Regulation on Requirements for the Formation of Financial Reporting of Commercial Banks of the Kyrgyz Republic

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Creation date: 2024-04-30

Appendix
to the Resolution of the Board of the National Bank of the Kyrgyz Republic of March 12, 2010 No. 6/2

REGULATION

on the requirements for the formation of financial reporting of commercial banks of the Kyrgyz Republic

(In the edition of the Resolutions of the Board of the National Bank of the Kyrgyz Republic of December 16, 2010 No. 91/5, November 16, 2012 No. 43/1, June 15, 2017 No. 2017-P-12/25-1, September 9, 2019 No. 2019-P-33/47-4, February 26, 2020 No. 2020-P-12/8-7, September 28, 2021 No. 2021-P-33/53-10, March 23, 2022 No. 2022-P-12/17-4, April 6, 2022 No. 2022-P-12/20-1, December 14, 2022 No. 2022-P-12/78-10, January 17, 2024 No. 2024-P-12/1-3, April 12, 2024 No. 2024-P-12/17-2-(NPA))

1. General Provisions

2. This Regulation defines the components, content, and main rules for the preparation and submission of financial reporting by commercial banks, including those having an "Islamic window," and the parent company (head company) of a banking group to the National Bank of the Kyrgyz Republic (hereinafter - the National Bank).

Financial reporting of a banking group is presented on a consolidated basis by the parent company of the banking group (hereinafter - consolidated financial reporting of a banking group).

The requirements of this Regulation apply to parent companies (head companies) - residents of the Kyrgyz Republic.

A bank under temporary administration also presents financial reporting in accordance with this Regulation.

Banks having an "Islamic window" provide additional (separate) reporting on operations carried out in accordance with Islamic principles of banking and financing, in accordance with the Regulation "On Requirements for the Formation of Financial Reporting of Commercial Banks Carrying Out Operations in Accordance with Islamic Principles of Banking and Financing," approved by the Resolution of the Board of the National Bank of the Kyrgyz Republic of May 31, 2017 No. 21/13.

This Regulation does not apply to banks undergoing liquidation.

(In the edition of the Resolutions of the Board of the National Bank of the Kyrgyz Republic of June 15, 2017 No. 2017-P-12/25-1, September 9, 2019 No. 2019-P-33/47-4, February 26, 2020 No. 2020-P-12/8-7, September 28, 2021 No. 2021-P-33/53-10, March 23, 2022 No. 2022-P-12/17-4, January 17, 2024 No. 2024-P-12/1-3)

2. Financial reporting of banks must objectively represent the financial position, financial performance, cash flows of the bank, and comply with International Financial Reporting Standards (hereinafter - IFRS).

3. Financial reporting of a bank represents a structured presentation of the financial position and financial performance of the bank for the reporting period.

(Paragraph lost force in accordance with the Resolution of the Board of the National Bank of the Kyrgyz Republic of March 23, 2022 No. 2022-P-12/17-4)

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of March 23, 2022 No. 2022-P-12/17-4)

4. The purpose of financial reporting of banks is:

• structured presentation of information on the financial position, financial performance, and cash flows of the bank, useful for a wide range of users in making economic decisions;
• presentation of the performance of the banking group and its investments in the capital of other legal entities, operations and transactions with these legal entities;
• presentation of operations and transactions of participants of the banking group, risks of the banking group;
• presentation of the results of managing resources entrusted to the bank.

To achieve this goal, financial reporting must present information on the following indicators of the bank:

a) assets; b) liabilities; c) equity; d) income and expenses, including profit and loss; e) contributions by owners and distributions to owners; f) cash flows.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 16, 2010 No. 91/5)

5. Financial reporting of a bank is prepared in accordance with the accounting policy approved by the Board of Directors of the bank.

If a participant of a banking group uses an accounting policy different from the accounting policy adopted for the preparation of consolidated financial reporting of the banking group regarding similar transactions and events under similar conditions, then in the process of preparing consolidated financial reporting, its financial reporting is appropriately transformed.

(In the edition of the Resolutions of the Board of the National Bank of the Kyrgyz Republic of December 16, 2010 No. 91/5, March 23, 2022 No. 2022-P-12/17-4)

6. The management of the bank must ensure the timely and accurate preparation and submission of the bank's financial reporting to the National Bank within the established deadlines. In case of violation by banks of the procedure and deadlines for submitting financial reporting, submission of unreliable information, as well as publication of reports without complying with the requirements established by legislation, measures of impact provided for by the legislation of the Kyrgyz Republic are applied to the bank and its management.

(*) (Paragraph lost force in accordance with the Resolution of the Board of the National Bank of the Kyrgyz Republic of June 15, 2017 No. 2017-P-12/25-1)

2. General Requirements for the Structure and Content of Financial Reporting

(Name of the chapter in the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of March 23, 2022 No. 2022-P-12/17-4)

7. Financial reporting of a bank includes the following components:

1. statement of financial position at the end of the period;
2. statement of comprehensive income for the period;
3. statement of changes in equity for the period;
4. statement of cash flows for the period;
5. notes to the financial reporting;
6. comparative information for the preceding period.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of March 23, 2022 No. 2022-P-12/17-4)

8. (Lost force in accordance with the Resolution of the Board of the National Bank of the Kyrgyz Republic of March 23, 2022 No. 2022-P-12/17-4)

9. The bank must clearly identify each component of financial reporting. The following information must be reflected in the financial reporting for proper understanding of the presented information:

• full name of the bank and other identification details;
• whether this financial reporting is the reporting of a separate bank or consolidated reporting of a banking group;
• the date of completion of the reporting period or the period covered by this set of financial reporting;
• the currency and unit of measurement when presenting amounts in financial reporting.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of March 23, 2022 No. 2022-P-12/17-4)

10. When preparing financial reporting, the management of the bank must assess the ability of the bank/banking group to continue its operations. The bank is obliged to prepare financial reporting on the going concern basis, except in cases where the liquidation of the bank or cessation of its operations is assumed. In the event that management is aware during the formation of opinion of material uncertainties related to events or conditions that may cast significant doubt on the ability of the bank to continue its operations in the future, these uncertainties must be disclosed (in components) in the financial reporting.

If financial reporting is prepared on a basis other than the going concern assumption, this fact must be disclosed, as well as the basis on which the reporting was prepared and the reason why the bank is not considered a going concern.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 16, 2010 No. 91/5)

11. The bank must prepare financial reporting using the accrual method, except for the preparation of the statement of cash flows.

12. The reporting period for financial reporting of banks is the period from January 1 to December 31 inclusive.

For a bank created before October 1, the first reporting year is considered the period from the date of its state registration to December 31 inclusive.

For a bank created after October 1, the first reporting year is considered the period from the date of its state registration to December 31 of the following year inclusive.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of March 23, 2022 No. 2022-P-12/17-4)

13. In exceptional cases, when the reporting period of a bank is changed and financial reporting is presented for a period longer or shorter than one year, the bank must disclose in addition to the period covered by the financial reporting:

• the reason for using a longer or shorter period different from the reporting period;
• the fact that the amounts presented in the financial reporting are not fully comparable.

If the reporting dates of the parent and subsidiary companies do not match, then the subsidiary company, for the purposes of consolidation, prepares additional financial reporting at the end of the reporting period of the parent company.

(In the edition of the Resolutions of the Board of the National Bank of the Kyrgyz Republic of December 16, 2010 No. 91/5, March 23, 2022 No. 2022-P-12/17-4)

14. Each material class of items must be presented separately in the financial reporting. The bank is obliged to present items separately if they differ in nature or purpose, except in cases where items are immaterial. An item that is not sufficiently material for separate presentation in financial reports is disclosed in the Notes to the Financial Reporting.

The materiality of items for the purpose of forming financial reporting is determined independently by the bank in the Accounting Policy of the bank and disclosed in the Notes to the Financial Reporting.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of March 23, 2022 No. 2022-P-12/17-4)

15. The content and forms of financial reporting are applied consistently from one reporting period to another (principle of consistency).

16. Classification and presentation of items in financial reports must be maintained from period to period, except in cases where:

• due to a significant change in the nature of the bank's activities or revision of its financial reporting, another presentation of information or another classification is more appropriate, taking into account the criteria for selection and application of accounting policy;
• IFRS standards require a change in presentation.

17. For each indicator of financial reporting, comparative indicators of the previous reporting year must be provided, unless otherwise permitted or required by IFRS. Comparative information must be included in the narrative and descriptive part when appropriate for understanding the financial reporting for the current period.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of March 23, 2022 No. 2022-P-12/17-4)

18. If the presentation or classification of items in financial reporting is changed, comparative amounts must be reclassified (unless this is impracticable) to ensure comparability with the current period. In addition, disclosure must be made of the nature, amount of each item or class of items that were reclassified, as well as the reason for the reclassification. If reclassification of comparative amounts is impracticable, the bank must disclose the reason why the reclassification of the corresponding amounts was not carried out, and the nature of adjustments that would have been made in case of reclassification of amounts.

18-1. Consolidated financial reporting of a banking group must include the financial reporting of all its subsidiaries, dependent, and associated companies. At the same time, participants of a banking group are responsible for the accuracy and completeness of data provided to the parent company.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 16, 2010 No. 91/5)

18-2. When preparing consolidated financial reporting of a banking group, the parent company consolidates the financial reporting of the parent and subsidiary organizations line by line by adding similar items of assets, liabilities, capital, income, expenses, and cash flows.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of March 23, 2022 No. 2022-P-12/17-4)

18-3. The following information must be disclosed in consolidated reporting:

• the nature of the relationship between the parent and subsidiary companies, when the parent company does not own, directly or indirectly through subsidiary companies, more than 50% of voting shares;
• the reasons why ownership of a share, direct or indirect, through subsidiary companies, exceeding 50% of voting shares of the investment object does not lead to obtaining control over it;
• if the reporting date or period of financial reporting of a subsidiary company used in the preparation of consolidated financial reporting differs from the reporting date or period of financial reporting of the parent company:
  a) the reporting date of the financial reporting of the subsidiary company; b) the reason why another reporting date or period was used;
• the content and scale of significant restrictions on the ability of subsidiary companies to transfer funds to the parent company in the form of cash dividends or to repay loans or advances;
• a table representing the impact of changes in the parent company's participation in a subsidiary company that do not result in loss of control over it, on the amount of capital attributable to owners of the parent company;
• in the event of loss of control over a subsidiary company, the parent company must disclose information on income and expenses (if any) recognized in accordance with IFRS, including:
  a) the portion of income or expense attributable to recognition at fair value on the date of loss of control over the investment retained in the former subsidiary company; b) the item(s) in the consolidated statement of comprehensive income, in which the income or expense is recognized (if it is not presented separately in the consolidated statement of comprehensive income).

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 16, 2010 No. 91/5)

18-4. In order for the consolidated financial reporting of the parent company to present financial information about the banking group as a single economic entity, it is necessary:

• to exclude the book value of the parent company's investment in each subsidiary company and the parent company's share in the capital of each subsidiary company;
• to determine the non-controlling interest (or minority interest) in the profit or loss of consolidated subsidiary companies for the reporting period;
• to determine the non-controlling interest (or minority interest) in the net assets of consolidated subsidiary companies separately from the parent company's interest in them. The non-controlling interest (or minority interest) in net assets consists of the following:
  a) the amount of non-controlling interest (or minority interest) on the date of initial business combination; b) non-controlling interest (or minority interest) in changes in capital since the business combination.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 16, 2010 No. 91/5)

18-5. When preparing consolidated financial reporting, intra-group assets, liabilities, capital, income, expenses, and cash flows within the banking group must be fully eliminated.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of March 23, 2022 No. 2022-P-12/17-4)

18-6. The financial reporting of a subsidiary company cannot be excluded from consolidated financial reporting on the grounds that:

• the activities of the subsidiary company differ from the activities of other participants of the banking group;
• the investor is an organization with venture capital, mutual fund, trust, or similar structure.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of March 23, 2022 No. 2022-P-12/17-4)

18-7. (Lost force in accordance with the Resolution of the Board of the National Bank of the Kyrgyz Republic of March 23, 2022 No. 2022-P-12/17-4)

18-8. The nature of the relationship between the parent company and subsidiary companies must be disclosed in financial reporting, regardless of whether transactions were carried out between these related parties.

(In the edition of the Resolutions of the Board of the National Bank of the Kyrgyz Republic of December 16, 2010 No. 91/5, March 23, 2022 No. 2022-P-12/17-4)

18-9. A bank is exempt from presenting consolidated financial reporting if the parent company of this bank, located in the territory of the Kyrgyz Republic, prepares and presents consolidated financial reporting in accordance with IFRS and the requirements of the National Bank.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of March 23, 2022 No. 2022-P-12/17-4)

18-10. Investments in associated and joint (dependent and related) companies of the bank are reflected using the equity method, except in cases where they are classified as held for sale, or exempted from the need to apply this method in accordance with IFRS.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of March 23, 2022 No. 2022-P-12/17-4)

19. Financial reporting must be signed by the Chairman of the Board of the bank, the Chief Accountant of the bank, and sealed with the bank's seal.

The correctness and accuracy of the reflection of data on the financial condition of the banking group in consolidated financial reporting is certified by the Chairman of the Board of Directors (supervisory body), the Board, and the chief accountant of the parent company of the banking group.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 16, 2010 No. 91/5)

20. (Lost force in accordance with the Resolution of the Board of the National Bank of the Kyrgyz Republic of March 23, 2022 No. 2022-P-12/17-4)

21. Financial reporting of a bank must be prepared in the national currency of the Kyrgyz Republic, unless otherwise agreed by international treaties ratified in the established order.

22. (Lost force in accordance with the Resolution of the Board of the National Bank of the Kyrgyz Republic of March 23, 2022 No. 2022-P-12/17-4)

23. Procedure and Deadlines for Submission and Publication of Financial Reporting

24. Publication and additional publication of financial reporting together with the auditor's report is carried out after the completion of the audit and approval of financial reporting no later than April 30 of the year following the reporting year.

Financial reporting of the bank, including all components, Notes to the Financial Reporting, and the auditor's report, must be published on the official website of the bank.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of March 23, 2022 No. 2022-P-12/17-4)

24. One copy of the bank's financial reporting, together with a copy of the auditor's report, is submitted to the National Bank within 10 working days after its approval, but no later than April 15 of the year following the reporting year.

25. Financial reporting must be available at the bank (head office, branches, savings offices) for users in full volume and must be provided upon their first request for review.

26. Additional publication of components of financial reporting (Statement of Financial Position at the end of December 31 of the reporting year, Statement of Comprehensive Income for the period, Statement of Cash Flows, and Statement of Changes in Equity) together with the auditor's report must be carried out in the media in the state and official languages. The bank selects media for publication of financial reporting forms together with the auditor's report to ensure its wide dissemination and accessibility to users. Publication is carried out within the timeframes and in the manner determined by this Regulation.

In this case, a reference must necessarily be made that the full financial reporting and explanations to it can be viewed on the official website of the bank, as well as in the head office of the bank, its branches, and savings offices.

Information about the publication with an attached copy of the publication must be submitted to the National Bank within 3 working days after publication.

(In the edition of the Resolutions of the Board of the National Bank of the Kyrgyz Republic of March 23, 2022 No. 2022-P-12/17-4, April 12, 2024 No. 2024-P-12/17-2-(NPA))

26.1. Consolidated financial reporting of a banking group is published and presented to users in compliance with the requirements of this chapter of this Regulation.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 16, 2010 No. 91/5)

4. Daily, Monthly, and Quarterly Financial Reporting, Procedure and Deadlines for Their Submission

5. In addition to the submission and publication of financial reporting, banks must also submit to the National Bank:

• daily trial balance;
• monthly statement of financial position, statement of comprehensive income (monthly financial reporting);
• quarterly statement of financial position, statement of comprehensive income, statement of cash flows, and statement of changes in equity, as well as information contained in paragraph 31-1 (quarterly financial reporting).

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of December 16, 2010 No. 91/5)

28. Monthly and quarterly financial reports must be prepared for the following interim periods:

• statement of financial position at the end of the current interim period and for a similar period of the financial year preceding the reporting year, and as of the end of the previous reporting financial year;
  Note: Interim period is a reporting period with a duration shorter than the duration of the full financial year.

• statement of comprehensive income for the current interim period cumulatively for the current financial year in comparison with a similar interim period of the year immediately preceding the reporting year;

• statement of cash flows for the past period of the current financial year in comparison with the report for a similar period of the financial year immediately preceding the reporting year;

• statement of changes in equity cumulatively, for the past period of the current financial year in comparison with the report for a similar period of the financial year immediately preceding the reporting year.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of June 15, 2017 No. 2017-P-12/25-1)

29. The daily trial balance is submitted by banks to the National Bank on the next working day in the period from 8:00 to 9:00 in electronic form, confirmed by an electronic digital signature.

30. Monthly statements of financial position and comprehensive income (monthly financial reporting) must be posted on the official website of the bank and the information board of the bank (in the head office, branches, savings offices) for clients no later than the 10th of the following month.

If during the month there were transactions that significantly affected or may affect the financial condition of the bank, the bank must disclose these events.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of March 23, 2022 No. 2022-P-12/17-4)

31. Quarterly statements of financial position, comprehensive income, cash flows, and changes in equity, as well as information contained in paragraph 31-1, must be published on the official website of the bank and in the media in the state and official languages no later than the 30th of the month following the reporting quarter.

In this case, the publication must necessarily contain a reference that the full quarterly financial reporting specified in paragraph 27 of this Regulation can be viewed in the head office of the bank, its branches, and savings offices.

The bank selects media for publication of quarterly reporting to ensure its wide dissemination and accessibility to users.

If during the quarter there were transactions that significantly affected or may affect the financial condition of the bank, the bank must disclose these events in the full quarterly financial reporting.

Information about the publication with an attached copy of the publication, d