Resolution of the Board of the National Bank of the Kyrgyz Republic of 14 December 2022 No. 2022-П-12/78-9-(НПА)

On Amendments to Certain Regulatory Legal Acts

of the National Bank of the Kyrgyz Republic

on issues of accounting, audit and reporting

In accordance with Articles 5, 9 and 64 of the Constitutional Law of the Kyrgyz Republic "On the National Bank of the Kyrgyz Republic", the Board of the National Bank of the Kyrgyz Republic resolves:

1. To introduce amendments to the following resolutions of the Board of the National Bank of the Kyrgyz Republic (attached):

• "On Approval of the Regulation on Minimum Requirements for External Audit of Banks and Other Financial and Credit Organizations Licensed by the National Bank of the Kyrgyz Republic" of 15 June 2017 No. 2017-П-12/25-2-(НПА);

• "On Approval of the Regulation "On Consolidated Supervision" and the Regulation "On Periodic Regulatory Consolidated Reporting" of 28 June 2019 No. 2019-П-12/34-4-(НПА);

• "On Certain Regulatory Legal Acts of the National Bank of the Kyrgyz Republic" of 25 August 2005 No. 26/5;

• "On Approval of the Chart of Accounts for Accounting in Commercial Banks and Other Financial and Credit Organizations of the Kyrgyz Republic" of 30 May 2007 No. 28/3;

• "On Approval of the Regulation on Requirements for the Chart of Accounts for Accounting in Commercial Banks and Other Financial and Credit Organizations of the Kyrgyz Republic" of 20 December 2007 No. 54/9;

• "On Approval of the Regulation "On Requirements for the Accounting Policy of Commercial Banks and Other Financial and Credit Organizations Licensed by the National Bank of the Kyrgyz Republic" of 23 October 2004 No. 26/2.

2. To recognize as no longer in force the resolution of the Board of the National Bank of the Kyrgyz Republic "On the Temporary Instruction on the Separation of Financial, Tax, Regulatory and Statistical Reporting for Banks and Financial and Credit Institutions" of 14 February 1997 No. 4/2.

3. This resolution enters into force upon the expiration of 15 days from the day of official publication.

4. To the Legal Department:

• from the day of receipt of the relevant documents, within 3 (three) working days, to publish this resolution on the official website of the National Bank of the Kyrgyz Republic;

• after official publication, to send this resolution to the Ministry of Justice of the Kyrgyz Republic for inclusion in the State Register of Regulatory Legal Acts of the Kyrgyz Republic.

5. To the Supervision Methodology Department, after official publication, within 3 (three) working days, to bring this resolution to the attention of commercial banks, the Legal Entity Association "Union of Banks of Kyrgyzstan", structural subdivisions, regional departments and the representative office of the National Bank of the Kyrgyz Republic in Batken Oblast.

6. To entrust control over the execution of this resolution to the member of the Board of the National Bank of the Kyrgyz Republic supervising the Supervision Methodology Department.

Chairman K. Bokontaev

Annex
to the resolution of the Board of the National Bank of the Kyrgyz Republic of 14 December 2022 No. 2022-П-12/78-9-(НПА)

Amendments to Certain Regulatory Legal Acts

of the National Bank of the Kyrgyz Republic

on issues of accounting, audit and reporting

1. To introduce to the resolution of the Board of the National Bank of the Kyrgyz Republic "On Approval of the Regulation on Minimum Requirements for External Audit of Banks and Other Financial and Credit Organizations Licensed by the National Bank of the Kyrgyz Republic" of 15 June 2017 No. 2017-П-12/25-2-(НПА) the following amendments:

in the Regulation on Minimum Requirements for External Audit of Banks and Other Financial and Credit Organizations Licensed by the National Bank of the Kyrgyz Republic, approved by the above-mentioned resolution:

• subparagraph 3 of paragraph 18 shall be set forth in the following wording:

"3) by an audit organization or an organization located in the same international network to which services were provided:

• for the restoration and maintenance of accounting;

• related to the development of accounting methodology;

• for the preparation of financial statements;

• internal audit;";

• paragraph 40 shall be set forth in the following wording:

"40. The audit report must reflect information in accordance with international standards on auditing and the requirements of the National Bank, including recommendations that must be included in the audit program. At the same time, for all users, in accordance with international financial reporting standards, the audit report on the bank's financial statements must be unified.";

• paragraph 51 shall be set forth in the following wording:

"51. In the event that the National Bank recognizes the audit report as not complying with the requirements of the legislation of the Kyrgyz Republic and/or international standards on auditing, the bank is obliged to conduct a repeat audit with the involvement of another audit organization at its own expense.

The bank does not have the right to engage an audit organization or auditors to conduct an audit of the next financial year if the previous audit report of this audit organization or auditor was not accepted or was recognized by the National Bank as not complying with the requirements of the legislation of the Kyrgyz Republic and/or international standards on auditing.".

2. To introduce to the resolution of the Board of the National Bank of the Kyrgyz Republic "On Approval of the Regulation "On Consolidated Supervision" and the Regulation "On Periodic Regulatory Consolidated Reporting" of 28 June 2019 No. 2019-П-12/34-4-(НПА) the following amendments:

in the Regulation "On Consolidated Supervision", approved by the above-mentioned resolution:

• in paragraph 2:

the fifth paragraph shall be set forth in the following wording:

"- a group of legal entities engaged in banking and/or financial activities, which includes a bank, over which control is exercised by the same legal or natural person, individually or jointly with other persons.";

the sixteenth paragraph shall be set forth in the following wording:

“Related parties to the bank are understood in the meaning specified in the Law of the Kyrgyz Republic “On Banks and Banking Activity”;

• paragraph 12 shall be stated in the following wording:

“12. The consolidated financial statements of a banking group shall be prepared in accordance with the regulatory legal acts of the National Bank and international financial reporting standards. The bank at the head of a banking group, or a banking holding company, including a parent/management company – a non-resident of the Kyrgyz Republic (management company of a banking holding), shall annually publish its consolidated accounting statements and consolidated profit and loss statements after confirmation of their reliability by an audit firm (auditor) opinion and approval in the manner established by legislation.”;

• paragraph 19 shall be stated in the following wording:

“19. When submitting an application for the acquisition of shares of a bank to the National Bank, information must be provided in accordance with the requirements of the Law of the Kyrgyz Republic “On Banks and Banking Activity” and the Regulation “On Licensing of Banking Activity”.”;

• in paragraph 47, the second paragraph shall be stated in the following wording:

“The bank shall not be entitled to acquire/create a subsidiary or dependent company on the grounds provided for in the Law of the Kyrgyz Republic “On Banks and Banking Activity”;

• in paragraph 96:

the first and second paragraphs shall be stated in the following wording:

“Any participant of a banking group (natural persons and legal entities) or its official may be subject to supervisory measures in accordance with the requirements provided for in the Law of the Kyrgyz Republic “On Banks and Banking Activity”.

Supervisory measures shall be applied by the National Bank on the grounds, in the cases and in the manner provided for by this Regulation and the Law of the Kyrgyz Republic “On Banks and Banking Activity”. The National Bank shall independently determine the appropriateness, type and procedure for applying supervisory measures.”;

• paragraph “d” of subparagraph 2 shall be stated in the following wording:

“d) on other grounds provided for by the banking legislation of the Kyrgyz Republic, including:

• if obstacles have arisen to the exercise of proper consolidated supervision over the bank and participants of the banking group;

• in the event of violation of the norms, requirements and restrictions established by the legislation of the Kyrgyz Republic.”;

• appendix 4 shall be stated in the following wording:

“Appendix 4 to the Regulation “On Consolidated Supervision”

Information on affiliated persons

of the banking group_______________________________ (the name of the parent company and the number of the group structure 2 or 3 shall be indicated)

No.

Name of the affiliated person

Name of the participant of the banking group

Nature of the relationship of the affiliated person with the participant of the banking group

Percentage of ownership of shares/interest depending on the relationship to the participants of the banking group

Name / Full name of the affiliated person / main activity

Note

The name of the affiliated person – participant of the banking group that received an asset from the participant of the banking group shall be indicated

The full name of the participant of the banking group shall be indicated

It is necessary to indicate in accordance with the norms of the Law of the Kyrgyz Republic “On Banks and Banking Activity”

The percentage/interest of ownership shall be indicated

The full name of the affiliated person or the full name of the affiliated person shall be indicated; type of main activity

1

2

…

n

Note: in accordance with Article 16 of the Law of the Kyrgyz Republic “On Banks and Banking Activity”, affiliated persons are recognized as:

• significant participants of a legal entity;

• legal entities in which the same legal entity is a significant participant.

Position _____________ Full name _________________ Signature ________________

Information on persons related to the banking group

No.

Full name of the person related to the banking group

Position held in the company – participant of the banking group

Full name of the related person

Disclosure of the degree of relatedness

Degree of kinship (parents, spouse, etc.)

The surname, name, patronymic of the related person shall be indicated

The position of the related person shall be indicated

The surname, name, patronymic of the related person shall be indicated

The degree of relatedness shall be indicated

The degree of kinship with the related person shall be indicated

1

2

3

4

5

6

...

n

Note: the concept of “related party” is set out in Article 52 of the Law of the Kyrgyz Republic “On Banks and Banking Activity”.

Position _______________ Full name _________________ Signature ________________

»;

in the Regulation “On Periodic Regulatory Consolidated Reporting” approved by the above-mentioned resolution:

• in paragraph 23, the words “Government of the Kyrgyz Republic” shall be replaced by the words “Cabinet of Ministers of the Kyrgyz Republic”;

• in Appendix 2:

  • line 130 of Section 10.2 “Securities Portfolio” shall be set out in the following wording:

“130. Securities issued by the Cabinet of Ministers of the Kyrgyz Republic and/or the National Bank of the Kyrgyz Republic”.

3. To introduce the following amendments to the resolution of the Board of the National Bank of the Kyrgyz Republic “On Certain Regulatory Legal Acts of the National Bank of the Kyrgyz Republic” dated 25 August 2005 No. 26/5:

• in the Regulation on Periodic Regulatory Bank Reporting approved by the above-mentioned resolution:

  • subparagraph “a” of paragraph 2.1 shall be set out in the following wording:

“a) the financial condition of the bank within the framework of the functions performed by the National Bank of the Kyrgyz Republic as set out in the constitutional Law of the Kyrgyz Republic “On the National Bank of the Kyrgyz Republic”;”;

• paragraph 4.10 shall be set out in the following wording:

“4.10. The PRBR must include and provide, within the established deadlines, information for weekends and holidays declared and recommended as working days for the National Bank and commercial banks by the Cabinet of Ministers of the Kyrgyz Republic, regardless of whether the bank operated during that period or not. At the same time, reports containing information in foreign currency in som equivalent must be prepared using the official exchange rate of the National Bank on the date of preparation of the report.”;

• in Appendix 2:

• throughout the text of Section 5 “Securities Portfolio”, the words “Government of the Kyrgyz Republic” in various case forms shall be replaced by the words “Cabinet of Ministers of the Kyrgyz Republic”;

• line 130 of Section 15.2 “Securities Portfolio” shall be set out in the following wording:

“130. Securities issued by the Cabinet of Ministers of the Kyrgyz Republic and/or the National Bank”;

• in Section 15.7 “Capital and capital adequacy (sufficiency) ratios:

  • articles 800, 850 and 950 shall be recognized as having lost force;

  • article 810 shall be set out in the following wording:

“Total Tier 1 Basic Capital (sum of art. 710-790)”.

• 4. To introduce the following amendments to the resolution of the Board of the National Bank of the Kyrgyz Republic “On Approval of the Chart of Accounts for Accounting in Commercial Banks and Other Financial and Credit Organizations of the Kyrgyz Republic” dated 30 May 2007 No. 28/3:

in the Chart of Accounts for Accounting in Commercial Banks and Other Financial and Credit Organizations of the Kyrgyz Republic approved by the above-mentioned resolution:

in class 1 Assets:

• account 10301 “Securities issued by the Government of the Kyrgyz Republic, measured at amortized cost” shall be set out in the following wording:

“10301 Securities issued by the Cabinet of Ministers of the Kyrgyz Republic, measured at amortized cost”;

• account 10401 “Debt securities of the Government of the Kyrgyz Republic, measured at fair value through profit or loss” shall be set out in the following wording:

“10401 Debt securities of the Cabinet of Ministers of the Kyrgyz Republic, measured at fair value through profit or loss”;

• account 10501 “Debt securities of the Government of the Kyrgyz Republic, measured at fair value through other comprehensive income” shall be set out in the following wording:

“10501 Debt securities of the Cabinet of Ministers of the Kyrgyz Republic, measured at fair value through other comprehensive income”;

• account 11402 “Interest accrued to be received on debt securities issued by the Government of the Kyrgyz Republic and measured at amortized cost” shall be set out in the following wording:

“11402 Interest accrued to be received on debt securities issued by the Cabinet of Ministers”;

• account 11412 “Interest accrued to be received on securities issued by the Government of the Kyrgyz Republic and measured at fair value through profit or loss” shall be set out in the following wording:

“11412 Interest accrued to be received on securities issued by the Cabinet of Ministers of the Kyrgyz Republic and measured at fair value through profit or loss”;

• account 11422 “Interest accrued to be received on securities issued by the Government of the Kyrgyz Republic and measured at fair value through other comprehensive income” shall be set out in the following wording:

“11422 Interest accrued to be received on securities issued by the Cabinet of Ministers of the Kyrgyz Republic and measured at fair value through other comprehensive income”;

in class 2 Liabilities:

• the name of account group 20800 “Accounts and loans of the Government of the Kyrgyz Republic and local authorities” shall be set out in the following wording:

“Group 20800 Accounts and loans of the Cabinet of Ministers of the Kyrgyz Republic and local authorities”;

• account 21052 “Interest accrued to be paid on deposits and loans of the Government of the Kyrgyz Republic and local authorities” shall be set out in the following wording:

“21052 Interest accrued to be paid on deposits and loans of the Cabinet of Ministers of the Kyrgyz Republic and local authorities”;

in class 6 Income:

• account 60001 “Interest income on debt securities of the Government of the Kyrgyz Republic measured at amortized cost” shall be set out in the following wording:

“60001 Interest income on debt securities of the Cabinet of Ministers of the Kyrgyz Republic measured at amortized cost”;

• account 60011 “Interest income on debt securities of the Government of the Kyrgyz Republic measured at fair value through profit or loss” shall be set out in the following wording:

«60011 Interest income on debt securities of the Cabinet of Ministers of the Kyrgyz Republic measured at fair value through profit or loss»;

• account 60021 «Interest income on debt securities of the Government of the Kyrgyz Republic measured at fair value through other comprehensive income» shall be stated as follows:

«60021 Interest income on debt securities of the Cabinet of Ministers of the Kyrgyz Republic measured at fair value through other comprehensive income»;

in Appendix 1:

• throughout the text, the words «at the accounting rate» shall be replaced by the words «at the official rate»;

in class 1 Assets:

• account 10301 «Securities issued by the Government of the Kyrgyz Republic measured at amortized cost» shall be stated as follows:

«10301 Securities issued by the Cabinet of Ministers of the Kyrgyz Republic measured at amortized cost. This account records debt securities of the Cabinet of Ministers of the Kyrgyz Republic acquired by the bank. Securities in this account shall be reflected at nominal value taking into account the premium or discount reflected in account 10302. The account shall have a debit balance. When securities are acquired, the account is debited. When securities are sold or redeemed, the account is credited.»;

• account 10401 «Debt securities of the Government of the Kyrgyz Republic measured at fair value through profit or loss» shall be stated as follows:

«10401 Debt securities of the Cabinet of Ministers of the Kyrgyz Republic measured at fair value through profit or loss. This account records the value of securities of the Cabinet of Ministers of the Kyrgyz Republic measured at fair value through profit or loss. Securities in this account shall be reflected at nominal value taking into account the premium or discount reflected in account 10402. The account shall have a debit balance. When securities are acquired, the account is debited. When securities are sold or redeemed, the account is credited.»;

• account 10501 «Debt securities of the Government of the Kyrgyz Republic measured at fair value through other comprehensive income» shall be stated as follows:

«10501 Debt securities of the Cabinet of Ministers of the Kyrgyz Republic measured at fair value through other comprehensive income. This account records the value of debt securities of the Cabinet of Ministers of the Kyrgyz Republic measured at fair value through other comprehensive income. Securities in this account shall be reflected at nominal value taking into account the premium or discount reflected in account 10502. The account shall have a debit balance. When securities are acquired, the account is debited. When securities are sold or redeemed, the account is credited.»;

• account 11402 «Interest accrued to be received on debt securities issued by the Government of the Kyrgyz Republic and measured at amortized cost» shall be stated as follows:

«11402 Interest accrued to be received on debt securities issued by the Cabinet of Ministers of the Kyrgyz Republic and measured at amortized cost. This account records interest accrued to be received on debt securities issued by the Cabinet of Ministers of the Kyrgyz Republic and measured at amortized cost. The account shall have a debit balance. When interest amounts to be received are accrued, the account is debited. When cash is received in payment of interest, the account is credited.»;

• account 11412 «Interest accrued to be received on securities issued by the Government of the Kyrgyz Republic and measured at fair value through profit or loss» shall be stated as follows:

«11412 Interest accrued to be received on securities issued by the Cabinet of Ministers of the Kyrgyz Republic and measured at fair value through profit or loss. This account records interest accrued to be received on securities issued by the Cabinet of Ministers of the Kyrgyz Republic and measured at fair value through profit or loss. The account shall have a debit balance. When interest amounts to be received are accrued, the account is debited. When cash is received in payment of interest, the account is credited.»;

• account 11422 «Interest accrued to be received on securities issued by the Government of the Kyrgyz Republic and measured at fair value through other comprehensive income» shall be stated as follows:

«11422 Interest accrued to be received on securities issued by the Cabinet of Ministers of the Kyrgyz Republic and measured at fair value through other comprehensive income. This account records interest accrued to be received on securities issued by the Cabinet of Ministers of the Kyrgyz Republic and measured at fair value through other comprehensive income. The account shall have a debit balance. When interest amounts to be received are accrued, the account is debited. When cash is received in payment of interest, the account is credited.»;

in class 2 Liabilities:

• account groups 20800 «Accounts and loans of the Government of the Kyrgyz Republic and local authorities» shall be stated as follows:

«Group 20800 Accounts and loans of the Cabinet of Ministers of the Kyrgyz Republic and local authorities. This group includes accounts for accounting of budget and non-budget accounts and loans received from the Cabinet of Ministers of the Kyrgyz Republic and local authorities. Accounting of accounts and loans of the Cabinet of Ministers of the Kyrgyz Republic and local authorities is maintained in nominal currency. For financial reporting purposes, amounts in these accounts in foreign currency shall be translated into the som equivalent at the official rate of the National Bank of the Kyrgyz Republic as of the reporting date.»;

• account 21052 «Interest accrued to be paid on deposits and loans of the Government of the Kyrgyz Republic and local authorities» shall be stated as follows:

«21052 Interest accrued for payment on deposits and loans of the Cabinet of Ministers of the Kyrgyz Republic and local government bodies. This account records interest accrued for payment on deposits and loans of the Cabinet of Ministers of the Kyrgyz Republic and local government bodies. The account must have a credit balance. When interest is accrued for payment, the account is credited. When interest is paid, the account is debited.»;

in class 6 Income:

• account 60001 «Interest income on debt securities of the Government of the Kyrgyz Republic measured at amortized cost» shall be stated as follows:

«60001 Interest income on debt securities of the Cabinet of Ministers of the Kyrgyz Republic measured at amortized cost. This account records the amount of the bank's interest income on debt securities of the Cabinet of Ministers of the Kyrgyz Republic measured at amortized cost. The account must have a credit balance. When income arises, the account is credited. When temporary accounts are closed at the end of the financial year, the account is debited.»;

• account 60011 «Interest income on debt securities of the Government of the Kyrgyz Republic measured at fair value through profit or loss» shall be stated as follows:

«60011 Interest income on debt securities of the Cabinet of Ministers of the Kyrgyz Republic measured at fair value through profit or loss. This account records the amount of the bank's interest income on securities issued by the Cabinet of Ministers of the Kyrgyz Republic measured at fair value through profit or loss. The account must have a credit balance. When income arises, the account is credited. When temporary accounts are closed at the end of the financial year, the account is debited.»;

• account 60021 «Interest income on debt securities of the Government of the Kyrgyz Republic measured at fair value through other comprehensive income» shall be stated as follows:

«60021 Interest income on debt securities of the Cabinet of Ministers of the Kyrgyz Republic measured at fair value through other comprehensive income. This account records the amount of the bank's interest income from securities issued by the Cabinet of Ministers of the Kyrgyz Republic measured at fair value through other comprehensive income. The account must have a credit balance. When income arises, the account is credited. When temporary accounts are closed at the end of the financial year, the account is debited.».

• 5. To introduce the following amendments to the resolution of the Board of the National Bank of the Kyrgyz Republic «On approval of the Regulation on requirements for the Chart of Accounts for accounting in commercial banks and other financial and credit organizations of the Kyrgyz Republic» of 20 December 2007 No. 54/9:

in the Regulation on requirements for the Chart of Accounts for accounting in commercial banks and other financial and credit organizations of the Kyrgyz Republic approved by the above-mentioned resolution:

• paragraph 1.1 shall be stated as follows:

«1.1. This Regulation establishes requirements for the formation of the Chart of Accounts for accounting (hereinafter – the Chart of Accounts) in commercial banks, the State Development Bank of the Kyrgyz Republic and other financial and credit organizations (hereinafter – banks) in accordance with the laws of the Kyrgyz Republic «On Banks and Banking Activity» and «On Accounting».»;

• throughout the text of paragraph 3.2:

  • the words «at the accounting rate» shall be replaced by the words «at the official rate»;

  • the words «Government of the Kyrgyz Republic» shall be replaced by the words «Cabinet of Ministers of the Kyrgyz Republic».

• 6. To introduce the following amendments to the resolution of the Board of the National Bank of the Kyrgyz Republic «On approval of the Regulation «On requirements for the accounting policy of commercial banks and other financial and credit organizations licensed by the National Bank of the Kyrgyz Republic» of 23 October 2004 No. 26/2:

in the Regulation «On requirements for the accounting policy of commercial banks and other financial and credit organizations licensed by the National Bank of the Kyrgyz Republic» approved by the above-mentioned resolution:

• paragraph 5.1 shall be stated as follows:

«5.1. When forming its accounting policy, an FCO must be guided by:

    - the Law of the Kyrgyz Republic «On Accounting»;

    - legislative and regulatory legal acts of the Kyrgyz Republic regulating banking operations;

    - International Financial Reporting Standards;

    - this Regulation.

As additional methodological support, an FCO may use examples of accounting policies and other methodological materials developed by the National Bank of the Kyrgyz Republic.

Note:

(1) Here, FCOs should bear in mind that, according to banking legislation, these matters are regulated by the National Bank of the Kyrgyz Republic.».