Bishkek
April 29, 2002, # 76
THE LAW OF THE KYRGYZ REPUBLIC
ON ACCOUNTING
(As amended by the Laws of the Kyrgyz Republic of
October 17, 2008 #231, July 15, 2009 #216,
May 18, 2012 #56, April 26, 2013 #61)
CHAPTER I. GENERAL PROVISIONS
CHAPTER II. REQUIREMENTS FOR ORGANIZATION OF ACCOUNTING
CHAPTER III. FINANCIAL STATEMENTS
CHAPTER IV. FINAL PROVISIONS
The present Law establishes the legal and methodological framework for organization and maintenance of accounting in the Kyrgyz Republic, specifies the procedure of state regulation of accounting and financial statements, rights and obligations of the persons who administer and maintain accounting and prepare financial statements.
CHAPTER I
GENERAL PROVISIONS
Article 1. Accounting and its methodological framework
1. Accounting is a system of collecting, measuring through data recording, processing and communication of information on assets, liabilities, equity, revenues and expenses of the entity (legal entity) by means of financial statements of the entity for making informed decisions.
2. Uniform methodological framework for accounting and financial statements applied in the territory of the Kyrgyz Republic for public interest entities, regardless of ownership, are the International Financial Reporting Standards (hereinafter - IFRS) adopted by the Fund of the IFRS Committee (City of London).
For the purposes of this Law, subject of public interest means the entity, which:
- issuer whose securities are listed on the Stock Exchange;
- bank or other financial institution licensed by the National Bank of the Kyrgyz Republic;
- investment fund, insurance company, private pension funds.
Unless otherwise provided in this article, the uniform methodological framework of the financial statements, applied in the territory of the Kyrgyz Republic for the subjects, with the exception of public interest entities, regardless of ownership, are the International Financial Reporting Standards for Small and Medium Enterprises (hereinafter - IFRS for SMEs) adopted by the Fund of the IFRS Committee (City of London).
2-1. Uniform methodological framework for accounting and financial statements used by the budgetary institutions in the territory of the Kyrgyz Republic are the International Financial Reporting Standards for the Public Sector (hereinafter – IFRS PC) developed by the Council on IFRS PC of the International Federation of Accountants.
2-2. Small business enterprises carry out accounting and financial statements in accordance with the simplified rules established by the Government of the Kyrgyz Republic.
Small and medium enterprises may, on a voluntary basis on according of their governing bodies have approved the accounting policies, to prepare financial statements in accordance with IFRS or IFRS for SMEs.
For the purposes of this Law, a small business enterprise means the entity specified as such in accordance with the tax legislation of the Kyrgyz Republic.
3. In a relationship, carried out in accordance with the Islamic principles of banking and finance, the methodological framework of accounting and financial statements are accounting standards for Islamic financial institutions, adopted in accordance with the legislation of the Kyrgyz Republic.
(As amended by the Laws of the Kyrgyz Republic of July 15, 2009 #216, May 18, 2012 #56, April 26, 2013 #61)
Article 2. Objectives of Accounting
1. Principal objectives of accounting are:
- systematic forming of full and reliable information on operation of the entities and communicating it to internal and external users of financial statements;
- preparation of financial statements in compliance with the requirements of the present Law and IFRS effective on the date of preparation of financial statements;
- providing information for preparation of other types of statements provided for by the legislation of the Kyrgyz Republic;
- providing information for monitoring compliance of the entities' business transactions with the legislation of the Kyrgyz Republic;
2. Internal users of the information generated in the accounting system are the managers, shareholders and owners of the entities.
External users are the individuals who need financial information about the entity, including investors, creditors, and state bodies.
3. To fulfill the above-stated objectives the entities shall:
maintain accounting in compliance with the IFRS requirements;
adopt the accounting policy and consistently implement it;
maintain a system of internal control.
Article 3. Principles of Accounting and Financial Statements
1. The entities shall use the double-entry system in their accounting.
2. In recording of information in the accounting system and in preparation of financial statements the following basic principles shall be used:
continuity, understandability, relevance, materiality, reliability, completeness, neutrality, substance over form, prudence, comparability, faithful representation.
The above stated principles are specified in IFRS, IFRS for SME and specific principles shall be used for explaining general provisions of the standards.
3. Accounting shall be based on the accrual principle. Under this principle revenues are recognized (recorded) when they are earned, and expenses and losses are recognized when they are incurred.
(As amended by the Law of the Kyrgyz Republic of April 26, 2013 #61)
Article 4. Legislation on Accounting
1. Legislation of the Kyrgyz Republic on accounting consists of the present Law which establishes a uniform legal and methodological basis for the accounting procedure in entities, Acts of the President of the Kyrgyz Republic, resolutions of the Government of the Kyrgyz Republic, normative acts of the Authorized State Body and other normative legal acts stipulating rules for preparation of full and reliable information, applicable to concrete objects of accounting and financial statements.
2. Provisions contained in other laws and normative legal acts related to accounting and financial statements shall comply with the present Law. If the provisions included in other laws regulating accounting issues are discrepant to the provisions of the present Law, the present Law shall prevail.
(As amended by the Law of the Kyrgyz Republic of April 26, 2013 #61)
Article 5. Coverage of the Present Law
1. All the legal entities operating in the Kyrgyz Republic as well as subsidiaries and representative offices of foreign entities in the Kyrgyz Republic shall maintain accounting and financial statements in compliance with the present Law.
1-1. Provisions of this Law shall apply in the relations conducted in accordance with the Islamic principles of banking and finance, in part, is not regulated by the accounting standards for Islamic financial institutions.
2. The requirements for accounting and preparation of financial statements in budgetary institutions stipulated by the normative legal acts of the Government of the Kyrgyz Republic in compliance with this Law.
See:
Provisions on the organization of accounting in budgetary institutions (approved by the Decree of the Government of May 16, 2011 #224)
2-1. The requirements for accounting and financial statements in the organizations operating in accordance with the Islamic principles of banking and finance, are determined in accordance with accounting standards for Islamic financial institutions.
3. The requirements for accounting and preparation of financial statements of the National Bank of the Kyrgyz Republic, commercial banks and financial institutions licensed by the National Bank of the Kyrgyz Republic shall be determined by normative legal acts of the National Bank of the Kyrgyz Republic and in accordance with this Law.
See:
Resolution of the Board of the National Bank of the Kyrgyz Republic of October 23, 2004 #26/2 “On approval of the Regulation “On the requirements for the accounting policy of commercial banks and other financial institutions licensed by the National Bank”
4. Tax records are maintained in accordance with the tax legislation of the Kyrgyz Republic.
(As amended by the Law of the Kyrgyz Republic of October 17, 2008 #231, July 15, 2009 #216, May 18, 2012 #56)
Article 6. State Regulation of Accounting
1. General methodological guidance of accounting in the Kyrgyz Republic shall be provided by the unified authorized state body (hereinafter the “authorized bodies”) assigned by the Government of the Kyrgyz Republic.
The authorized bodies as a state administration body shall carry out a uniform state policy on introduction of IFRS and IFRS PC in the republic and control their application.
2. The authorized bodies shall:
- provide conditions for distribution of standards newly adopted by the Fund of the IFRS Committee and amendments made to them;
- develop jointly with interested organizations methodical recommendations on IFRS, IFRS for SME and IFRS PC application;
- develop and approve normative legal acts regulating administration and maintenance of accounting;
- assist in the development of IFRS and IFRS PC compliant curricula in the area of accounting and financial statements;
- maintain the state register of normative legal acts as well as methodological guidelines on their application, adopted by the authorized body and other state bodies of the Kyrgyz Republic;
- coordinate the activity of corresponding state authorities involved in regulation of accounting;
- control compliance of normative acts on accounting and financial statements of the state bodies of the Kyrgyz Republic with IFRS, IFRS for SME, IFRS PC and legislation of the Kyrgyz Republic;
- collaborate with the professional public organizations and provide regular consultations with the purpose of improving the accounting system;
- carry out other authorities stipulated by the present Law and other normative legal acts of the Kyrgyz Republic.
3. Professional activities in the field of accounting and financial statements are not subject to licensing and certification by the public authorities of the Republic.
CHAPTER II
REQUIREMENTS FOR ORGANIZATION OF ACCOUNTING
Article 7. Procedures for Organization of Accounting
1. Responsibility for organization of accounting in entities, observance of legislation when effecting business transactions, ensuring statutory audits in cases specified by the legislation, lies with the manager, who is entitled to act on behalf of the entity in accordance with constituent documents.
The entity' manager shall ensure internal accounting, reporting and control system, procedure of controlling the business transactions, preparation of financial statements for external users, preparation of tax statements and other financial documents, timely settlements.
2. Accounting in entities can be organized by:
a) creating the accounting department as a structural subdivision headed by the chief accountant or other person authorized by the manager;
b) introducing a position of the accountant;
c) using the services of specialized organizations or accounting specialists on a contract basis;
d) maintaining accounting personally by the manager of the entity.
3. Documents for cash receipts and disbursements, inventory and other assets, credit and other liabilities of the entity as well as financial statements and balance sheets shall be signed by the manager or persons assigned by the manager.
4. In case there is a disagreement between the manager of the entity and the chief accountant or the person who maintains accounting, on any business transaction, the related documents can be accepted for execution upon a written consent of the entity manager who will bear entire responsibility for the consequences of such transactions.
Article 8. Accounting Documentation
1. Records in accounting registers shall be made on the basis of source documents that enter the effected transactions. Source accounting documents shall be executed at the point of transaction and if there is no possibility of doing so, they shall be prepared immediately after completion of the transaction.
Accounting records are made manually on paper mediums and/or in computerized accounting system.
2. Source documents shall include the following mandatory requisites:
name of the document;
date and place of drawing up the document;
name of the entity on behalf (by order) of which the document is prepared;
description of the business transaction;
measurement units of the business transaction in physical or money terms;
job titles of the persons responsible for effecting the business transaction and for the accuracy of documenting it;
personal signatures of abovementioned people.
See:
Decree of the Government of the Kyrgyz Republic of March 30, 2010 #186 “On approval of the standard unified form of source accounting records N OP-5 “Procurement Act”
3. The persons who prepare and sign source documents shall ensure their timely and proper execution, timely submission for recording in the accounting system and reliability of the information included in those documents.
4. In order to monitor and improve processing of data on business transactions the summary accounting documents (registers) shall be prepared on the basis of source documents. The forms of accounting registers where the information is accumulated shall be developed and approved by the entity. In addition, the entity can use any other forms recommended by the authorized body.
5. The persons who prepare accounting registers shall bear responsibility for the accuracy of the information recorded.
6. The content of accounting registers, internal reporting and other documentation is strictly confidential. Nobody has the right to read the contents of those documents unless the access is permitted by the manager (owner of the entity), decision of the court or public prosecutor's office and in other cases provided for by the legislation of the Kyrgyz Republic.
7. Inspectors, auditors and other persons who have obtained access to the information included in the accounting registers and internal reporting shall not release this data to any outside parties. For disclosure of such information they shall bear responsibility specified by the legislation of the Kyrgyz Republic.
8. Source documents can be seized only by inquest bodies, preliminary investigation bodies, public prosecutions department, courts and tax bodies on the basis of their resolutions in accordance with the legislation of the Kyrgyz Republic.
9. The authorized officer of the entity has the right to make copies of the documents in the presence of representatives of the bodies seizing those documents. The grounds for and the date of withdrawal should be indicated on the copies.
(As amended by the Law of the Kyrgyz Republic of May 18, 2012 #56)
Article 9. Inventory of Assets and Liabilities
The accuracy and reliability of accounting and financial statements information shall be verified by inventory of assets and liabilities. The inventory procedure and time shall be defined in accordance with the accounting policy of the entity.
CHAPTER III
FINANCIAL STATEMENTS
Article 10. Financial statements and its general requirements
1. Financial statements are presentation of data on the entity's financial position and results of its operation and changes in the financial position of the entity. The entities shall prepare financial statements in compliance with rules, indicated in article 1 of this Law.
2. The financial statements indicators shall be presented in national currency of the Kyrgyz Republic unless otherwise stipulated by the international agreements ratified in set order.
3. In cases provided for by IFRS, IFRS for SME and IFRS PC the entities shall prepare consolidated financial statements.
(As amended by the Laws of the Kyrgyz Republic of May 18, 2012 #56, April 26, 2013 #61)
Article 11. Financial Statements of the Liquidated Entity
1. The liquidating commission (liquidator) shall prepare interim financial statements (interim liquidation balance sheet) with the volume no smaller than annual financial statements, as of the final date for submission of demands by creditors.
2. During preparation of the liquidating balance sheet stated in paragraph 1, the data on assets, liabilities, equity and other items shall be estimated at market value i.e. they shall be recorded in the cash amounts that could be collected from selling those items.
3. After completion of settlements with creditors the liquidating commission (liquidator) shall prepare a liquidating balance sheet signed by the chairman of the liquidating commission and the person, responsible for accounting, who is designated by the decision of the liquidating commission and approved by owner of the property of the legal entity or the body that made the decision on liquidation of the legal entity.
4. When the entity is liquidated due to insolvency (bankruptcy) the liquidating balance sheet shall be prepared, stating the balances in asset and liability accounts supported by corresponding documents. It shall be signed by the administrator and submitted, along with its activity report, to the arbitration court and/or to the meeting of creditors.
5. When the entity is in the process of bankruptcy and/or liquidation the requirements established by the legislation of the Kyrgyz Republic shall be taken into consideration in the accounting system of that entity.
Article 12. Addresses and Time Terms for Submission of Financial Statements
1. All the entities, except for the budgetary institutions, shall submit financial statements to founders, participants or property owners.
2. Financial statements shall be submitted to other state executive bodies, banks and other users in accordance with the legislation of the Kyrgyz Republic. The entities shall provide free copy of financial statements to each specified addressee.
3. The entities, except for the budgetary institutions, shall submit annual financial statements within sixty (60) days after the end of the accounting year unless otherwise stipulated by the legislation of the Kyrgyz Republic. The submitted annual financial statements shall be approved in accordance with the procedure established by the legislation of the Kyrgyz Republic.
4. The budgetary institutions shall submit interim and annual statements to a higher authority and/or to the person in charge of the funds at a set time.
5. Financial statements shall be submitted on paper mediums. With the availability of facilities and on the grounds of a request from a corresponding body the entity may submit the copies of the financial statements on a floppy disc or other electronic medium.
6. The date of submission of financial statements by the entity shall be determined by the mailing date or the date of actual transfer to the user. If the date of submission of financial statements coincides with a day-off (weekend) the nearest following working day shall be considered the day of submission of financial statements.
See:
Decree of the State Commission of the Kyrgyz Republic on the Financial Reporting Standards and Audit of December 30, 2004 #36 “On the Interim Financial Statements”.
Article 13. Accounting Year
1. The period from January 1 to December 31 inclusive of the calendar year shall be considered accounting year for all the entities.
The first accounting year for the newly established or reorganized entity shall be a period from state registration to December 31 inclusive. For the entities established after October 1 (except for the budgetary institutions) the accounting year shall be a period from the date of state registration to December 31 inclusive of the following year.
2. The data on business transactions effected before the date of state registration of the newly established entity shall be included in the financial statements for the first accounting year.
Article 14. Publication of Financial Statements
1. Entities of the Kyrgyz Republic shall publish their financial statements in 90 days after the end of accounting year but no later than June 1 of the current year in accordance with the legislation of the Kyrgyz Republic:
2. Entities specified in paragraph 1 publish annual financial statements after verification of reliability (compliance with IFRS) of the presented information by independent individual auditors and/or audit organizations and after approval of the annual balance sheet and income statement by the annual general meeting of shareholders. The auditor's opinion shall be published along with the financial statements.
3. Financial statements that include the information considered to be state secret by the legislation of the Kyrgyz Republic shall be presented with consideration of the requirements of the specified legislation.
4. The procedure of publishing as well as the volume of financial statements for publication shall be established by the authorized body.
(As amended by the Law of the Kyrgyz Republic of May 18, 2012 #56)
Article 15. Storage of Accounting Documents
1. The entities shall keep source accounting documents, accounting registers, the working chart of accounts, financial statements and other accounting policy related documents both on paper mediums and in computerized accounting systems in order and during the periods established in accordance with the legislation on state archiving and in accordance with other laws of the Kyrgyz Republic.
2. The manager of the entity bears responsibility for organizing the storage of accounting documents, accounting registers and financial statements.
CHAPTER IV
FINAL PROVISIONS
Article 16. Responsibility for Violations of the Accounting
Legislation of the Kyrgyz Republic
In case of violation of the procedures of accounting and preparation of financial statements in compliance with the present Law, the managers of the entities shall bear responsibility in accordance with the legislation of the Kyrgyz Republic.
On liability for violations of the legislation on accounting, see the Code of Administrative Responsibility and the Criminal Code of the Kyrgyz Republic.
Article 17. Putting the Present Law into Effect
1. The present law shall come into effect from the date of official publication.
The Law is published in the newspaper “Erkin Too” of May 8, 2002 #35
2. Provisions of the present Law on mandatory application of IFRS shall apply to those legal entities that converted to IFRS in accordance with the schedule approved by the Government of the Kyrgyz Republic.
3. The normative acts on accounting, published before the effect of the present Law, shall remain in force with regard to those parts, which do not contradict the present Law.
4. The Government of the Kyrgyz Republic, the National Bank of the Kyrgyz Republic shall:
- bring their decisions in accordance with the present Law;
- prepare and submit for consideration by the Jogorku Kenesh of the Kyrgyz Republic proposals on brining the legislative acts of the Kyrgyz Republic in accordance with the present Law.
President of the Kyrgyz Republic A.Akaev
Adopted by the Legislative Assembly
of the Jogorku Kenesh of the Kyrgyz Republic April 2, 2002
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