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Kyrgyz Republic Establishes New Procedure for Recognizing Work, Issuing Auditor Qualification Certificates

In a significant move to improve the country’s auditing sector, the Cabinet of Ministers of the Kyrgyz Republic has approved a resolution establishing a new procedure for recognizing work, issuing auditor qualification certificates, and recognizing international qualification certificates.

Key Changes

  • All registered auditors will be subject to continuing professional development (CPD) requirements as outlined in the Audit Law.
  • Audit firms performing mandatory audits must hold professional indemnity insurance.
  • The Kyrgyz Republic is establishing a Public Registry of audit firms and auditors, which will provide a centralized database of all registered auditors and audit firms.

New Council for Public Oversight of Audit

The country has established a Council of Public Oversight of Audit (CPOA) under the State Registration Service of the Financial Market (SRSFM). The CPOA will serve as a consultative and advisory body comprising non-practitioners’ representatives from state bodies, business environment, and academia. The council’s responsibilities include:

  • Ensuring that auditing standards are met
  • Holding auditors accountable

Remaining Areas for Improvement

Despite these positive developments, the Kyrgyz Republic still faces several challenges in its accounting and auditing sector. A report by the World Bank’s ROSC (Report on the Observance of Standards and Codes) highlights several areas requiring improvement, including:

  • Public disclosure of annual financial statements by some banks, microfinance institutions, listed companies, and insurers is not fully compliant or timely.
  • Financial transparency and adequate financial disclosures are required for wholly owned state-owned enterprises to facilitate good governance, fiscal discipline, and optimum allocation of scarce resources.
  • Enforcement activities and sanctions have largely been suspended pending the publication of new laws.

2022 Assessment Findings

An assessment of key accounting and auditing performance indicators has confirmed these remaining challenges. The report provides an overall rating of 2 out of 10 for the Kyrgyz Republic’s financial reporting and auditing standards, with significant gaps in areas such as:

  • Financial reporting and auditing of listed companies
  • Financial reporting and auditing for banks, microfinance entities, and insurance companies

The assessment highlights that while some progress has been made in adopting international accounting and auditing standards, more work is needed to ensure their effective implementation and application.