required to undergo external QA reviews conducted by the Ministry of Finance in collaboration with the recognized PAOs.

  Current Status: Partially Adopted

• International Education Standards

  Auditors, chief accountants of certain enterprises, and auditors providing services to entities supervised by the Central Bank of Uzbekistan are subject to specific educational requirements established by the respective authorities.

  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. These requirements are implemented by the Ministry, universities, and professional organizations of accountants and auditors.

  The Ministry is responsible for the certification of auditors and operates its own training and examination programs. Candidates are required to have a University degree in economics, obtain practical experience of no less than three years, complete professional training in the accredited training centers, and pass examinations. Holders of certain qualifications such as ACCA, CGA, CAP/CIPA, etc. are exempt from professional training.

  The Ministry also establishes CPD requirements for auditors, which, according to the Chamber of Auditors (ChAUz), are in line with IES. Compliance with the CPD requirement is verified during quality assurance reviews by professional accountancy organizations.

  Universities provide the initial educational programming, which does not fulfill the requirements of IES, according to ChAUz.

  Chief accountants of entities that must undergo mandatory audits are subject to several IPD requirements established in the Law on Accounting of 1996, as amended in 2016. In order to practice as a chief accountant of such entities, individuals must have a university diploma and obtain practical experience of no less than three (3) years. In addition, chief accountants are required to undergo annual CPD programs of no less than 20 hours per year.

  The Central Bank of the Republic of Uzbekistan also establishes educational requirements for chief accountants who provide services to entities under its supervision. No information regarding the requirements is available.

  Accountancy professionals other than the categories described above may also choose to join professional organization of accountants and auditors and be subject to their educational requirements, including the requirements for obtaining voluntary certifications such as CAP/CIPA and the national certification of accountant developed by the National Association of Accountants and Auditors, the Chamber of Auditors, and the Federation of Accountants of Uzbekistan. Obtaining professional education is not required for the provision of accounting services. The extent of alignment of the educational programming with IES has not been reported.

  As indicated in the Presidential Resolution No. 3946 of 2018 On Measures to Further Develop Audit Activity in the Republic of Uzbekistan, overall professional development of accountancy profession, both initial and continuing, needs to be significantly strengthened. The resolution requires the stakeholders, within specified timeframes, 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.

  Current Status: Partially Adopted

• 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. The Uzbek National Standards on Auditing are based on ISA in effect as of 2008.

  Full adoption of ISA has been an objective of the Government of Uzbekistan for the last decade. In 2010, ISA were adopted for application by listed companies effective 2017 through the Decree of the President of the Republic of Uzbekistan No. 1438. The 2013 amendments to the Law on Auditing Activity have further extended the scope of application of ISA by allowing all companies to follow ISA. The standards are translated by the National Association of Accountants and Auditors (NAAA Uz), which, as of 2019, has translated the 2013 ISA as part of a World Bank’s project for the Uzbek’s banking sector. According to NAAA Uz, however, in practice the Russian translation of ISA is more widely applied.

  Finally, on September 19, 2018, the Resolution on Measures for the Further Development of Audit Activities in the Republic of Uzbekistan No. 3946 was adopted, which requires all audits to be conducted in accordance with ISA as translated into the Uzbek language and published on the website of the Ministry of Finance effective 2020.

  Current Status: Partially Adopted

• Code of Ethics for Professional Accountants

  There is no legal requirement for professional accountants in Uzbekistan to abide by a Code of Ethics, with limited ethical requirements contained in the Law on Auditing Activity of 1992. In the absence of a legal requirement imposed by the Ministry of Finance, which regulates the profession, the national professional organizations of accountants and auditors took the lead in introducing ethical requirements for their members who join them on a voluntary basis.

  In 2010, the Chamber of Auditors (ChAUz) and the National Association of Accountants and Auditors adopted a joint Code of Ethics for their members, which is based on the 2008 IESBA Code. No plans to adopt the most recent version of the IESBA Code either at the jurisdictional level or by professional organizations for their members have been reported.

  Information on the adoption of the IESBA Code by the Federation of Accountants of Uzbekistan, which is not a member of IFAC, is not available.

  Current Status: Not Adopted

• International Public Sector Accounting Standards

  The Ministry of Finance is responsible for establishing public sector accounting standards. It has adopted a Public Financial Management Reform Strategy with a transition period to the international standards envisioned for 2009–2018. The Budget System Reform Project, a joint initiative between United Nations Development Project and the Ministry of Finance, and a key part of the reform strategy, aims to bring the National Public Sector Accounting Standards (NPSAS) in line with IPSAS. The development of 12 converged NPSAS was announced during roundtable presentations held in 2013–2014. It is not clear whether the standards have been adopted. According to the Chamber of Auditors of Uzbekistan, the Government remains committed to fully adopting IPSAS by 2022.

  Current Status: Not Adopted

• Investigation and Discipline

  The Law on Auditing Activity of 1992 as amended in 2018 requires auditors to comply with the requirements of the law and other applicable legislation of the Republic of Uzbekistan. The Ministry of Finance under the same Law 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.

  Both IFAC member organizations in the Republic of Uzbekistan—the Chamber of Auditors (ChAUz) and the National Association of Accountants and Auditors (NAAA Uz)—have established I&D systems for their respective members, as authorized by their bylaws. In 2019, 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. In 2019, ChAUz also reported partial compliance, with gaps mainly related to the scope of the system; disciplinary process; sanctions; and rights of representation and appeal.

  Information on any I&D mechanism established by Federation of Accountants of Uzbekistan, which is not a member of IFAC, is not available.

  Current Status: Partially Adopted

• International Financial Reporting Standards

  The Law on Accounting of 1996, as amended, establishes basic accounting and bookkeeping requirements for all legal entities in the Republic of Uzbekistan, except for banks and credit institutions, and authorizes the Ministry of Finance of the Republic of Uzbekistan to set accounting standards both for private companies and state-financed organizations. National Accounting Standards adopted by the Ministry represent a modified version of IAS as they existed in 2008. Full adoption of IFRS is being considered, although no defined timeline has been established.

  The Central Bank of Uzbekistan (CBU) establishes accounting requirements for banks and credit institutions under the Law on Banks and Banking Activity of 1996. In 2004, the CBU adopted IFRS in existence at the time for application in the financial statements of entities under its supervision. The standards have not been updated to incorporate subsequent changes to IFRS. Prudential reporting rules established by the CBU also fall short of the requirements of IFRS.

  Through a Presidential Decree issued in 2018, listed companies are permitted, and in 2022 will be required, to use IFRS. However, the due process for their adoption and application in the jurisdiction is not clear.

  IFRS (2013 edition) were translated into Uzbek by the National Association of Accountants and Auditors of Uzbekistan. However, as of the date of the assessment, the Ministry of Finance and the CBU have not yet adopted the translated IFRS, although they have recommended the use of that translation. In practice, accountants and auditors in Uzbekistan regularly refer to the Russian translation of IFRS.

  Current Status: Not Adopted

• Sources

  Relevant Organizations

  • National Association of Accountants and Auditors of Uzbekistan (NAAA Uz)
  • Chamber of Auditors (ChAUz)
  • Central Bank of Uzbekistan
  • Ministry of Finance of Uzbekistan

  Relevant Legislation

  • Law on Auditing Activity of Republic of Uzbekistan, 1992 (in Russian)
  • Ministry of Finance Regulation on Issuance of Auditor Qualification Certificate, 2000 (as amended 2016) (in Russian)
  • Regulation on the Certification of Accountants, 2015 (in Russian)
  • Law on Accounting No. 279-I, 1996 (as amended 2016) (in Russian)

  Relevant Publications

  • ChAUz, SMO Action Plan, September 2019.
  • Deloitte, Doing Business in Uzbekistan, 2016.
  • IFRS Foundation, “IFRS Application around the World, Jurisdictional Profile: Uzbekistan,” June 2016.
  • Ministry of Finance, Public Financial Management Reform Strategy 2007–2018.
  • Nordea, Accounting Rules in Uzbekistan, July 2018.
  • United Nations Development Programme, Improving the System of Accounting and Reporting for the Public Sector on the Basis of the IPSAS, September 2015.
  • World Bank, Report on the Observance of Standards and Codes, Accounting and Auditing: Uzbekistan, 2008.

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.