On Approval of the Regulation on the Procedure for Banks to Reflect Events After the Reporting Date in Accounting

Resolution of the Board of the Central Bank of the Republic of Uzbekistan, registered on 23.11.2004, reg. number 1426

Date of entry into force

03.12.2004

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11.11.2021

03.12.2004

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Act lost force 11.11.2021

[OKOZ:

1.07.00.00.00 Legislation on finance and credit. Banking activity / 07.21.00.00 Banking activity / 07.21.17.00 Accounting and reporting in banks;

2.07.00.00.00 Legislation on finance and credit. Banking activity / 07.29.00.00 Accounting. Financial reporting / 07.29.07.00 Accounting in specific industries and spheres]

[TSZ:

1. Finance / Banks and other credit institutions. Credits;

2. Finance / Accounting]

Resolution

BOARD OF THE CENTRAL BANK OF THE REPUBLIC OF UZBEKISTAN

ON APPROVAL OF THE REGULATION ON THE PROCEDURE FOR BANKS TO REFLECT EVENTS AFTER THE REPORTING DATE IN ACCOUNTING

[Registered by the Ministry of Justice of the Republic of Uzbekistan on November 23, 2004. Registration No. 1426]

Commentary LexUz

This Resolution will lose force with November 11, 2021 in accordance with [resolution](/docs/5563535?ONDATE=11.11.2021 00#5566856) of the Board of the Central Bank of the Republic of Uzbekistan dated July 15, 2021 No. 17/3 "On recognizing certain normative legal acts adopted by the Central Bank of the Republic of Uzbekistan as having lost force" (reg. No. 3317 from 10.08.2021).

In accordance with the laws of the Republic of Uzbekistan "On the Central Bank of the Republic of Uzbekistan", "On Banks and Banking Activity" and "On Accounting", the Board of the Central Bank of the Republic of Uzbekistan resolves:

1. Approve "Regulation on the procedure for banks to reflect events after the reporting date in accounting" according to the appendix.

2. This Regulation enters into force upon the expiration of ten days from the moment of its state registration in the Ministry of Justice of the Republic of Uzbekistan.

3. Control over the execution of this Resolution is entrusted to the First Deputy Chairman of the Central Bank M.R. Jumagaliev.

Chairman of the Board of the Central Bank F. MULLAZHANOV

Tashkent,

November 6, 2004,

No. 24/10

APPROVED
resolution of the Board of the Central Bank of November 6, 2004 No. 24/10

REGULATION

on the procedure for banks to reflect events after the reporting date in accounting

I. General Provisions

1. This Regulation is developed in accordance with the laws of the Republic of Uzbekistan "On the Central Bank of the Republic of Uzbekistan", "On Banks and Banking Activity" and "On Accounting" and defines the procedure for accounting for events occurring after the reporting date by banks of the Republic of Uzbekistan (hereinafter referred to as banks) in accordance with International Financial Reporting Standards (hereinafter referred to as IFRS).

2. For the purposes of this Regulation, the following terms are used:

events occurring after the reporting date are events, both favorable and unfavorable, that occur between the reporting date and the date when the financial statements are approved for issue. Two types of events are distinguished:

adjusting events after the reporting date are events that confirm conditions that existed at the reporting date, but were identified after the reporting date in the period up to the approval of these reports for issue;

non-adjusting events after the reporting date are events that indicate circumstances that arose after the reporting date;

date of approval of financial statements for issue is the date of approval of financial statements by the board of directors or the board of the bank for their further submission to shareholders at a general meeting of shareholders;

going concern assumption is the primary assumption in the preparation of financial statements, according to which it is assumed that the bank will continue its operations for at least the period sufficient to fulfill its goals and obligations. The going concern assumption must be applied, except in those cases where the liquidation of the bank appears inevitable.

II. Recognition and Measurement of Events

§ 1. Adjusting Events After the Reporting Date

3. If adjusting events have occurred after the reporting date, banks must reflect these events in their financial reports by making appropriate adjustments.

4. Below are examples of events after the reporting date, regarding which it is required that banks adjust the amounts recognized in their financial reports, or recognize items that were not previously recognized:

a) the entry into force of a court decision regarding a lawsuit filed after the reporting date, which confirms that the bank had this obligation at the reporting date. In accordance with the court decision, the bank accrues or reduces previously recognized expenses. If expenses were not previously assessed, the bank is obliged to recognize additional expenses;

b) as a result of information obtained after the reporting date, it became known that an asset was impaired as of the reporting date, or that the amount of a previously recognized impairment loss for this asset requires adjustment. For example:

1) if a client went bankrupt after the reporting date, this usually confirms that as of the reporting date there was a loss on the loan issued to the bankrupt client, and that the bank should adjust the carrying amount of this loan; and

2) the proceeds from the sale of assets after the reporting date, accepted from the borrower as collateral for a loan, may provide accurate information about their net realizable value as of the reporting date;

c) determination (by the board of directors or the board of the bank) after the reporting date of the amount of participation in profits or bonus payments, if the bank had a present obligation at the reporting date to make these payments depending on the results of the bank's activities for the reporting period;

d) the discovery of fraud or errors that show that the financial reports are incorrect.

§ 2. Non-Adjusting Events After the Reporting Date

5. The bank does not adjust the amounts recognized in the financial reports to reflect non-adjusting events after the reporting date.

6. An example of a non-adjusting event after the reporting date may be a decrease in the market value of investments between the reporting date and the date when the financial statements were approved for issue. The decrease in market value is usually not related to the state of investments as of the reporting date, but reflects circumstances that arose later. Therefore, the bank does not adjust the amounts recognized in its financial reports for these investments. The bank also should not update the amounts disclosed regarding these investments as of the reporting date, although additional information disclosure in footnotes may be required.

7. Since annual dividends are declared only by the general meeting of shareholders upon the recommendation of the supervisory board, which takes place after the date of approval, such dividends should not be recognized as a liability in the financial statements prepared as of this reporting date, and disclosing them is not required.

III. Going Concern

8. The bank should not prepare financial statements on a going concern basis if management decides after the reporting date to either liquidate the bank or reorganize, or if there is no other alternative but to act in such a manner.

9. Deterioration in the bank's performance and financial position after the reporting date may indicate the need to make a decision regarding whether the going concern assumption is still appropriate. If the going concern assumption is no longer considered appropriate, fundamental changes are required in the basis of accounting and corresponding disclosures, instead of adjusting amounts recognized in accordance with the original bases of accounting.

IV. Disclosure

§ 1. Date of Approval for Issue

10. The bank must indicate the date of approval of the financial statements for issue, and by whom they were approved.

11. If the owners of the bank or other persons have the authority to amend the financial statements after issue, the bank must disclose this fact.

§ 2. Updating Disclosed Information About Circumstances at the Reporting Date

12. If after the reporting date the bank identifies or receives information about circumstances that existed at the reporting date, it must update the disclosures taking into account the new information.

13. In some cases, the bank must update disclosures in its financial reports to reflect information obtained after the reporting date, even when this information does not affect the amounts the bank recognizes in its financial statements. One example of the need to update disclosures is a situation where evidence becomes available after the reporting date regarding a lawsuit that existed at the reporting date. Regardless of whether the bank decides to recognize or change provisions, the bank must update the disclosed information taking into account these contingent liabilities based on the evidence obtained.

§ 3. Disclosures of Non-Adjusting Events After the Reporting Date

14. If non-adjusting events after the reporting date are material, their non-disclosure may affect the decisions made by users based on these financial statements. Accordingly, for each material category of non-adjusting event that occurred after the reporting date, the bank must disclose:

a) the nature of the event;

b) an estimate of the financial consequences, or a statement that such an estimate cannot be made.

15. Below are examples of non-adjusting events after the reporting date, for which no adjustments in the financial statements are required, but disclosure is required:

a) bank mergers after the reporting date, as well as the disposal of a branch or subsidiary;

b) announcement of a plan to discontinue operations or entering into binding agreements for the sale of assets or repayment of liabilities related to discontinued operations;

c) major acquisitions or disposals of assets or the transfer of major assets to state revenue;

d) damage or destruction of the main building by fire after the reporting date;

e) announcement, or commencement of restructuring;

f) major transactions with ordinary shares and operations with financial instruments convertible into ordinary shares after the reporting date;

g) significant changes after the reporting date in asset prices or in foreign exchange rates;

h) changes in tax rates or tax legislation, which came into force or were announced after the reporting date, which have a significant impact on current and deferred tax assets and liabilities;

i) assumption of significant obligations or contingent liabilities, for example, for issuing significant guarantees;

j) involvement in lawsuits arising exclusively from events that occurred after the reporting date.

(Collection of Legislation of the Republic of Uzbekistan, 2004, No. 47, Art. 489)