Strengthening Financial Reporting Regime in the Kyrgyz Republic: ROSC Assessment

Overview of Key Findings

The Reports on the Observance of Standards and Codes (ROSC) assessment highlights key areas of improvement for the accounting and auditing sector in the Kyrgyz Republic.

Banking Sector

• The banking sector consists of 22 commercial banks, with foreign banks holding 61.4% of shares and the state holding 7%.
• Reforms have contributed to its success, including:
  • Closing uncompetitive small banks
  • Strengthening banking supervision

Insurance Sector

• The insurance sector is still developing, with 15 insurance companies.
• Most insurance companies are controlled by a handful of large companies.
• Foreign involvement is significant, but mandatory insurance coverage laws are lacking.

Stock Exchange

• Only 10 companies are listed on the Kyrgyz Stock Exchange.
• No company’s securities are permanently traded due to:
  • A culture of confidentiality
  • Lack of investor confidence

Privatization

• Many state-owned entities have been privatized, but there is debate surrounding the need for greater transparency in remaining state-owned entities.
• Some state-owned entities may be required to report financial information using IFRS.

Financial Reporting Regime

• The economy requires a stronger financial reporting regime to facilitate growth through:
  • Easy access to finance at lower costs
  • Increased trust among foreign investors

Accounting and Auditing Laws

• The Kyrgyz Republic has made improvements in its accounting and auditing laws, but discrepancies exist between law and practice.
• The adoption of IFRS and ISA as official standards is a positive step towards greater financial transparency.

Conclusion

The ROSC assessment highlights the need for improved financial reporting, stronger regulation, and increased transparency to support economic growth and development in the Kyrgyz Republic.