Budget Code of the Republic of Uzbekistan
Civil Code of the Republic of Uzbekistan
Criminal Code of the Republic of Uzbekistan
Tax Code of the Republic of Uzbekistan
Law No. LRUz-404 of 13.04.2016 on Accounting
Law No. LRUz-350 of 22.04.2013 on citizens’ self-governing bodies
Law No. LRUz-580 of 05.11.2019 on Banks and Banking Activities
Law No. LRUz-582 of 11.11.2019 on the Central Bank of the Republic of Uzbekistan
Law No. LRUz-370 of 06.05.2014 on Joint Stock Companies and Protection of Shareholder Rights
Regulation “On Documents and Document Flow in Accounting” approved by Order of the Ministry of Finance No. 131 of 23.12.2003
Presidential Decision No. PD-419 of 10 November 2022 on measures to optimize reporting and archiving procedures

2. The concept of accounting

Accounting, in accordance with the Law of the Republic of Uzbekistan “On Accounting”, is an orderly system for collecting, recording, and summarising accounting information through continuous, uninterrupted, and documentary recording of all business transactions, as well as the preparation of financial and other reports based on this information.

Accounting shall be carried out by double entry through the simultaneous and interrelated recording of a business transaction in monetary terms in at least two accounting accounts.

The double-entry method is a method of accounting in which every action with money is recorded in equal amounts in two accounts – a credit and a debit. The accountant writes down where the money has come from, where it has gone, where it has come from, and what the result has been.

Accounting information is processed data about accounting entities that are based on primary accounting documents.

The main accounting principles are continuity, reliability, and comparability.

3. Primary accounting documents

Primary accounting documents are the basis for accounting and they record the facts of business transactions and the orders to carry them out.

A business operation (BO) is a certain action that changes either the composition of assets or their location or the sources of their formation. It can also be related to changes in the formation of the budget, the ownership structure of the company, equity and debt, and reserve capital.

Examples of BO:

Supply (receipt of raw materials, transfer of funds to the supplier, input of raw materials into production).
Sales (expenditure on product sales, receipts, sales of goods).
Production (payment of staff salaries, depreciation of fixed assets, acceptance of contractor’s work, transfer of funds to contractor).

Receipts of payment terminals when paying with bank corporate plastic cards for goods (works, services) purchased by business entities in the field of trade and services are also recognized as primary accounting documents.

Primary accounting documents are prepared at the time of business transactions or after the transactions have taken place.

The mandatory details of the primary accounting documents are:

-the name of the accounting entity;

-the name and number of the document, the date and place where it was drawn up;

-the name, content, and quantitative measurement of the business transaction, indicating the units of measurement (in kind and monetary terms);

-names and signatures indicating surname and initials or other details necessary to identify the persons (person) who have carried out the business transaction.

(Regulation on Documents and Document Flow in Accounting, 23.12.03).

Persons who prepare and sign primary accounting documents are responsible for the timeliness, accuracy, and reliability and for submitting them in due time for recording in accounting records.

Primary accounting documents can be prepared and submitted as an electronic document.

Entries in primary documents shall be made in ink, biros paste, typewriters, mechanizations, and other means to ensure that the records are preserved for the time prescribed for their archiving.

It is forbidden to use a pencil for writing in primary documents.

Free lines in primary documents and registers must be dashed.

The head of the company approves the list of persons authorized to sign primary documents and accounting registers.

4. Accounting subjects

The subjects of accounting are:

– public authorities;

– Legal entities registered in the Republic of Uzbekistan, their subsidiaries, representative offices, branches, and other structural subdivisions located both within and outside Uzbekistan.

Public authorities keep records of their activities and submit reports to the state statistics and tax authorities. (Citizens’ Self-Government Bodies Act).

5. Objects of accounting

The objects of accounting are:

-actives;

-obligations;

-equity;

-reserves;

-incomes;

-expenses;

-profit;

-losses;

-business operations.

These items of accounting are objects to synthetic and analytical accounting.

Synthetic accounting refers to accounting that is carried out by summarising information about accounting objects according to certain economic characteristics in the manner prescribed by law.

Analytical accounting refers to accounting that is carried out for the purpose of forming detailed accounting information about accounting subjects in the manner determined by the accounting entity itself. (Accounting Act of 13.04.2016)

6. Organisation of accounting and reporting

The organization of the accounting and reporting is carried out by the head (hereinafter: director) of the accounting entity (hereinafter: the company).

Rights of the director of accounting:

-create an accounting service under the direction of the head of the accounting service (hereinafter the head accountant) or use the services of an accountant engaged on a contractual basis;

-delegate bookkeeping on a contractual basis to a specialized organization (auditing organizations, tax advisory organizations, and other organizations whose statutes provide for the provision of bookkeeping services);

-to keep their accounting records.

The company director is obliged to ensure:

-development of accounting policies, internal accounting and reporting systems;

-the procedure for internal control;

-complete and accurate accounting;

-the safety of records;

-the preparation and publication of financial statements in the manner prescribed by law;

-preparation of tax returns and other financial documents;

-timeliness of payments.

The head of the accounting service is the chief accountant or another official.

The requirements of the chief accountant for documenting business transactions and submitting them to the accounting department are binding on all employees of the company.

In the event of a dispute or disagreement between the director and the chief accountant concerning certain business transactions, the documents relating to such transactions may be executed by order of the director. The Director shall be solely responsible for the consequences of such transactions.

The chief accountant of a company (excluding banks and other credit institutions) that is subject to a mandatory audit must meet the following requirements:

-have a university degree;

-have work experience in accounting or financial reporting or auditing, in the case of a university degree in economics – at least three years of the last five calendar years, and in the case of a university degree in non-economics – at least seven years of the last ten calendar years.

The director of a company subject to statutory audit is obliged to ensure that the head of the accounting department receives annual refresher training. (Instruction on accounting in budgetary organisations of 22.12.10)

7. Regulation of accounting and reporting

The Ministry of Finance of the Republic of Uzbekistan regulates accounting and reporting and develops and approves accounting standards.

The Ministry of Finance of the Republic of Uzbekistan to improve accounting, and financial reporting and also to regulate auditing activities:

-approves financial reporting forms;

-develops and adopts, within its competence, regulations governing accounting and auditing activities;

– carries out, per the established procedure, external quality control of the work of audit organizations;

-agrees on the procedure and regulations for conducting qualification exams for obtaining an auditor’s qualification certificate, a standard program for the professional development of auditors approved by the republican public associations of auditors;

-maintains the Register of Audit Organizations and the Register of Auditors;

-ensures the improvement of the information system of the Audit software package, designed for electronic interaction with audit organizations and republican public associations of auditors;

-analyzes the development of audit services.

(Regulation “On the Ministry of Finance of the Republic of Uzbekistan” of 18.03.2017).

8. The accounting rules are determined by the accounting standards, including the standard on simplified accounting for small businesses

The head (hereinafter director) of the small entrepreneur organizes the accounting

Small businesses include organizations with an average annual number of employees between 6 and 270, depending on the type of activity.

The type of activity and number of employees is indicated in Annex No. 1 to the Cabinet of Ministers Decree of 24.08.2016. N 275

Rights of the director of a small business:

-create an accounting service under the direction of a chief accountant or use the services of an accountant engaged on contractual terms;

-delegate the bookkeeping to a specialized accounting firm on contractual terms;

-to keep their accounting records.

Simplified accounting procedures are chosen by small businesses voluntarily.

A small business entity develops its accounting policy with reference to its needs and the specifics of its financial and economic activities and keeps its accounts in accordance with the basic rules laid down in the accounting legislation.

A small business may adapt the accounting registers used independently to the specifics of its activities.

Some requirements must be met.

Requirements:

-a single methodological framework (double entry principle);

-the interrelation of analytical and synthetic accounting data;

-accumulative recording of all financial and business transactions in the registers on the basis of primary documents;

-the accumulation and systematization of data from primary accounting documents in terms of the indicators necessary for the management, control, and analysis of financial and economic activities, as well as for the preparation of financial statements.(NAS No. 20 “Simplified accounting procedures for small businesses” of 14.08.2013)

Accounting is divided into the following phases:

-documentation of all financial and business transactions;

-registration of the information contained in the primary accounting documents in the applicable accounting registers;

-compilation of financial reports.

9. Regulating the accounting and financial reporting of budgetary organizations and state trust funds

The quarterly financial statements of the budgetary organizations and budgetary recipients are prepared as of 1 April, 1 July, and 1 October of the financial year.

The annual financial statements are prepared as of 1 January of the following financial year.

The financial statements of the budgetary organizations and budgetary recipients are signed by the head or a person authorized by the head and the chief accountant of these organizations.

Quarterly and annual financial reports shall be submitted on:

-to the Ministry of Finance of the Republic of Uzbekistan – to budgetary administrators (local public authorities);

-To budgetary organizations and recipients of budgetary funds financed from the republican budget of the Republic of Karakalpakstan, region budgets, and the Tashkent city budget – to the Ministry of Finance of the Republic of Karakalpakstan, financial departments of region khokimiyats and Tashkent city;

-To budgetary organizations and recipients of budgetary funds financed from the budgets of districts and cities – to the financial departments of district and city khokimiyats.

Administrators of budgetary funds prepare and submit quarterly and annual consolidated financial reports to the Ministry of Finance of the Republic of Uzbekistan on the basis of the financial reports of their subordinate organizations financed from the republican budget of the Republic of Uzbekistan.

The financial statements may be submitted as an electronic document, but this document must be supported by an electronic digital signature.

Budgetary organizations and recipients of budgetary funds have the right to have their financial statements electronically signed:

-manager;

-chief accountant;

-a person authorized by the manager.

The Ministry of Finance determines the procedure for the preparation, approval, and submission of quarterly and annual financial reports by budgetary organizations and recipients of budgetary funds.

10. The accounting and reporting of banks and other credit institutions is regulated by the Central Bank of Uzbekistan

Under Article 70 of the Law on Banks and Banking, banks organize and maintain accounting records in accordance with internal accounting policies developed on the basis of rules established by the Central Bank.

Banks may apply international financial reporting standards.

Accounting in banks must ensure that:

-the reliability of management, financial, tax, supervisory, and other reports that reflect the real financial condition of the bank and its performance;

-secure management of the bank’s assets and emerging risks;

– the opportunity for shareholders and the supervisory board to monitor the bank’s financial condition and the performance of its officers. (Law on Banks and Banking of 5.11.2019)

11. Financial reporting

The financial reporting is systematic information about the financial position of an accounting entity as at the reporting date, and their financial performance and cash flows for the reporting period.

The financial reporting period is the calendar year from 1 January to 31 December.

The reporting date for the financial statements is the last calendar day of the reporting period. For example, for an entity’s annual balance sheet the reporting date is 31 December, for the annual income statement the reporting period is from 1 January to 31 December (NAS № 1 Accounting Policies and Financial Statements)

The annual financial statements include:

-accounting balance sheet;

-reporting of financial results;

-a cash flow report;

-report of equity;

-notes, calculations, and explanations.

A balance sheet is a form of financial accounting that shows the financial position of an organization.

statement of financial performance – a new name for the income statement, form no. 2 of the financial statements.

the cash flow statement shows all cash receipts and payments for the accounting period and the opening and closing cash balances of the period.

Equity is a line item on the balance sheet which gives a realistic view of the firm’s current state of affairs

The requirements for financial statements prepared under international standards are determined by international financial reporting standards.

An accounting entity must include the balance sheets and other reporting forms of its representative offices, branches, and other structural subdivisions set up on a separate balance sheet when preparing its financial statements.

The financial statements are prepared on an accrual basis from the beginning of the accounting year.

Financial statements of budgetary organizations, recipients of budgetary funds, and state trust funds are prepared and submitted in accordance with budget legislation.

The structure and content of the financial statements are determined by the Ministry of Finance of the Republic of Uzbekistan.

The structure and content of financial statements of banks and other credit organizations are determined by the Central Bank of Uzbekistan.

12. New procedures for reporting and document retention

Pursuant to the Decree of the President of the Republic of Uzbekistan on Measures to Optimise Reporting and Archival Document Retention Procedures, the following innovations are envisaged:

the requirement for storage and transfer to state or non-state archives is abolished:

– archival documents on the wages accrued by legal entities and other income of natural persons and the amount of taxes accrued thereon after 1 January 2022;

– financial, tax, and statistical reports submitted from 1 January 2022 to the state tax and statistical authorities in electronic form, as well as documents drawn up in electronic form through the automated information systems of the tax authority.

Also, from 1 January 2023, accounting entities will not have to submit quarterly financial reports to the tax and statistical authorities.

The requirement to submit annual financial reports to the tax authorities by business entities paying turnover tax is abolished.

In addition, from 1 May 2023 it is allowed:

Entrepreneurs whose founders are residents of RUz to open bank accounts remotely;
Legal entities shall draw up contracts for electricity, natural gas, hot water, drinking water supply, sewerage, and telecommunication services, reports on their consumption, as well as other documents on the contractual value for the next period in electronic form.

From 1 January 2023, the following types of statistical reporting will be abolished:

– Form 1 (“Stock Exchange Report”);

– Form 1 (МШ) (“Report on the state of working conditions”);

– Form 1 (НХ) (“Report on the distribution of the number of employees according to the amount of accrued wages”);

– Form 1 (Report on public railway transport services);

– Form 1 (ТБ) (“Report on the activities of a commercial bank”);

– Form 1 (“Report on the activities of the insurance company”);

– Annex to Form 1 kb (“Report on Construction Machinery and Equipment Available in Small Construction Companies and Microfirms”);

– Report on pipeline transport activities;

– Form 4 (“Report on the purchase of horticultural products”).

In addition, from January 1, 2023, the requirement for non-state archives to be included in the register of archives will be abolished. In addition, non-state archives that provide electronic archiving services do not have to obtain a license but only have to notify the authorized body.

13 Statutory liability for failure to comply with accounting laws

The Code of Administrative Responsibility sanctions violations of the accounting laws.

Failure on the part of the head of the accounting entity and/or the accounting service to comply with the obligations laid down in accounting legislation, including failure to ensure the accuracy and reliability of the accounting and financial statements, as well as failure to conduct an inventory of assets and liabilities:

-shall carry a fine of 3 to 7 basic calculation units for officials (from 1 020 000 sums to 2 380 000 sums, which is approximately $ 82 to $ 192).

The same offense committed repeatedly within one year after the imposition of the administrative penalty,

-shall carry a fine of 7 to 10 basic calculation units for officials. (2 380 000 sums to 3 400 000 sums, approximately US$ 192 to US$ 274).

Breaching the confidentiality of accounting information is a criminal offense.

Under Article 191 of Uzbekistan’s Criminal Code, the disclosure or use of information is punishable by a fine of up to 100 (up to 340 000 000 sums, approximately US$ 27 371 ) basic calculation units or compulsory community service of up to 300 hours or correctional labor for up to 2 years.

Accounting in Uzbekistan

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