Methodological Recommendations on the Organization and Maintenance of Accounting for Microfinance Organizations and Credit Unions

Back to top

Print Version

Date of creation: 2018-08-23

Approved

by the resolution of the Supervisory Committee of the NBKR of 12.06.2014 No. 20/4

Methodological Recommendations

on the organization and maintenance of accounting for microfinance organizations and credit unions

(amendments and additions approved by the resolution of the Supervisory Committee No. 32/1 dated 24.08.2017)

Chapter 1. GENERAL PROVISIONS

1. These Methodological Recommendations are developed in accordance with the Laws of the Kyrgyz Republic "On Microfinance Organizations in the Kyrgyz Republic", "On Credit Unions", "On Accounting" and regulatory legal acts of the National Bank of the Kyrgyz Republic (hereinafter referred to as the National Bank).

2. The Methodological Recommendations may be used in the development of internal procedures for the organization and maintenance of accounting in microfinance organizations and credit unions (hereinafter referred to as MCOs), including those carrying out operations in accordance with Islamic principles of banking and financing, taking into account the specifics of the terminology and accounting standards for Islamic financial institutions developed by the Accounting and Auditing Organization for Islamic Financial Institutions (hereinafter referred to as AAOIFI), as well as International Financial Reporting Standards (hereinafter referred to as IFRS) to the extent that they do not contradict AAOIFI standards.

3. The purpose of these Methodological Recommendations is to assist MCOs in organizing accounting and developing an effective internal control system in MCOs.

4. The governing body of the MCO - the head and/or the Board (hereinafter referred to as the MCO management) is responsible for the organization of accounting in the MCO and for compliance with legislation in the performance of accounting operations.

5. The MCO management ensures the organization of internal accounting, control over the preparation of financial reports for external users, control over the preparation of tax reports and other financial reports, as well as control over the timeliness of settlements on the obligations of the MCO.

6. The chief accountant (accountant - in the absence of the position of chief accountant in the MCO) is responsible for the maintenance of accounting and the timely submission of financial reports in the MCO.

7. The following approved documents are used in the MCO when maintaining accounting:

• document flow rules;
• forms of primary accounting documents;
• procedure for binding and storing accounting documents;
• technology (procedure) for processing accounting information;
• procedure for organizing off-system accounting;
• procedure for conducting inventory;
• internal procedures for conducting accounting operations and reflecting them in accounting reports;
• rules for accepting and transferring accounting documentation when changing the accountant (independently developed by the MCO);
• job description of the chief accountant/accountant (independently developed by the MCO).

The documents specified in this paragraph must be approved by the MCO management.

8. Accounting information is processed daily as documents on the completion of accounting operations are provided. The result of processing information on accounting operations is the balance sheet. The MCO prepares the balance sheet in accordance with the regulatory legal acts of the National Bank.

9. All accounting operations are subject to timely reflection on accounting accounts without any omissions and exclusions in accordance with the internal procedures of the MCO.

10. The MCO carries out accounting in the national currency.

Chapter 2. DOCUMENT FLOW RULES AND DOCUMENTATION OF MCO ACCOUNTING OPERATIONS

11. The system of documentary registration of primary data on the state and movement of MCO property must meet the following requirements:

• timely, accurate and justified reflection of all accounted objects in documents;
• simplicity of registration and processing of primary information, adaptability of primary information carriers to methods of its subsequent processing;
• rational organization and minimal costs for maintaining primary accounting.

12. All accounting operations carried out by the MCO must be documented with primary accounting documents, on the basis of which accounting is maintained.

13. The requirements of the chief accountant/accountant for the documentary formatting of accounting operations and the submission of documents and information are mandatory for all employees/departments of the MCO.

14. To control and organize the processing of data on accounting operations based on primary accounting documents, summary accounting documents (registers) are compiled.

15. Entries on accounting documents are made using a computerized accounting system and/or manually on paper carriers.

§2. Concept of Document Flow

16. Document flow is the movement of documents in the MCO from their creation or receipt from other organizations to acceptance for accounting, processing, and transfer to the archive.

17. Stages of document flow are:

• compilation of the document in the MCO or receipt from outside;
• receipt of the document in the accounting department (to the chief accountant/accountant);
• verification of the document: by form, arithmetically, by substance;
• processing of the document: recording entries, including documents in registers;
• transfer of the document to the archive.

18. Document flow is regulated by a schedule approved by the MCO management. The document flow schedule can be оформлен as a scheme or a list of works on the creation, verification, and processing of documents performed by each employee (department), indicating their interrelation and delays in the performance of work.

19. Control over compliance with the document flow schedule in the MCO is carried out by the chief accountant/accountant.

The proposed scheme of the document flow schedule is provided in Appendix 1 to these Methodological Recommendations.

20. The document flow schedule depends on:

• organizational structure of the MCO;
• volumes of the organization's activities;
• diversity of operations.

§3. Classification of Accounting Documents

21. Accounting documents are classified according to various criteria:

• by purpose;
• by degree of generalization of accounting information;
• by place of compilation;
• by method of filling;
• by carrier basis;
• by storage periods.

22. All primary accounting documents are classified as follows:

1. organizational and administrative - orders, directives, instructions, powers of attorney, etc. These documents contain an order, permission, assignment, or right to carry out an accounting operation. Information contained in these documents is not entered into accounting registers, as they do not reflect the fact of the operation itself;

2. justificatory documents (executive) - waybills, requisitions, receipt orders, acceptance acts, etc. Justificatory documents are compiled at the time of the operation, reflecting its execution, and serve as a source of primary accounting information or the first stage of the accounting process. Information contained in them is entered into accounting registers;

3. accounting formatting documents. Accounting formatting documents are filled out by the chief accountant/accountant to justify entries that do not have other documentary evidence. These are various calculations and certificates that play an auxiliary role and are compiled to facilitate and speed up the work of the accounting department (accounting certificate for reversing an erroneously made entry, distribution of MCO profit, operating and non-operating expenses, etc.). Information from such documents is also entered into accounting registers.

23. By place of compilation, accounting documents are divided into the following types:

1. internal documents - compiled to document internal accounting operations of the MCO (cash journals for receipts and payments, memorandum order/journal-order, advance report, inventory acceptance-transfer acts, write-off of materials, write-off of costs, etc.;

2. external documents - received from other entities, reflect relations with other entities (invoices, payment orders, purchase acts, receipts, etc.).

24. By degree of generalization of accounting information, accounting documents are divided into the following groups:

1. primary documents are compiled at the time of the accounting operation and are the basis of the accounting process;

2. summary (secondary) documents - are used to generalize accounting information recorded in the primary document; in an aggregated form, they represent indicators used as additional information about the accounted objects (for example: an advance report).

§4. Right to Sign Primary Documents

25. The list of persons authorized to sign primary accounting documents is approved by the MCO management by order (directive). This order (directive) must contain the following information:

• surname, first name, patronymic of the employee;
• position title of the employee;
• type of operations or type of documents;
• specimen signature;
• nature of the granted signing authority (control, approval, performer's signature), etc.

26. Monetary and settlement documents without the signature of the management or an authorized person are considered invalid and must not be accepted for execution.

27. In case of discrepancies between the MCO management and the chief accountant regarding the implementation of certain operations, primary accounting documents may be accepted for execution with a written directive of the MCO management, which bears responsibility for the accuracy and completeness of financial reporting.

§5. Accounting Registers

28. To control and organize the processing of data on accounting operations based on primary accounting documents, summary accounting documents - accounting registers - are compiled. The forms of accounting registers, in which information is accumulated, are developed and approved by the MCO itself. In this regard, forms recommended by authorized bodies may be used.

29. In the MCO, a list of accounting registers is approved, along with responsible persons for their maintenance, place of storage, and storage period.

The proposed form of the list of mandatory accounting registers is provided in Appendix 2 to these Methodological Recommendations.

30. Responsibility for the correct reflection of data in accounting registers lies with the persons who compiled them - usually the accountant.

31. The content of accounting registers and internal accounting reports is a trade secret.

Chapter 3. REQUIREMENTS FOR ACCOUNTING DOCUMENTS

32. To properly organize accounting and timely reflect accounting operations on accounts, it is necessary to strictly comply with the requirements for document compilation.

33. Entries in accounting registers are made on the basis of primary accounting documents fixing the fact of the operation.

34. Primary accounting documents are formatted at the time of the operation and transferred for accounting to the accountant or the person performing accounting and reporting.

35. The absence of any of the mandatory requisites in a primary accounting document is a violation of accounting rules and does not serve as confirmation of the fact of the accounting operation.

36. Entries in primary documents must be made with ink, ballpoint pen paste, using typewriters, computer equipment, and other means ensuring the preservation of these entries for the time established for their storage in the archive.

37. Blanks of primary document forms classified as strict accountability forms must be numbered in the order established by the MCO.

38. Primary accounting documents contain the following mandatory requisites so that the document has legal force:

• name of the document;
• date and place of compilation of the document;
• name of the MCO, on behalf of (by order of) which the document was compiled;
• content of the accounting operation;
• units of measurement of the accounting operation in natural and monetary terms;
• position titles of persons responsible for the completion of the accounting operation and the correctness of its formatting;
• personal signatures of the specified persons.

39. Timely and high-quality formatting of primary accounting documents, their transfer within established deadlines for reflection in accounting, as well as the accuracy of the data contained in them, are ensured by the persons who compiled and signed these documents.

Chapter 4. FORMS OF PRIMARY ACCOUNTING DOCUMENTS

40. In the MCO, the primary accounting documents listed in this chapter are mainly used, as well as standardized forms of primary documentation, which are used mandatorily by all business entities in the Kyrgyz Republic approved by the National Statistics Committee.

41. Memorandum Order:

1. the memorandum order is used for accounting for all internal operations of the MCO;
2. the number of copies is determined in the document flow schedule depending on the order of movement and binding of documents accepted in the MCO;
3. the memorandum order must contain the name of the document, form code, document serial number, date (day, month, year) of issuance, counterparty name, MCO name, purpose of the operation, amount (in words and figures), account posting, signatures of authorized persons;
4. corrections, smudges, erasures, as well as the use of correction fluid are not allowed. The memorandum order must necessarily have posting, i.e., designation of account numbers on which the operation is conducted.

42. Payment Order:

1. the payment order is used to conduct all types of payments in the national currency within the territory of the Kyrgyz Republic;
2. the number of copies is determined by the document preparation rules;
3. the payment order must contain the name of the document, form code, document serial number, date (day, month, year) of issuance, payer name, account number, tax identification number (hereinafter - TIN), payer code in accordance with the All-Republican Classifier of Enterprises and Organizations (hereinafter - OKPO), personal identification number - when paying social insurance contributions, payer bank name, its location, payer bank code, payee name, account number, payee bank name, its location, payer bank code, purpose of the operation, amount (in words and figures), signatures of authorized persons;
4. corrections, smudges, erasures, as well as the use of correction fluid are not allowed. Upon receipt of a copy of the payment order from the bank, the document must bear a mark from an authorized bank employee confirming the processing of this document in the bank. Signatures of the MCO management and accountant or organizations-counterparties are placed on the first copy, which remains in the MCO.

43. Cash Receipt Order:

1. the cash receipt order is filled out upon receipt of monetary funds (for example, upon repayment of debt, upon receipt of monetary funds from the bank by check);
2. number of copies - two or three copies according to internal documents of the MCO. One copy must necessarily be left with the person depositing the funds;
3. the cash receipt order must contain the name of the document, form code, document serial number, date (day, month, year) of issuance, payer name, entity/MCO name, purpose of the contribution, amount (in words and figures), signature of the person depositing the funds, signatures of authorized persons of the entity/MCO. The cash receipt order must be filled out clearly and legibly with ink or ballpoint pen or printed on a computer;
4. all cash documents for receipts are registered in cash journals for receipts separately by the accountant and the cashier. It is possible to maintain the cash journal by the accountant with simultaneous transfer to the cashier along with the cash receipt order under signature. Cash receipt orders must necessarily have the designation of account numbers on which the operation is conducted. At the end of the day, the accountant reconciles the cash documents registered by him in the cash journals with the documents processed by the cashier;
5. when manually compiling the document, the amount in words must necessarily start from the beginning of the line with a capital letter, and the free space in the "amount in figures" requisite and after the amount in words must be crossed out with two lines;
6. corrections, smudges, erasures, as well as the use of correction fluid are not allowed. When processing manually, all copies must be filled out in one go using carbon paper. Signatures are placed on each copy separately, without using carbon paper.

44. Cash Payment Order:

1. the cash payment order is filled out upon issuance of monetary funds (for example, issuance of funds for petty cash, issuance of wages, provision of financing, provision of accrued payments (income) on deposits);
2. number of copies - two/three copies according to internal documents of the MCO;
3. the cash payment order must contain the name of the document, form code, document serial number, date (day, month, year) of issuance, payer name, MCO name, purpose of the operation, amount (in words and figures), signature of the recipient of the funds, signatures of authorized persons of the MCO. The cash payment order must be filled out clearly and legibly with ink or ballpoint pen or printed on a computer;
4. all cash documents for payments are registered in cash journals for payments separately by the accountant and the cashier. It is possible to maintain the cash journal by the accountant with simultaneous transfer to the cashier along with the cash payment order under signature. Cash payment orders must necessarily have the designation of account numbers on which the operation is conducted. At the end of the day, the accountant reconciles the cash documents registered by him in the cash journals with the documents processed by the cashier;
5. when manually compiling the document, the amount in words must necessarily start from the beginning of the line with a capital letter, and the free space in the "amount in figures" requisite and after the amount in words must be crossed out with two lines;
6. corrections, smudges, erasures, as well as the use of correction fluid are not allowed. All copies must be filled out in one go using carbon paper when processing manually. Signatures are placed on each copy separately, without using carbon paper.

45. Notice of Cash Deposit:

1. the notice of cash deposit is used in the following operations: upon receipt of a savings share (for MCOs carrying out operations in accordance with Islamic financing principles), upon repayment of debt and remuneration (interest/surcharge, part of profit), upon payment of a fine, upon depositing funds under deposit agreements;
2. number of copies – one;
3. the notice of cash deposit must contain the name of the document, form code, document serial number, date (day, month, year) of issuance, surname, first name, patronymic of the person depositing the funds, MCO name, purpose of the contribution, amount (in words and figures), signature of the person depositing the funds, signatures of authorized persons of the MCO;
4. the set of this document includes: notice of cash deposit, receipt for cash deposit, order for cash deposit. The receipt for cash deposit is returned to the person depositing the funds as a confirming document of the receipt of funds. The notice of cash deposit is bound with cash documents, the order for cash deposit is transferred to the accountant for binding into documents. The notice of cash deposit must necessarily have the designation of account numbers on which the operation is conducted.

46. Power of Attorney:

1. the power of attorney certifies the right of the holder of the power of attorney to receive or transfer goods and services;

2. number of copies – one;

3. the power of attorney must contain the name of the document, document number, date (day, month, year) of issuance of the power of attorney, validity period of the power of attorney, which must be indicated in the power of attorney and not exceed ten days from the date of issuance of the power of attorney, passport data of the person receiving the power of attorney, name and quantity of goods to be received or transferred, or amount and type of services to be paid or received, supplier name, basis for receiving or transferring goods/services (contract, etc.), signature of the person receiving the power of attorney, signatures of authorized persons (management and chief accountant/accountant of the MCO) and MCO seal.

4. corrections, smudges, erasures, as well as the use of correction fluid are not allowed. Special attention should be paid to:

• validity period of the power of attorney;
• passport data of the person receiving the power of attorney;
• specimen of his signature.

5. all issued powers of attorney must be registered in the Register of Issued Powers of Attorney. The accountant monitors the use ("closure") of powers of attorney. Unused powers of attorney are returned to the accountant, who makes a note of their annulment and binds the annulled powers of attorney into a separate folder.

47. Value Added Tax (hereinafter - VAT) Invoice:

1. the invoice is a document issued by a taxable entity carrying out a taxable supply in accordance with the Tax Code of the Kyrgyz Republic. It serves as the basis for settlements with the consumer of services or goods and the budget on value-added tax. The MCO issues an invoice in the case of providing non-financial services to participants: consultations, provision of premises for rent, sale of fixed assets, low-value inventory, other property (collateral property), etc. Mainly, the MCO receives invoices for payment from suppliers of goods and services;
2. number of copies - one copy when receiving an invoice for payment and two when issuing invoices for receipt;
3. in the VAT invoice, as a strict accountability form, the following must be indicated mandatory: date of compilation of the VAT invoice, surname, first name, patronymic or full name, legal address and TIN of the supplier and recipient of goods (completed works, rendered services), name of goods sold (completed works, rendered services), cost of goods (completed works, rendered services) excluding value-added tax (value-added tax rate, amount of value-added tax), cost of goods (completed works, rendered services) including value-added tax in words, certified by signatures of management and chief accountant/accountant, signatures of the head and chief accountant/accountant of the supplier company, signature of the official of the consumer of goods and services, seal;
4. corrections, smudges, erasures, as well as the use of correction fluid are not allowed. The invoice also indicates the amounts of other taxes, if any.

48. Receipt to Cash Receipt Order:

1. the receipt to the cash receipt order certifies the receipt of monetary funds into the MCO cash for services rendered by the MCO or for the supply of goods;
2. number of copies – one;
3. the receipt to the cash receipt order must contain the name of the document, document number, date (day, month, year) of issuance, MCO name and surname, first name, patronymic of the person transferring the funds, name of the organization receiving the funds and TIN of the taxpayer, purpose of the operation, amount (in words and figures), signature of the chief accountant and signature of the cashier who accepted the funds;
4. corrections, smudges, erasures, as well as the use of correction fluid are not allowed. Special attention must be paid to the presence of a serial number on the receipt, the presence of signatures and a round seal, which is placed in the middle of the tear-off line of the receipt.

49. Advance Report:

1. purpose of the document. The advance report is a report on the use of funds issued for petty cash;
2. number of copies – one;
3. the advance report must contain the name of the document, document number, date of compilation of the report, surname, first name, patronymic of the reporting person, amount issued, amount used, balance or overspend of funds, when, to whom, for what, by which document was paid, and what amount was paid, signatures of authorized persons of the MCO, signature of the accountable person;
4. the advance report, as an attachment, must and