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LEGISLATIVE REGULATIONS FOR ACCOUNTING OF FINANCIAL
INVESTMENTS IN THE REPUBLIC OF UZBEKISTAN
Khasanboeva Bakhora Farkhodjon qizi
Master’s student, National Research University "Tashkent Institute of Irrigation
and Agricultural Mechanization Engineers institute "
bahorabahronova732@gmail.com
https://doi.org/10.5281/zenodo.15461876
Annotation.
The article examines the legal basis for accounting for
financial investments in the Republic of Uzbekistan. An analysis of current
regulatory legal acts governing the recognition, evaluation, classification and
reflection of financial investments in accounting is conducted. Particular
attention is paid to the National Accounting Standards (NAS), their
harmonization with International Financial Reporting Standards (IFRS), as well
as the role of the Central Bank and the Ministry of Economy and Finance in the
formation of investment policy.
Key words:
financial investments, accounting, Uzbekistan, NAS, IFRS, legal
regulation.
Introduction.
Financial investments play an important role in ensuring
sustainable economic growth, contribute to the modernization of the production
base, increase the competitiveness of enterprises and strengthen financial
stability. In the context of active reform of the financial system of the Republic of
Uzbekistan, the development of the legal framework for accounting of financial
investments is of particular importance. The article is aimed at studying the
regulatory framework for accounting of financial investments operating in the
country, identifying existing problems and determining the prospects for the
development of the accounting system.
Financial investments are the placement of funds in various financial
instruments with the aim of generating income. In the context of accounting,
financial investments include investments in:
shares and bonds;
government and municipal securities;
shares in the authorized capital of other organizations;
debt obligations (bills of exchange, loans and credits);
other financial instruments.
According to NAS № 14, investments are classified as:
short-term (up to 12 months);
long-term (over 12 months).
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Such classification is necessary for correct reflection in the reporting
according to the prudence principle and for assessing the liquidity and financial
stability of the enterprise.
The legislative basis for accounting of financial investments in the
Republic of Uzbekistan is a set of normative legal acts that regulate the
rules of recognition, classification, evaluation and disclosure of
information on financial investments in accounting. The main documents
that form the legal framework include:
1.
The Law of the Republic of Uzbekistan "On Accounting" (as amended
on April 6, 2020 № ЗРУ-611) defines the uniform methodological foundations
for accounting, the procedure for recognizing assets and liabilities, including
financial investments, and the requirements for the preparation of financial
statements.
2.
The Law “On the Securities Market” (№ ЗРУ-163 of July 3, 2008)
establishes the legal regime for the issue, circulation and storage of securities,
including requirements for the disclosure of information on investments in such
securities.
3.
The Law "On Auditing Activity" (№ ЗРУ-69 of May 26, 2000)
regulates the verification of the reliability of financial information, including
information on financial investments, presented in accounting and financial
statements.
4.
National Accounting Standard (NAS) № 14 "Financial Investments" -
approved by the order of the Ministry of Finance of the Republic of Uzbekistan
dated February 27, 2002. The standard describes the procedure for classifying
investments, methods for their evaluation upon initial recognition and on
subsequent dates, as well as the principles for accounting for the impairment
and disposal of investments.
5.
Regulatory documents of the Ministry of Economy and Finance,
including methodological recommendations for reflecting financial investments
in accounting and reporting.
6.
Regulations and instructions of the Central Bank of the Republic of
Uzbekistan regulating the procedure for reflecting financial assets and liabilities
in banks and other financial institutions.
7.
Instructions of the State Tax Committee concerning the reflection of
investment activities in tax accounting, including taxation of investment income
and depreciation charges.
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Thus, legislative regulation of accounting of financial investments in
Uzbekistan is systemic and comprehensive, covering both general principles of
accounting and specialized requirements for financial investments. However,
despite the existence of a regulatory framework, there remains a need for its
further improvement, taking into account international practice.
According to the provisions of NAS № 14 "Financial Investments",
organizations are required to recognize investments in securities and other
financial assets as assets if the following conditions are met:
there is a high probability of receiving future economic benefits from using
the object;
the value of the object can be reliably determined.
Initial recognition of financial investments is carried out at actual cost,
which includes purchase price; intermediary commissions; government duties
and taxes paid in connection with the acquisition; other expenses directly
related to the acquisition.
Subsequent measurement of financial investments:
Short-term financial investments — are measured at the lower of cost or
market value at each reporting date;
Long-term investments — are recorded at historical cost less possible
impairment. Signs of impairment include deterioration in the financial condition
of the issuer, decrease in market value.
Investment income from financial investments is reflected as part of other
income - when dividends or interest are received; as profit or loss - when the
investment is disposed of.
Financial investments are disposed of using one of the following methods:
average cost method;
FIFO method (first in - first out).
The choice of method is recorded in the accounting policy of the enterprise
and must be consistently applied from one reporting period to another.
Thus, accounting of financial investments according to NAS provides a
structured and reliable reflection of investments, and also allows analyzing the
investment activity of the enterprise in terms of risks and profitability.
The process of harmonizing National Accounting Standards (NAS) with
International Financial Reporting Standards (IFRS) in the Republic of Uzbekistan
is a key component of accounting reform. The aim is to increase the
transparency of financial information and attract foreign investment by aligning
local practices with global norms.
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Table 1.
Comparison NAS vs IFRS in Investment Accounting
There are several challenges in harmonization National Accounting
Standards (NAS) with International Financial Reporting Standards (IFRS). The
primary challenges are delayed adoption of fair value-based accounting, lack of
qualified IFRS professionals, gaps in methodology and accounting systems and
need for more regulatory and institutional support.
Thus, the harmonization of NAS with IFRS in the field of financial
investments is an important step towards creating a favorable investment
environment and integrating the Republic of Uzbekistan into the international
financial space. However, for the full implementation of this process, a
comprehensive modernization of the regulatory framework, an increase in the
level of professional training of accountants and auditors, as well as the
development of accounting infrastructure are required.
Conclusion
Legal regulation of accounting of financial investments in the Republic of
Uzbekistan today is a complex and dynamically developing system,
based on the
interaction of national accounting standards (NAS), international financial
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reporting standards (IFRS), as well as regulations of the Central Bank, the
Ministry of Economy and Finance and other regulatory bodies.
The analysis shows that the legislative base includes both general
framework laws (for example, the Law on Accounting) and specialized
regulations that determine the procedure for accounting, evaluation and
disclosure of information on financial investments.
NAS №14 provides a basic
accounting structure, but needs further updating and approximation to the
requirements of IFRS, in particular to the IFRS 9 standard, which is especially
relevant in the context of globalization and Uzbekistan's desire to integrate into
the international economic space.
The role of the Central Bank and the Ministry of Economy and Finance
remains key in the process of harmonizing standards, forming an investment
climate and providing methodological support to enterprises.
These institutions
must not only develop the regulatory framework, but also ensure its practical
applicability through training, auditing, consulting and digitalization of
accounting processes.
Thus, in order to improve the efficiency of accounting for financial
investments in the Republic of Uzbekistan, it is necessary to continue reforming
national standards, actively implement international approaches, develop
financial infrastructure and strengthen institutional support. Only with a
comprehensive approach can we ensure reliable, transparent and comparable
presentation of investment information in reporting, which, in turn, will
contribute to increased investor confidence, an improved investment climate
and sustainable economic development in the country.
References:
1.
Law of the Republic of Uzbekistan “On Accounting”, № ЗРУ-611, adopted
on April 6, 2020.
2.
Law “On the Securities Market” of the Republic of Uzbekistan, № ЗРУ-163,
adopted on July 3, 2008.
3.
Law “On Auditing Activities”, № ЗРУ-69, adopted on May 26, 2000.
4.
National Accounting Standard (NAS) №14 “Financial Investments”,
approved by the Ministry of Finance of the Republic of Uzbekistan, 2002.
5.
Methodological Guidelines and Explanations of the Ministry of Economy
and Finance of the Republic of Uzbekistan on NAS Implementation, 2023.
6.
International Financial Reporting Standard (IFRS) 9 “Financial
Instruments”, International Accounting Standards Board (IASB), 2014 (latest
amendments applied).
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7.
Ministry of Economy and Finance of the Republic of Uzbekistan. (2023).
Recommendations
on
the
Introduction
of
IFRS
in
Uzbekistan.
(https://www.mf.uz)
8.
Central Bank of the Republic of Uzbekistan. (2023). Regulatory
Instructions for Financial Institutions. (https://www.cbu.uz)
9.
Deloitte. (2023). A Guide to IFRS 9: Financial Instruments.
(https://www.deloitte.com)
10.
Ernst & Young (EY). (2022). Applying IFRS: A Closer Look at IFRS 9. EY
Global Publications.
11.
PwC. (2023). IFRS 9 Financial Instruments: Practical Guide and Key
Considerations. (https://www.pwc.com)
12.
World Bank. (2022). Uzbekistan Country Report on Accounting Reform.
World Bank Group.
