Kazakhstan

The corporate financial reporting framework in the Republic of Kazakhstan is outlined in the Law on Audit Activity in the Republic of Kazakhstan of 1998 (as amended in 2020), the Law on Accounting and Financial Reporting of 1995 (as amended in 2007), and regulations issued by the National Bank of Kazakhstan (NBK) as well as the Kazakhstan Stock Exchange (KASE).

The Law on Accounting and Financial Reporting and the Law on Audit Activity grant authority to the Ministry of Finance and the Professional Council on Auditing (PCA) (as of 2020) to determine policy on accounting and auditing, respectively, and to adopt relevant regulatory acts with input from the Consultative Board. The Consultative Board is comprised of members drawn from government agencies, state-owned enterprises, professional accounting and auditing organizations as well as business and academia.

The Law on Accounting and Financial Reporting requires the use of IFRS for the preparation of financial statements of all large entities and listed companies, banks, insurance companies and other non-bank financial institutions. Small- and medium-sized entities must use Kazakhstan National Financial Reporting Standards (KNFRS) 2, while micro entities are required to use KNFRS 1. Regulatory bodies such as the NBK have authority to issue additional accounting requirements that are not provided for in the standards.

The Law on Audit Activity stipulates mandatory audits for all joint stock companies, banks, insurance companies, other financial institutions, and entities from specific sectors of the economy. The Law requires audits to be conducted in accordance with ISA as issued by the IAASB and published in the Russian and Kazak languages.

Auditors and accountants in Kazakhstan are regulated in accordance with the Law on Audit Activity of 1998 (as amended in 2020) and the Law on Accounting and Financial Reporting of 1995 (as amended in 2007), respectively. The profession is regulated by the newly established Professional Council on Auditing (PCA) (as of 2020), the Ministry of Finance, and by professional accountancy organizations (PAOs) accredited by the Ministry of Finance.

Regulation of Auditors

To qualify as an auditor, an individual must (i) have a university degree in accounting; (ii) have three or more years of practical experience; and (iii) successfully pass a certification program and professional examinations administered by one of the organizations accredited by the Ministry of Finance under the Law on Audit Activity. To practice as an auditor, an individual must become a member of one of the organizations accredited by the Ministry of Finance, be included in the register of auditors, and fulfill continuing professional development (CPD) requirements.

Under the Law on Audit Activity of 1998, the Ministry of Finance is responsible for (i) maintaining a register for auditors and audit firms; (ii) overseeing implementation of quality assurance (QA) reviews; (iii) overseeing implementation of the initial professional development (IPD) and CPD requirements’ (iv) establishing licensing requirements as well as licensing auditors; and (v) and defining through law accounting, auditing, and ethical standards.

Under Article 21 of the Law on Audit Activity, audit companies are required to be members of an accredited auditing organization that unites auditors and audit organizations. Accredited auditing organizations are responsible for (i) conducting QA reviews of their members; (ii) certification of auditors; (iii) provision of CPD programs for auditors; (iv) adopting a Code of Ethics for their members; and (v) investigating and disciplining their members.

On July 3, 2020, amendments to the Law on Audit Activity of 1998 came into effect which delegated to the PCA the powers to conduct quality assurance inspection of public interest entities (PIE) audits and auditors’, investigating and disciplining cases related to PIEs, conducting examinations for certification of auditors, and monitoring quality assurance performed by accredited professional auditing organizations in Kazakhstan. The Chamber of Auditors of the Republic of Kazakhstan (CoA RK) reports that the PCA has been established and became operational on July 3, 2021. On March 30, 2021, a roundtable involving key stakeholders was organized by the World Bank and the Ministry of Finance of Kazakhstan under Joint Economic Research Program (JERP) to discuss the content of the provisions of the new model of audit oversight function in Kazakhstan. It was agreed that both the authorities and the profession in Kazakhstan will join their efforts to finalize and adopt a secondary legislation, that would allow proper enforcement and functioning of the public oversight body in line with good international trends. In the meantime, all audits of PIEs and non-PIEs, as well as investigation and disciplinary processes, continue to be conducted by accredited PAOs under the oversight of the Ministry of Finance.

On October 5, 2021, the Chamber of Auditors of the Republic of Kazakhstan (CoA RK) established and registered the non-commercial organization called the Professional Council on Auditing of the Republic of Kazakhstan (PCA) with the judicial bodies of the country.

On November 4, 2021, Chamber of Auditors of the Republic of Kazakhstan (CoA RK) organized the first meeting of PCA RK Board, which included representatives from various sectors, which included the Ministry of Finances, the Kazakhstan Stock Exchange (KASE); academia, the Union of Auditors of Kazakhstan and the Chamber of Auditors of Kazakhstan. During the meeting, the PCA established three working bodies:

• External Quality Control Committee for auditing services related to subsoil users, financial organizations, and organizations with state participation.
• Qualification Commission for attesting auditor candidates.
• Ministerial collegiate body (secretariat).

On April 15, 2022, the second meeting of the PCA Board was held, during which procedural documents for the working bodies were established.

Since October 5, 2022, CoA RK has been inviting all professional audit organizations (excluding the Union of Auditors of Kazakhstan) to join PCA as members. As a result, Kazakhstan now has a two-leveled system of external quality control:

• Professional Audit Organizations (PAOs) conduct external quality control for audit organizations that are their members, except those which are under the PCA's jurisdiction.
• The PCA conducts external quality control for its designated objects (as mentioned above) and also has the authority to review and assess the results of quality control checks conducted by PAOs.
• All complaints and appeals fall under the competence of PCA.

This two-leveled system aims to enhance the quality and effectiveness of auditing practices in Kazakhstan.

Regulation of Accountants

In accordance with the Law on Accounting and Financial Reporting of 1995 (as amended in 2007), the Ministry of Finance has overall responsibility for the regulation of accountants. The Law establishes basic rules and procedures for financial reporting and the applicable accounting standards; requires all accounting firms, but not individual accountants, to belong to a professional accounting organization accredited by the Ministry of Finance; and authorizes accredited certification organizations to certify accountants.

Under the Law, the Ministry of Finance is responsible for overseeing the activities of the accredited accounting organizations and accredited certification organizations; establishing and overseeing implementation of the IPD and CPD requirements; and defining through law accounting and other professional standards, among other functions. Accredited accounting organizations must participate in the activities of the Consultative Body of the Ministry of Finance, implement IPD and CPD rules established by the Ministry of Finance, and enforce compliance with the ethical standards.

All Professional Accountants must be a member of a professional accounting organization accredited by the Ministry of Finance. To obtain a qualification of a Professional Accountant, a candidate must have a university level degree or higher; confirm theoretical knowledge and professional competence by successfully passing relevant exams conducted by an accredited certification organization; and obtain practical training in accounting activities.

On July 3, 2020, amendments to the Law on Audit Activity of 1998 came into effect which delegated to the PCA the powers to conduct quality assurance inspection of public interest entities (PIE) audits and auditors, investigating and disciplining cases related to PIEs, conducting examinations for certification of auditors, and monitoring quality assurance performed by accredited professional auditing organizations in Kazakhstan. The Chamber of Auditors of the Republic of Kazakhstan (CoA RK) reports that the PCA has been established and became operational on July 3, 2021. On March 30, 2021, a roundtable involving key stakeholders was organized by the World Bank and the Ministry of Finance of Kazakhstan under Joint Economic Research Program (JERP) to discuss the content of the provisions of the new model of audit oversight function in Kazakhstan. It was agreed that both the authorities and the profession in Kazakhstan will join their efforts to finalize and adopt a secondary legislation, that would allow proper enforcement and functioning of the public oversight body in line with good international trends. In the meantime, all audits of PIEs and non-PIEs, as well as investigation and disciplinary processes, continue to be conducted by accredited professional audit organizations under the oversight of the Ministry of Finance.

The Chamber of Auditors of the Republic of Kazakhstan (CoA RK)

CoA RK, which was established in 1993, is an accredited professional auditing organization in Kazakhstan. It received accreditation as a professional organization of auditors in 2008. The Chamber is a not-for-profit organization comprised of audit firms (associate members) and auditors (full members). Membership is mandatory to practice auditing. The CoA RK’s mandate includes protecting the interest of the auditing profession, managing the education and training of auditors, strengthening audit quality through the operation of a quality assurance review system for members, instituting a Code of Ethics for its members, and establishing an investigative and disciplinary system for members. It is a Member of IFAC and a member of the Eurasian Council of Certified Accountants and Auditors (ECCAA).

The Chamber of Professional Accountants of the Republic of Kazakhstan (CPA RK)

CPA RK was established in 2011 after the reorganization of the Chamber of Professional Accountants and Auditors and obtained its accreditation as a professional organization of accountants in March 2011. Its members are accounting firms and individual accountants. CPA RK’s functions include promoting the interests of the accounting profession, determining educational and training requirements, establishing and fostering compliance with a Code of Ethics, and investigating and disciplining members for professional misconduct and non-compliance with the Chamber’s rules and regulations. The CPA RK is an Associate of IFAC and a member of the ECCAA.

The Collegium of Auditors of the Republic of Kazakhstan (CARK)

CARK, an accredited professional auditing organization in Kazakhstan, was founded in 2007 and is a not-for-profit organization comprised of individual auditors and audit firms.

The Union of Auditors of Kazakhstan (UAK)

UAK was founded in 2012 and received accreditation from the Ministry of Finance in June 2013. Its membership comprises individual auditors, audit firms, and accountants that work in government, banking, and academia.

The Law on Audit Activity of 1998 (as amended in 2020) stipulates that audit firms are subject to mandatory quality assurance (QA) reviews. The Law specifies that the Professional Council on Auditing (PCA) is responsible for conducting reviews of audits of public interest entities (PIEs), while professional auditing organizations accredited and overseen by the Ministry of Finance are responsible for conducting audits of non-PIEs.

On March 30, 2021, a roundtable involving key stakeholders was organized by the World Bank and the Ministry of Finance of Kazakhstan under Joint Economic Research Program (JERP) to discuss the content of the provisions of the new model of audit oversight function in Kazakhstan. It was agreed that both the authorities and the profession in Kazakhstan will join their efforts to finalize and adopt a secondary legislation, that would allow proper enforcement and functioning of the public oversight body in line with good international trends. In the meantime, all audits of PIEs and non-PIEs continue to be conducted by accredited professional audit organizations under the oversight of the Ministry of Finance.

On October 5, 2021, the Chamber of Auditors of the Republic of Kazakhstan (CoA RK) established and registered the non-commercial organization called the Professional Council on Auditing of the Republic of Kazakhstan (PCA) with the judicial bodies of the country.

On November 4, 2021, Chamber of Auditors of the Republic of Kazakhstan (CoA RK) organized the first meeting of PCA RK Board, which included representatives from various sectors, which included the Ministry of Finances, the Kazakhstan Stock Exchange (KASE); academia, the Union of Auditors of Kazakhstan and the Chamber of Auditors of Kazakhstan. During the meeting, the PCA established three working bodies:

• External Quality Control Committee for auditing services related to subsoil users, financial organizations, and organizations with state participation.
• Qualification Commission for attesting auditor candidates.
• Ministerial collegiate body (secretariat).

On April 15, 2022, the second meeting of the PCA Board was held, during which procedural documents for the working bodies were established.

Since October 5, 2022, CoA RK has been inviting all professional audit organizations (excluding the Union of Auditors of Kazakhstan) to join PCA as members. As a result, Kazakhstan now has a two-leveled system of external quality control:

• Professional Audit Organizations (PAOs) conduct external quality control for audit organizations that are their members, except those which are under the PCA's jurisdiction.
• The PCA conducts external quality control for its designated objects (as mentioned above) and also has the authority to review and assess the results of quality control checks conducted by PAOs.
• All complaints and appeals fall under the competence of PCA.

This two-leveled system aims to enhance the quality and effectiveness of auditing practices in Kazakhstan

The Chamber of Auditors of the Republic of Kazakhstan (CoA RK), an IFAC member and one of the accredited organizations of auditors, reports that it established a QA review system in 2007 and conducts inspections of audit firms at least once every three years. According to the updated self-assessment conducted by CoA RK in 2021, the system complies with all the requirements of SMO 1 (revised 2012).

The Union of Auditors of Kazakhstan (UAK), not an IFAC member as of the date of the assessment, is an accredited organization of auditors and reports that it has also established a QA review system since 2014 that complies with all the requirements of SMO 1 (revised 2012). The Union of Auditors of Kazakhstan participates in PCA as a member of the Board and in work of committees of Quality control and Qualification Commission.

As for the Collegium of Auditors of the Republic of Kazakhstan (CARK), which is not an IFAC member as of the date of the assessment, it remains unclear if it has established a QA review system in line with SMO 1 requirements. More information is needed to determine the extent of alignment with SMO 1 requirements at the jurisdiction level.

Current Status: Partially Adopted

Initial and continuing professional development (IPD and CPD) for auditors and accountants, are stipulated in the Law on Audit Activity of 1998 (as amended in 2020) and the Law on Accounting and Financial Reporting of 1995 (as amended in 2007), respectively.

To qualify as an auditor, an individual must (i) have a university degree in accounting; (ii) have three or more years of practical experience; and (iii) successfully pass a certification program and professional examinations administered by one of the organizations accredited by the Ministry of Finance under the Law on Audit Activity. To practice as an auditor, an individual must become a member of one of the organizations accredited by the Ministry of Finance, be included in the register of auditors, and fulfill continuing professional development (CPD) requirements. CPD training for auditors and CPD monitoring are performed by accredited professional audit organizations for their members. According to the Law, in line with IES 7 (2019), auditors are required to complete 40 hours annually of CPD.

On July 3, 2020, amendments to the Law on Audit Activity of 1998 came into effect which delegated to the Professional Council on Auditing (PCA) the authority to establish a unified certification system for auditors. Neither the Audit Law nor the 2020 amendments legally require the design of the certification program for auditors to follow IES provisions. Furthermore, the amendments do not ensure that the skills framework is achieved and demonstrated through student assessments, following the provisions of IES 6 (2019). A clear link between learning and achievement demonstrated in the examinations is needed to ensure that the process of qualifying as an auditor in Kazakhstan is as transparent as possible.

According to the CFRR / World Bank’s Report prepared as part of the Joint Economic Research Program between the Government of Kazakhstan and the World Bank Group (December 2020), there are no requirements for practical work experience assessment. The amendments to the law only stipulate that all aspiring auditors should have minimum three (3) years practical experience, but they do not require enforcement by the PCA before a qualification certificate is issued as required by IES 5 (2019).

As for accountants, IPD and CPD requirements for obtaining and maintaining the Professional Accountant qualification are established in the Law on Accounting and Financial Reporting of 1995 (as amended in 2007) and are being implemented by accredited professional accounting organizations under the oversight of the Ministry of Finance.

To obtain a qualification of a Professional Accountant, a candidate must have a university level degree or higher; confirm theoretical knowledge and professional competence by successfully passing relevant exams conducted by an accredited certification organization; and obtain one (1) year of practical training in accounting activities.

To practice as a Professional Accountant, an individual must become a member of one of the accounting organizations accredited by the Ministry of Finance, be included in their register of accountants, and fulfill CPD requirements as stipulated by the Law. The Law requires 120 hours of CPD over a three-year rolling period in accordance with IES 7 (2019).

Although some of the requirements of IES are in place for both accountants and auditors, the extent of alignment with the requirements of the revised 2019 IES needs to be clarified.

The responsibility for attesting candidates for auditors' qualification has been completely transferred from the qualification commissions of the 7 Professional Audit Organizations (PAOs) to the unified qualification commission of the Professional Council on Auditing (PCA). The Qualification Commission of PCA operates under the same principles and legal framework as the Qualification Commission of the Council of Auditors of the Republic of Kazakhstan (CoA RK) did previously.

Simultaneously, working groups have been actively working on recommendations for amendments to the orders of the Ministry of Finance. The Chamber of Auditors of Kazakhstan reports that these efforts took place from August to October 2022. As a result of the Working Group on Regulatory Impact Analysis in Audit Legislation meetings, the Ministry of Finance has accepted separate proposals from the Chamber of Auditors and the Union of Auditors. These proposals are scheduled for further development and implementation between 2023 and 2027.

Current Status: Partially Adopted

The Law on Audit Activity of 1998 (as amended in 2020) requires application of ISA as issued by the IAASB and translated into Russian and Kazak languages.

Under the Law, the Ministry is responsible for translation of ISA into Kazak language, while the Chamber of Auditors of the Republic of Kazakhstan (CoA RK) ensures availability of the Russian translation.

As of the date of the assessment, the Russian translation of the 2016-2017 Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements, as well as the Kazakh translation of the 2018 Handbook are being applied. CoA RK reports that it plans to work with the Professional Council on Auditing (PCA) on translating the 2021- Handbook into Russian.

Current Status: Partially Adopted

The Law on Audit Activity of 1998 (as amended in 2020) and the Law on Accounting and Financial Reporting of 1995 (as amended in 2007) require the accredited professional accountancy organizations to establish a Code of Ethics for their members under the oversight of the Ministry of Finance.

Both IFAC member organizations in Kazakhstan—the Chamber of Professional Accountants of the Republic of Kazakhstan (CPA RK) and the Chamber of Auditors of the Republic of Kazakhstan (CoA RK)—adopted the 2010 IESBA Code of Ethics for application by their members. The CoA RK reports that the 2020 version of the IESBA Code has been translated by the Ministry of Finance and is also disseminating the English version of the 2023 IESBA Code.

The Union of Auditors of Kazakhstan (UAK), not an IFAC member as of the date of the assessment, is an accredited organization of auditors and reports that it requires its members to apply the 2018 IESBA Code.

It is not clear whether other accredited professional organizations in the jurisdiction, which regulate auditors and accountants, have adopted the latest version of the IESBA Code for application by their members.

Current Status: Partially Adopted

The Ministry of Finance is responsible for determining public sector accounting standards with advice from the Consultative Board. The Ministry adopted accrual-basis IPSAS as national standards for application by all public entities effective January 1, 2013 and has translated the 2018 Handbook of International Public Sector Accounting Pronouncements into Kazakh in accordance with IFAC Translation Policy.

Current Status: Adopted

The Law on Audit Activity of 1998 (as amended in 2020) and the Law on Accounting and Financial Reporting of 1995 (as amended in 2007) establish the authority of accredited auditing and accounting organizations to investigate and discipline (I&D) their members for non-compliance with applicable standards, ethical requirements, and for breach of professional conduct.

In July 2020, amendments to the Law on Audit Activity of 1998 were enacted which further specify that the Professional Council on Auditing (PCA) is responsible for conducting I&D for cases related to public interest entities (PIEs), while professional auditing organizations accredited and overseen by the Ministry of Finance will continue to be responsible for conducting I&D for their members that are not related to PIEs.

According to CoA RK, the PCA’s I&D system for PIEs is not expected to be operational until 2022. In the meantime, all I&D processes for auditors and audit firms, continue to be conducted by accredited professional auditing organizations under the oversight of the Ministry of Finance.

Since the establishment of the Professional Council on Auditing (PCA) in 2021, all complaints and appeals relating to auditors and audit companies in Kazakhstan are within the competence of PCA (Professional Council on Auditing) and its Committee for Consideration of Complaints and Appeals. CoA RK (Council of Auditors of the Republic of Kazakhstan) affirms that its Investigating and Disciplinary (I&D) system is fully compliant with SMO 6.

CoA RK has also transferred all procedures and guidelines related to the I&D system to PCA, which now serves as the basis for PCA's internal documents and procedures. Consequently, CoA RK has decided to rename and merge its Committee on Disputes and Committee on Jurisdiction for better coordination and alignment with PCA's responsibilities.

The Union of Auditors of Kazakhstan (UAK), not an IFAC member as of the date of the assessment, is also an accredited organization of auditors and reports that it has established an I&D system that complies with all the requirements of SMO 6 (revised 2012).

More information is needed on the I&D systems operated by other accredited organizations in Kazakhstan to determine the extent of alignment with SMO 6 requirements at the jurisdiction level.

Current Status: Partially Adopted

The Law on Accounting and Financial Reporting grants the authority to the Ministry of Finance to adopt through legislative acts applicable accounting standards that must be applied in the preparation of financial statements in the Republic of Kazakhstan.

Under the Law, all large entities and listed companies, banks, insurance companies and other non-bank financial institutions are required to apply IFRS as issued by the IASB and translated into the Kazakh and the Russian languages and published by the authorized body in the Republic of Kazakhstan under the copyright agreement with the IFRS Foundation. As of 2021, the 2015 IFRS Blue Book in Russian, the 2016 IFRS Red Book in Kazakh, and the 2015 IFRS for SMEs have been translated for application in Kazakhstan.

Medium-sized enterprises and state enterprises are required to use either full IFRS or IFRS for SMEs.  Small enterprises must choose between full IFRS, IFRS for SMEs, and KNFRS 1, which is based on national tax rules.

Current Status: Partially Adopted

Relevant Organizations

• Chamber of Auditors of the Republic of Kazakhstan (COA RK)
• Chamber of Professional Accountants of the Republic of Kazakhstan (CPA RK)
• Collegium of Auditors of the Republic of Kazakhstan
• Ministry of Finance of the Republic Kazakhstan
• Professional Accountants Organization of Kazakhstan (UCHET)

Relevant Legislation

• Law on Audit Activity in the Republic of Kazakhstan, 1998 (as amended 2015) (in Russian)
• Law on Accounting and Financial Reporting, 2007
• Law on Self-Regulation, 2015 (in Russian)
• Articles of Association of the Chamber of Auditors of the Republic of Kazakhstan Professional Audit Organization, 2010
• Regulation on Dispute Committee, 2010 (in Russian)

Relevant Publications

• CFRR World Bank, International Experience and Key Considerations for Kazakhstan: Institutional Structure, Functions, Staffing, and Funding, June 2020
• CFRR World Bank, International Experience and Key Considerations for Kazakhstan: Requirements for Public Interest Entities’ Auditors, Quality Assurance, Auditors’ Qualification, and Continuing Professional Development, December 2020
• CIS Executive Committee, Experience of CIS States in Ensuring Consistent and Uniform Application of IFRS, 2019.
• CoA RK, SMO Action Plan, September 2021.
• CPA RK, SMO Action Plan, September 2021.
• Deloitte & Touche, IPSAS in Your Pocket, 2015.
• IFRS Foundation, IFRS Standards—Application Around the World Jurisdictional Profile: Kazakhstan, December 2016.
• Ministry of Finance, Follow-up on the Accounting Development Tool (ADT), October 2014.
• Ministry of Finance, Updates on ADT Implementations, November 2015.
• Tilburg University Department of Accountancy, Global Accountancy Education: Kazakhstan, 2012.
• World Bank, Report on the Observance of Standards and Codes?Accounting and Auditing: Kazakhstan, 2007.