Financial Crime World

Kyrgyzstan Tightens Grip on Banking Compliance with New Audit Procedures

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The Kyrgyz Republic has taken significant steps to strengthen its banking sector by introducing new audit procedures aimed at enhancing compliance and transparency. The law, which came into effect in 2002 and was recently amended in 2019, outlines the rules governing auditor activities and sets out specific standards for auditing banks.

Compliance with International Accounting Standards

Under the new regulations, auditors are required to follow international accounting standards and guidelines when conducting audits of financial institutions. This move is designed to increase confidence among users of financial reports and ensure that financial statements are presented in a transparent and accurate manner.

Key Requirements:

  • Auditors must follow international accounting standards and guidelines
  • Financial statements must be presented accurately and transparently
  • Increase confidence among users of financial reports

Scope of Audit Services

The law defines audit services as including not only traditional auditing activities but also additional services such as:

  • Financial analysis
  • Tax consulting
  • Managerial consulting

Auditing organizations and individual auditors are prohibited from engaging in any other business activity except for carrying out audits and rendering these accompanying services.

Additional Services:

  • Financial analysis
  • Tax consulting
  • Managerial consulting

Licensing and Registration

Auditor activities are considered a licensed type of business activity, with licensing performed according to regulatory legal acts of the Kyrgyz Republic. Only registered auditors and auditing organizations are authorized to perform audit services in the country.

Requirements:

  • Licensing performed according to regulatory legal acts
  • Only registered auditors and auditing organizations authorized to perform audit services

Bank Audit Requirements

The law sets out specific requirements for auditing banks and non-bank financial credit institutions. These institutions must be audited annually, with auditors required to follow international standards of audit. Banks are also subject to additional reporting requirements, including the publication of financial reports complete with an audit opinion in mass media.

Requirements:

  • Annual audits
  • International standards of audit followed
  • Additional reporting requirements

Auditor Qualifications

To become a certified auditor, individuals must meet specific qualification requirements established by the authorized body and hold a qualification certificate of the auditor. Auditors are prohibited from holding public office or engaging in other paid activities except for scientific, pedagogical, or creative work.

Requirements:

  • Meet specific qualification requirements
  • Hold a qualification certificate of the auditor
  • Prohibited from holding public office or engaging in other paid activities

Conflict of Interest Provisions

The law includes provisions to prevent conflicts of interest among auditors. These provisions prohibit auditors from carrying out audits of banks where they have served as members of council of directors or committee on audit within the past five years. Auditors are also prohibited from carrying out audits of competing banks if they serve as members of a council of directors or committee on audit in any other bank.

Provisions:

  • Prohibit auditors from carrying out audits of banks where they have served as members of council of directors or committee on audit within the past five years
  • Prohibit auditors from carrying out audits of competing banks if they serve as members of a council of directors or committee on audit in any other bank

Conclusion

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The new audit procedures introduced by Kyrgyzstan aim to strengthen its banking sector and promote transparency and accountability among financial institutions. The measures are designed to increase confidence among users of financial reports and ensure that financial statements are presented accurately and transparently.