Uzbekistan

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 2023.

The Law on Accounting of 1996, as amended, establishes 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. Effective January 1, 2021, under the Presidential Decree on additional measures to comply with International Financial Reporting Standards, joint-stock companies, commercial banks, insurance organizations and legal entities classified as large tax payers must prepare their financial statements in accordance with IFRSs as adopted by the Ministry of Finance. A detailed roadmap for the full transition to IFRS has been developed and is implemented by the Ministry of Finance and other stakeholders.

Other companies must apply National Accounting Standards adopted by the Ministry, which represent a modified version of IAS as they existed in 2008.

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 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.

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 2013 renovated in 2021, amended in 2022 and 2023 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 February 25, 2021, Uzbekistan enacted the updated Law on Auditing, which has been further amended in 2022 (Acts 759, 760, 765) and 2023 (Act 815), leading to significant revisions in the regulatory framework governing the audit profession. Beginning in 2022, the following reforms have been implemented: (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) PAOs will assume responsibilities including: a. Setting the procedure and regulations for the operation of the qualification commission. b. Administering qualification exams alongside national auditor associations. c. Issuing, renewing, extending, and terminating the validity of auditors' qualification certificates, with the exception of those granted by the Central Bank of the Republic of Uzbekistan; (iv) auditors and audit firms are permitted to form associations and other non-profit entities to advocate and protect their professional interests.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.

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.

From 1992-2020, the Ministry was responsible for initial professional development (IPD) of auditors — i.e., the certification of auditors through its own training and examination programs. Recent legislation such as the Law on Auditing Activity No 677 of 2021 and the President’s Resolution No 5210 of 2021 shifted responsibility for the certification of auditors to recognized PAOs. 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.

On February 25, 2021, Uzbekistan enacted the updated Law on Auditing, which has been further amended in 2022 (Acts 759, 760, 765) and 2023 (Act 815), leading to significant revisions in the regulatory framework governing the audit profession. Beginning in 2022, the following reforms have been implemented: (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) PAOs will assume responsibilities including: a. Setting the procedure and regulations for the operation of the qualification commission. b. Administering qualification exams alongside national auditor associations. c. Issuing, renewing, extending, and terminating the validity of auditors' qualification certificates, with the exception of those granted by the Central Bank of the Republic of Uzbekistan; (iv) auditors and audit firms are permitted to form associations and other non-profit entities to advocate and protect their professional interests.

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.

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 assist 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).

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.

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.

As of 2019, quality assurance (QA) reviews are required only for audit firms as part of undergoing an annual rating review. The National Association of Accountants and Auditors (NAAA Uz) reported that in 2022, the Cabinet of Ministers Resolution No. 538 updated the quality control process for audit firms, allowing for external QA reviews to ensure high-quality work in the field of auditing in Uzbekistan. This resolution mandates that audit firms are to be subjected to external Quality Assurance (QA) reviews. These reviews are to be conducted by the Ministry of Finance and are to be carried out in partnership with recognized Professional Accountancy Organizations (PAOs). The Cabinet of Ministers Resolution No. 274 of 2017 permits 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 ISQM 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, 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.

The National Association of Accountants and Auditors (NAAA Uz) reports that under the Law of the Republic of Uzbekistan "On Audit Activity," as amended in the years 2022 (Acts 759, 760, 765) and 2023 (Act 815), audit organizations have the option to voluntarily submit to external quality control by the national public association of auditors. However, this voluntary process does not exempt them from the mandatory external quality control conducted by the authorized state body, as stipulated by this law.

Current Status: Partially Adopted

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.

From 1992-2020, the Ministry was responsible for initial professional development (IPD) of auditors — i.e., the certification of auditors through its own training and examination programs. Recent legislation such as the Law on Auditing Activity No 677 of 2021 and the President’s Resolution No 5210 of 2021 shifted responsibility for the certification of auditors to recognized PAOs — primarily, the NAAA Uz and ChAUz. 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.

University curricula does not fulfill the requirements of IES, according to ChAUz.

The Ministry of Finance still establishes CPD requirements for auditors, which, according to the National Association of Accountants and Auditors (NAAA UZ) and 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. The National Association of Accountants and Auditors (NAAA Uz) reports that the Law of the Republic of Uzbekistan on Audit Activity has been updated with amendments in 2022 (Acts 759, 760, 765) and in 2023 (Act 815). According to Article 15, titled "National Public Associations of Auditors," recognized Professional Accountancy Organizations (PAOs) are now authorized to approve the regulations for the qualification exam, and oversee the issuance, reissuance, extension, and termination of auditors' qualification certificates. This is done in coordination with the authorized state body. These updates, effective from January 20, 2023, also include the provision for conducting qualification exams and managing the auditors' qualification certificates, except for those issued by the Central Bank of the Republic of Uzbekistan.

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. However, no specific 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 three-level system of 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 assessed yet.

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

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.

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.

The standards are translated by the National Association of Accountants and Auditors (NAAA Uz), which, to date, has translated the 2012 ISA as part of a World Bank’s project for the Uzbek’s banking sector.

NAAA Uz notes that in practice the Russian translation of ISA is more widely applied. NAAA Uz has published the 2017 version of ISA on its website in Russian, as well as translations of ISA revisions from the 2017-2022 period

Current Status: Partially Adopted

The 2021 Audit Law contains a legal requirement for professional associations of auditors to adopt and monitor compliance with the International Code of Ethics issued by the IESBA.

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 International Code of Ethics for Professional Accountants issued by the IESBA either at the jurisdictional level or by professional organizations for their members have been reported.

Current Status: Not Adopted

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. According to the Chamber of Auditors of Uzbekistan, the Government remains committed to fully adopting IPSAS; however, the progress and timeline for convergence of NPSAS is unknown.

The Uzbekistan's Accounts Chamber became a full member of INTOSAI in November 2021 and it has the intention to adopt all IPSAS in the near future.

Current Status: Not Adopted

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. Furthermore, the Auditing Act 2021 states that non-compliance with the requirements of the act (i.e., application of relevant standards) the auditor or audit organization will be excluded from the register of auditors or from the register of audit organizations.

The Ministry of Finance under the Law on Auditing Activity has the authority to suspend audit firms’ licenses and certificates in case of infringement of law or misconduct.

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 self-assessment against the requirements of SMO 6, which revealed that its I&D system falls short of the SMO 6 requirements. In 2019, ChAUz also reported areas for improvement, with gaps mainly related to the scope of the system; disciplinary process; sanctions; and rights of representation and appeal.

Current Status: Partially Adopted

The Law on Accounting of 1996, as amended, establishes 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. Effective January 1, 2021, under the Presidential Decree on additional measures to comply with International Financial Reporting Standards, joint-stock companies, commercial banks, insurance organizations, legal entities classified as large tax payers, and business entities with a state share and state-owned enterprises approved by the State Assets Management Agency must prepare their financial statements in accordance with IFRSs as translated and adopted by the Ministry of Finance.

Other companies may voluntarily apply the IFRS and if they do so, the entities are exempted from submitting financial statements in accordance with national accounting standards (NAS) set by the Ministry of Finance.

The Ministry of Finance signed an agreement with the IFRS Foundation to translate the standards to Uzbek. The latest IFRS volume translated was the 2022 version. All financial reporting forms, accounting and banking documentation are adopted in two languages: Uzbek and Russian.

The Central Bank of Uzbekistan (CBU) established accounting requirements for banks and credit institutions under the Law on Banks and Banking Activity of 1996. In 2019 the new Law on Banks and Banking Activities was adopted in accordance with amendments in made in and according to the Presidential Decree “on additional measures for the transition to International Financial Reporting Standards” commercial banks should prepare their financial statements in accordance with IFRSs translated and adopted by the Ministry of Finance and CBU. Other companies must apply National Accounting Standards adopted by the Ministry, which represent a modified version of IAS as they existed in 2008.

Since 2021, Small and Medium-sized Practices (SMPs) have the option to adopt the National Financial Reporting Standards for SMEs formulated by the Ministry, as well as the 2021 edition of the International Financial Reporting Standards (IFRS) for SMEs.

Current Status: Partially Adopted

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
• Asian-Oceanian Standard-Setters Group (AOSSG)

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

• NAAA Uz, SMO Action Plan, January 2020.
• ChAUz, SMO Action Plan, September 2019.
• IFRS Foundation, “IFRS Application around the World, Jurisdictional Profile: Uzbekistan,” June 2016.
• World Bank, Report on the Observance of Standards and Codes, Accounting and Auditing: Uzbekistan, 2008.
• Ministry of Finance, Public Financial Management Reform Strategy 2007–2018.