The necessary changes in the legislation for the further introduction of IFRS in Uzbekistan



Introduction of obligatory certification at auditors of IFRS, chief accountants, managers of financial services. The main reason consists in that Uzbekistan does not stop and constantly moves to the commission for the implementation of this program.

The main goal is to create the conditions for effective state regulation of the economy of the republic, an objective analysis of the role and value of its various fields of activity in the international community, on the basis of information adequate to the structure of the market economy, the timely identification of trends, predicting their development and assess the impact of management decisions.

The State Program, the following tasks:

– Review general methodological foundations of the state statistics and accounting, and bringing it into internationally accepted system of accounting and statistics;

– Alignment with international standards, national macroeconomic indicators, the establishment of the system of National Accounts of the Republic of Uzbekistan, including the development of accounts by sector of the national economy purpose, and IFRS will be accepted in Uzbekistan, Including, IASC, the International federation of Accountants, the World bank, FIC, UNDP, CIPAEN, IFRS ACCA and other associations are optimum in conditions to their introduction. Ensuring alignment by global practice of the report of enterprises and system of statistical indicators, including reflection of financial, bank affairs and customs necessary for compilation of national accounts to give the established support to their development.

In 1994, A State Program of transition of the Republic of Uzbekistan on the internationally accepted system of accounting and the interdepartmental shall have the following functions:

– control of the implementation of decisions and orders of the Cabinet of Ministers on the implementation of the State Program;

– ensuring alignment with global accounting practices of business entities and the system of statistical indicators, including reflecting the financial, banking and customs, necessary for the compilation of national accounts, to provide institutional support to their development. Public and private bodies authorized to carry out the plan or program of implementation of IFRS in the national economy:

– The Ministry of Finance of the Republic of Uzbekistan;

– The State Committee of the Republic of Uzbekistan on Statistics;

– The Central Bank of the Republic of Uzbekistan;

– The Ministry of Justice of the Republic of Uzbekistan;

– Professional Association of Accountants and Auditors.

2. The period during which it is supposed to carry out the implementation of IFRS in the national economy: in the long run-in stages.

Since 2000, the mandatory IFRS implemented in banks of Uzbekistan, where the basis of accounting and reporting is the Law of the Republic of Uzbekistan «On Accounting» and International Financial Reporting Standards. Financial statements published by the Bank, as well as the basic principles, concepts and definitions used by banks in the process of accounting and reporting, corresponds to the Law of the Republic of Uzbekistan «On Accounting» and IFRS [1].

Since 2007, the mandatory IFRS incorporated into microcredit organizations, where the accounting principles, rules of accounting and control of financial transactions, the structure of the accounting system, methods of customer service and management of documents, the order of the financial statements based on International Financial Reporting Standards.

In general, during this period, Uzbekistan was as close as possible to the current IAS standards (Table 1).

Table 1

Uzbekistan's compliance with the rules for accounting and reporting and IAS

International standards	National standards
IAS (IAS) 1 Presentation of Financial Statements	«Conceptual framework for the preparation and submission of financial statements» The NAS N 1 «Accounting Policies and Financial Statements» (registered by Ministry of Justice August 14, 1998 N474) NAS N 3 «Income Statement» (registered by Ministry of Justice August 27, 1998 N 484) NAS N 14 «Report on equity capital» (MJ registered April 7, 2004 N 1335) the NAS N 15 «balance Sheet» (registered by Ministry of Justice March 20, 2003 N 1226)
IAS (IAS) 2 «Inventories»	The NAS N 4 «Inventories» (registered by Ministry of Justice August 17, 2006 N 1595)
IAS (IAS) 7 «Cash Flow Statements»	NAS N 9 «Statement of Cash Flows» (registered by Ministry of Justice November 4, 1998 N519)
IAS (IAS) 8 «Accounting Policies, Changes in Accounting Estimates and Errors»	The NAS N 1 «Accounting Policies and Financial Statements» (registered by Ministry of Justice August 14, 1998 N 474) — it covers in terms of accounting policies The NAS N 3 «Report on financial results» (registered by Ministry of Justice August 27, 1998 N 484) — it covers in part of the Changes in Accounting Estimates and Errors
IAS (IAS) 10 Events after the Balance Sheet Date	The NAS N 16 «Contingencies and events occurring after the economic activity of the balance sheet date» (registered by Ministry of Justice December 23, 1998 N 578) — covers part
IAS (IAS) 11 «Construction Contracts»	The NAS N 17 «Construction contracts for capital construction» (registered by Ministry of Justice December 23, 1998 N 579) — covers part
IAS (IAS) 12 «Income Taxes»	Not available 1
IAS (IAS) 16 Property, Plant and Equipment	The NAS N 5 «Fixed Assets» (registered by Ministry of Justice January 20, 2004 N 1299)
IAS (IAS) 17 «Lease»	(Registered by the MoJ on June 22, 2004 No. 1374)
IAS (IAS) 18 Revenues	NAS N 2 «Income from core business» (registered by Ministry of Justice August 28, 1998 N483)
IAS (IAS) 19 «Employee Benefits»	Not available 2
IAS (IAS) 20 «Accounting for government subsidies and disclosure of government Help "	The NAS N 10 «Accounting for government grants and disclosure of government assistance» (registered by Ministry of Justice December 3, 1998 N 562) — covers part
IAS (IAS) 21 «The Impact of Changes in Exchange Rates»	The NAS N 22, «Accounting for assets and liabilities denominated in foreign currency» (registered by Ministry of Justice May 21, 2004 N 1364)
IAS (IAS) 23 «Borrowing Costs»	Not available 3
IAS (IAS) 24 «Related Party Disclosures»	Not available 4
IAS (IAS) 26 «Accounting and reporting under pension schemes (pension plans)"	Absent
IAS (IAS) 27 «Consolidated and Separate Financial Statements»	The NAS N 8, «Consolidated Financial Statements and Accounting for Investments in affiliated business entities» (registered by Ministry of Justice December 28, 1998 580 N), — partially covers
IAS (IAS) 32 «Financial Instruments-Presentation of Information»	The NAS N 12 «Accounting of financial investments» (registered by Ministry of Justice January 16, 1999 N 596) partially -pokryvaet
IAS (IAS) 37 «Estimated Liabilities, Contingent Liabilities and Contingent Assets»	The NAS N 16 «Contingencies and events occurring after the economic activity of the balance sheet date» (registered by Ministry of Justice December 23, 1998 N 578) — covers part
IAS (IAS) 38 «Intangible assets»	The NAS N 7, «Intangible Assets» (registered by Ministry of Justice June 27, 2005 N 1485) — it covers in terms of intangible assets NAS N 11 «Costs of research and development activities» (registered by Ministry of Justice December 28, 1998 N581) — covers in part of the cost accounting and development activities
IAS (IAS) 39 «Financial Instruments: Recognition and Measurement»	The NAS N 12 «Accounting of financial investments» (registered by Ministry of Justice January 16, 1999 N 596) — covers part
IAS (IAS) 41 «Agriculture»	The NAS N 4 «Inventories» (registered by Ministry of Justice July 17, 2006 N 1595) — covers part NAS N 5 «Property» (registered MU 20 January 2004 g. N 1299) — part covers
IAS (IFRS) 3 «Business Combinations»	The NAS N 23 «Formation of the financial statements at reorganization» (registered by Ministry of Justice June 27, 2005 N 1484) partially -pokryvaet
IAS (IFRS) 5 «Non-current assets held for sale and discontinued operations»	The NAS N 3 «Income Statement» (registered by Ministry of Justice August 27, 1998 N 484) -pokryvaet partly in terms of accounting, «Discontinued operations»
IAS (IFRS) 7 «Financial Instruments-Disclosure»	The NAS N 12 «Accounting of financial investments» (registered by Ministry of Justice January 16, 1999 N 596) — covers part

In voluntarilyapply IFRS Enterprises with foreign investment and joint ventures in the preparation of financial statements for foreign investors, but such companies simultaneously maintain accounting records and financial statements with the national standards.

In business practice, companies of Uzbekistan on a voluntary basis at the request of the bank's financial statements prepared using IFRS — to receive a bank loan. This is done to ensure that the most reliable way was presented a picture of the financial condition of the enterprises applying for a loan.

Quality control of the accounting statements prepared under IFRS operating audit organizations: banks and microcredit organizations — mandatory for all the others on a voluntary basis.

Since 1998 began to be administered by a National Accounting Standards (NAS), which were developed on the basis of IFRS. The main mission for the development of NAS assigned to the Office of accounting methodology and audit of the Ministry of Finance of the Republic of Uzbekistan with the participation of the National Association of Accountants and Auditors of Uzbekistan and with the support of international organizations [2]. Cooperation with international organizations in the field of accounting and reporting is carried out in the form of joint conferences, seminars, symposia, congresses, trainings: with IASC, the International Federation of Accountants, the World Bank, FIC, UNDP.

In 2002 was enacted national Accounting Standard (NAS) «Chart of Accounts and instructions for its use», which is designed based on the principles of IFRS and has been praised by all users [3]. Almost every year we introduce a new NAS in 2009 was inducted NAS, «Accounting for borrowing costs». Total enacted 25 National Standards developed on the basis of IFRS. Introduction NAS developed on the basis of IAS allowed to raise a high level of system of accounting in Uzbekistan and has greatly facilitated the work of the chief accountants and auditors.

The successful implementation of IFRS in Uzbekistan requires a sufficient number of specialists in IFRS, as well as the system for their training; independent audit; well developed regulatory and enforcement framework; adapted version of IFRS for small businesses; focus on key technical issues; established mechanisms to ensure compliance; careful matching of IFRS with the tax system.

Currently, the mandatory requirements to undergo training and obtain certificates (diplomas) IFRS in Uzbekistan have not been established, but it is planned to introduce this requirement for auditors and chief accountants.

In 2010, the President of the Republic of Uzbekistan has adopted a Decree supporting adoption of IFRS in Uzbekistan. The Decree would require audits of large 2015 [4]. Following that, IFRS would be implemented. Moreover, the Central Bank has adopted IFRS for the banking sector in Uzbekistan. However, IFRS has not yet been fully implemente d for banks.

While the Central Bank has required the use of IFRS in financial statements of the banking sector since 1996, banks also follow certain prudential accounting requirements of the Central Bank that differ from IFRS.

IFRS has not been adopted for other companies, but it is under consideration by the Ministry of Finance. No timetable has been established. Some companies publish voluntarily IFRS financial statements in addition to financial statements using Uzbek accounting standards.

The auditor's report/or the basis of presentation footnotes state that financial statements have been prepared in conformity with:

– for banks, the audit report states conformity with IFRS;

– for all other companies, the audit report states conformity with Uzbek national accounting standards.

IFRS are not incorporated into law.

However, IFRS have been adopted for banks in regulations issued by the Central Bank.

The Central Bank regulations were adopted again in 2004. They refer to those IAS/IFRS that were in effect before 2005. The requirements in those regulations are now outdated since they have not been kept up to date for new or amended IFRS issued since 2005 [5]. Therefore, the Central Bank is planning to change its regulation to refer simply to IFRS as issued by the IAS once IFRS have been translated into Uzbek (the national language). This will be done in a separate legal act (Resolution of Cabinet of Ministers or Resolution of Central bank). By referring to IFRS as issued by IAS, all future changes to IFRS will automatically be adopted in Uzbekistan without a need to issue new regulations.

The jurisdiction has eliminated any accounting policy options permitted by IFRS and/or made some modifications to any IFRS. Under the Central Bank regulations adopted by IFRS for the banks, property, plant, and equipment must be accounted for using the revaluation model and not the cost- depreciation-impairment model. In applying the revaluation model, property, plant, and equipment is remeasured on the basis of indices issued by the government on an annual basis. Further, in applying IFRS banks follow the certain prudential accounting requirements of the Central Bank that differ from IFRS. Examples of differences include:

– Valuation of investments held in bonds and equities.

– Measurement of loan loss impairment.

– Recognition and valuation of loan fees.

– Deferred income tax.

– Lease accounting.

– Consolidation.

Conclusions

1. Ensuring the application of international financial reporting standards is an important component of reforms to modernize the national economy.
2. The transition to international standards is conditioned by the need to ensure a high level of competitiveness of the national economy in the world division of labor.
3. The introduction of international standards at the first stage will concern an insignificant share of enterprises, first of all those that attract capital — public joint-stock companies, banks, insurers.

References

1. Karimov A, Accounting, Sharq, Tashkent, 2004.
2. Bobojonov A, Jumaniyozov K, FinancialAccounting, Moliya, Tashkent, 2002.
3. National Accounting Standards of the Republic of Uzbekistan, Norma, Tashkent, 2010
4. Hasanov B, Hashimov A, Management Accounting, Yangi asr, Tashkent, 2011.
5. Sh.A.Khalilov, The account of essences on operation activity by managing subjects, Journal of Moliya, № 4, 2013, 40–41 pages, Uzbekistan, www.jm.tfi.uz/Home.aspx.