Bishkek
July 30, 2002 #134
THE LAW OF THE KYRGYZ REPUBLIC
On auditing activities
(As amended by the Laws of the Kyrgyz Republic of
June 14, 2004 #75, December 15, 2004 #192,
October 23, 2008 #233, June 29, 2009 #196)
Chapter I. General provisions
Chapter II. Government management of auditing activities
Chapter III. Audit procedure and provision of audit services
This Law regulates relations arising in the implementation of auditing activities in the Kyrgyz Republic.
Chapter I
General provisions
Article 1. Auditing activities
Auditing activities is an entrepreneurial activity by the independent verification (audit) of the financial statements of organizations and individual entrepreneurs (hereinafter - the audited entity) and the provision of related services.
The purpose of audit is to express an opinion on the compliance of financial statements in all material respects, its established financial reporting framework.
Under the financial reporting framework are understood the International Financial Reporting Standards, and (or) other accounting standards in accordance with which the financial statements are prepared.
The materiality refers to a degree of accuracy of financial statements, which allows the user to make these statements based on it right conclusions about the financial and property status, as well as the results of operations of the audited entities and make conclusions based on these decisions.
Under the audit-related services means:
- review of financial statements;
- performance of obligations under the agreed procedures;
- collection and processing of financial information.
Audit organizations and individual auditors are prohibited from engaging in any entrepreneurial activities other than the audit, the provision of related services and services for performance, rehabilitation, accounting, preparation of reporting; analysis of financial and economic activities of organizations and individual entrepreneurs; accounting, economic, financial, tax and management consulting; training of accounting, economics, finance and audit.
Auditing activities are subject to licensing entrepreneurship. Licensing of auditing activities is carried out in accordance with the normative legal acts of the Kyrgyz Republic on licensing.
See:
Chapter 23 “Characteristics of licensing of auditing activities” Regulations on licensing of certain types of entrepreneurship, approved by the Decree of the Government of the Kyrgyz Republic of May 31, 2001 #260
Audit activities are carried out by auditors registered in accordance with the legislation of the Kyrgyz Republic as an individual entrepreneur (individual auditor) and (or) audit organizations.
Unless otherwise provided by the law, foreign legal entities and citizens, as well as stateless persons shall have the right to carry out audit activities in the territory of the Kyrgyz Republic on the same basis.
Article 1-1. Audit of banks
Audit of banks and other financial institutions licensed by the National Bank of the Kyrgyz Republic (hereinafter - the Bank of Kyrgyzstan), carried out in accordance with the international auditing standards and the requirements of the Law of the Kyrgyz Republic “On Banks and Banking in the Kyrgyz Republic”.
The Bank is required to provide the Bank of Kyrgyzstan copy of its audit opinion and report, together with the financial statements and the letter to the management, within 10 working days after its transfer by the audit organization to the bank or affiliated legal entity of the bank. The Bank of Kyrgyzstan also has a right to review, receive copies of any documents related to any audit conducted pursuant to this article.
The audit organization should provide the bank with copies of any documents related to any audit of the bank carried out under this article.
The Bank is obliged to provide information on the second paragraph of this article at the request of the Bank of Kyrgyzstan.
The Bank of Kyrgyzstan shall have the right not to accept the audit opinion and to request a re-audit of the bank or an affiliate, if the audit has been recognized by the authorized body of government regulation of auditing activities or the Bank of Kyrgyzstan not to comply with the requirements of the International Auditing Standards and the Law of the Kyrgyz Republic “On Banks and Banking in the Kyrgyz Republic”. The repeated audit is carried out by the bank or its affiliate.
(As amended by the Laws of the Kyrgyz Republic of December 15, 2004 #192, June 29, 2009 #196)
Article 2. Auditing standards
Under auditing standards are understood uniform requirements for the implementation of the order, presentation of results and quality assurance audit and audit-related services.
Auditing standards are established by the Government of the Kyrgyz Republic.
Audit of banks and other financial institutions licensed by the Bank of Kyrgyzstan shall meet the minimum requirements set by the Bank of Kyrgyzstan for the audit of banks, which must not contradict standards. In case of contradiction standards, the requirements specified in the standards are applied.
(As amended by the Laws of the Kyrgyz Republic of June 14, 2004 #75, June 29, 2009 #196)
Article 3. Required and initiative audit
Audit may be required and initiative.
Annual audit shall include:
- banks and other organizations licensed by the Bank of Kyrgyzstan;
See:
Regulations on minimum requirements for external audits of banks and other financial institutions licensed by the National Bank of the Kyrgyz Republic (approved by the Resolution of the Board of the National Bank of the Kyrgyz Republic of July 14, 2005 #22/2)
- insurance companies;
- public companies, which made a public offering of securities;
- investment funds;
- private pension funds;
- other persons in cases stipulated by normative legal acts of the Kyrgyz Republic.
Audited entities subject to required audit, must enter into an agreement for carrying out the required audit with the audit organization, to assist in the timely and complete audit, to provide all the documentation required for audit, by giving oral or written request exhaustive clarification and confirmation.
Initiative audit may be conducted by the decision of an individual entrepreneur or the competent authority of the management of organization, and in the cases provided for by the laws of the Kyrgyz Republic, as requested by other customers of the audit.
As a result of the required audit of the audited entity must:
- publish financial statements included in the audit opinion (report) in the mass media;
- notify the authorized state body, the regulatory audit activity on the required audit and publication of financial statements included in the audit opinion (report) in the mass media.
(As amended by the Law of the Kyrgyz Republic of June 29, 2009 #196)
Article 4. Auditor
Auditor is an individual which meets the qualification requirements established by the authorized body, and having a qualified certificate of the auditor.
Auditors during the period of its professional activity may not be in the public service and to engage in other remunerative activity, except for scientific, pedagogical and creative activities.
Article 5. Audit organization
Audit organization is a commercial organization that carries out activities defined in article 1 of this Law.
Audit organization can be created only in the form of partnerships and companies, with the exception of the open joint-stock company.
At least 50 percent of the staff of the audit organization must be citizens of the Kyrgyz Republic, residing in the territory of the Kyrgyz Republic, and if the head of the audit organization is a foreign citizen - not less than 75 percent.
Foreign audit organizations may carry out auditing activities in the Kyrgyz Republic only in the formation of the appropriate audit organizations - residents of the Kyrgyz Republic, except in the case of external audit of the Bank of Kyrgyzstan.
Head of the executive body of the audit organization can only be an auditor.
Audit organization operates for the audit after receiving a license on the terms and in the manner provided for by the legislation of the Kyrgyz Republic on licensing.
Staff of the audit organization must have at least two auditors.
Audit organizations are required to establish and maintain standards for internal quality audits conducted by them. The requirements for these standards are regulated by the auditing standards.
(As amended by the Laws of the Kyrgyz Republic of October 23, 2008 #233, June 29, 2009 #196)
Article 6. Audit opinion
According to the results of the audit, and (or) related services of an entity, performed it, provided the opinion, the form, the content and order of which are determined by the relevant auditing standards.
Drawing up of a knowingly false audit opinion is punishable by withdrawal (revocation) of the individual auditor and (or) the audit organization licensed to perform audits, and for the entity which signed such opinion, also withdrawal (revocation) of its qualification certificate of the auditor and liability in accordance with the legislation of the Kyrgyz Republic.
By deliberately false audit opinion refers to the auditor's opinion, compiled without auditing or though composed by its results, but clearly against the content of the documents considered by the auditor or audit organization during the audit. Knowingly false audit opinion is recognized as such only by the decision of the court.
See also:
Decision of the Constitutional Court of the Kyrgyz Republic of December 24, 2009
Audit organizations and individual auditors are required to report to the authorized state body that regulates auditing activities, with simultaneous notification of the audited entities identified in the audit violations of financial reporting standards, within 5 (five) working days from the date of the auditor's opinion (report).
(As amended by the Law of the Kyrgyz Republic of June 29, 2009 #196)
Article 7. Confidentiality of information
Audit organizations and individual auditors are required to provide safety of information and documents received and (or) composed by them in the course of auditing activities, and may not transfer these documents or copies thereof to any third party, with the exception of the customer and the authorized state body that regulates auditing activities, or disclose the data contained therein without the prior written consent of both the entity in respect of which the audit and provided associated services as well as customer if it is not the audited entity, except as provided in this Law and other laws of the Kyrgyz Republic.
(As amended by the Law of the Kyrgyz Republic of June 29, 2009 #196)
Chapter II
Government regulation of auditing activities
Article 8. Government regulation of auditing activities
Government regulation of auditing activities is performed by a specially authorized state body of executive power. The Regulations on the authorized body is approved by the Government of the Kyrgyz Republic.
The main functions of the authorized body are:
- organization of development and submission for approval to the Government of the Kyrgyz Republic auditing standards;
- publication of normative legal acts for the organization of a system of certification, education and training of auditors in the Kyrgyz Republic, licensing of auditing activities;
- monitoring of compliance with audit organizations and individual auditors of auditing standards;
- definition of scope and development of the order of presentation to the authorized state body the statements of audit organizations and individual auditors and financial statements;
- maintenance of public registers of auditors, audit organizations and individual auditors, professional audit associations in accordance with the provision of maintenance of registers to be approved by the authorized body, as well as the presentation of information contained in the registers to all interested parties.
See:
Regulations on the conduct of public registers of auditors, audit organizations and individual auditors, professional audit associations in the Kyrgyz Republic (approved by the Decree of the Government of the Kyrgyz Republic of March 30, 2011 #127)
Article 9. Certification of individuals willing to engage in auditing activities
Certification of individuals willing to engage in auditing activities (hereinafter - the applicants), is conducted to test their skills with the subsequent issuance to the applicants of unlimited qualifying standard certificate.
See also:
Decree of the Government of the Kyrgyz Republic of July 8, 2011 #377 “On approval of normative legal acts in the field of regulation of auditing activities”
The right to obtain the qualification certificate has the persons:
- successfully passed the qualifying examination;
- with higher education (economics);
- with experience in the economic specialty for at least three years;
- have other higher (not economic) education and having a seven-year experience in economic specialty;
- not having been convicted of acquisitive crimes;
- not deprived of the right to occupy certain positions or engage in certain activities.
For the purpose of certification of individuals, including foreigners wishing to engage in auditing activities in the Kyrgyz Republic, the competent authority creates the Examination Board, 1/3 of which shall consist of representatives of the professional auditing associations.
Each auditor, having qualified certificate is required for each calendar year beginning with the year following the year of receipt of the certificate, be trained in upgrading programs approved by the competent authority.
A document verifying the upgrading courses is submitted by the auditor in the authorized state body no later than February 1 next year.
(As amended by the Laws of the Kyrgyz Republic of June 14, 2004 #75, June 29, 2009 #196)
Article 10. Reason and procedure of withdrawal (revocation) of qualification certificate
Withdrawal (revocation) of qualification certificate from the auditor is only in the presence of the following grounds:
1) establishment of facts of receipt of the qualification certificate with the use of forged documents required for admission to the certification;
2) entry into force of the verdict, providing for a penalty of withdrawal of the auditor to hold certain positions or engage in certain activities;
3) establishment of facts of a systematic violation of (two or more times) the auditor during the audit, the requirements established by the legislation of the Kyrgyz Republic, and auditing standards;
4) entry into force of the court decision on the recognition of the audit opinion, signed by the auditor knowingly false;
See also:
Decision of the Constitutional Court of the Kyrgyz Republic of December 24, 2009
5) failure to comply with the auditor of the requirements of articles 7 and 11 of this Law.
The decision on withdrawal (revocation) of the auditor of the qualification certificate is received by the authorized body. The decision on withdrawal (revocation) of the auditor of the qualification certificate shall take effect immediately and shall be published in the mass media, determined by the authorized body.
The auditor which the qualification certificate is withdrawn by the reasoned decision may appeal the decision in court. In the case of entry into force of the court decision on the recognition of wrongful withdrawal (revocation) of the auditor of the qualification certificate, the authorized body is required to publish the above decision of the court in the manner provided by part two of this article.
Unless otherwise provided by the court verdict providing for the punishment of deprivation of the auditor to hold certain positions or engage in certain activities, the auditor has the right to re-schedule the certification on the same basis to apply for obtaining the qualification certificate no earlier than six months after the decision of withdrawal (revocation) the auditor of the qualification certificate.
Establishing the facts of violations of the auditor the auditing standards and the requirements of the laws of the Kyrgyz Republic is the exclusive competence of the authorized body.
When considering the judiciary disputes on the content and quality of the auditor's opinion entitled to give expert opinions only specialists with the qualified certificate of the auditor.
(As amended by the Law of the Kyrgyz Republic of June 29, 2009 #196)
Chapter III
Audit procedure and provision of audit services
Article 11. Limitations in the audit
Audit cannot be carried out by auditors who are founders (participants), shareholders, employees of audited entities, persons who have with their close relatives or property (parents, spouses, brothers, sisters, children; brothers, sisters, parents and children of spouses), and also in relation to the audited entities to which the auditor has given of any other, except for audit and related services, the property interest.
Audit cannot be performed by audit organizations to:
- audited entities which are their founders (participants), shareholders or have in the audit organizations other property interest;
- audited entities, the founder (participant), which is a shareholder of this audit organization or it has to audited entities other than the audit and related services, property interest;
- subsidiaries, branches and representative offices, said audited entities.
Audit can be carried out by individual auditors and audit organizations, to provide earlier, during two years immediately preceding the audit, recovery services and accounting, as well as the preparation of financial statements of legal entities and individuals in relation to such persons.
The order, size and form of payment for the audit (including during required) and the provision of related services are defined in agreements and may not be made dependent on the fulfillment of any requirements of the audited entities to the content of the conclusions that can be drawn as a result of the audit.
Article 12. Responsibility of auditors, individual auditors, audit organizations and audited entities
Auditors, individual auditors, audit organizations and audited entities for violations of normative legal acts of the Kyrgyz Republic, including the provisions of this Law shall be liable in accordance with the legislation of the Kyrgyz Republic.
(As amended by the Law of the Kyrgyz Republic of June 29, 2009 #196)
Article 13. Insurance of civil responsibility of audit organizations and individual auditors
The civil liability of audit organizations and individual auditors shall be insured in the manner and under the conditions prescribed by the civil legislation of the Kyrgyz Republic.
Article 14. Professional audit associations
In order to ensure the conditions for audit activities of its members, to protect their interests the auditors, individual auditors, audit organizations may associate professional audit associations operating on a non-commercial basis and established in accordance with the legislation of the Kyrgyz Republic.
Article 15. Order of enactment of this Law
This Law shall come into force from the date of publication.
The Law of the Kyrgyz Republic “On auditing activities” (Bulletin of the Jogorku Kenesh of the Kyrgyz Republic, 1998, #10, a.380) shall be deemed to have lost force.
Audit organizations that are created before the enactment of this Law in the legal form other than provided for in this Law shall, within three months to transform into legal form required by this Law.
Qualification certificates of the auditor and licenses to perform auditing activities issued in the prescribed manner before the entry into force of this Law shall remain valid until the end of the period provided for in them.
See:
Order of the State Committee of the Kyrgyz Republic on the Financial Reporting Standards and Audit of June 4, 2004 #11 “On temporary exchange of three qualification certificates of the auditor for a permanent qualification certificate of the auditor”
Within three months from the date of entry into force of this Law the audit organizations should bring their constituent documents and the composition working in the audit organizations of persons in accordance with the requirements set out in article 5 of this Law.
President of the Kyrgyz Republic A.Akaev
Adopted by the Jogorku Kenesh
Kyrgyz Republic of June 28, 2002