World Bank Document

compliance gap between standards as designed and as practiced, particularly when it comes 
to the preparation of explanatory notes and public availability of general purpose financial 
statements. Reasons for the gap include: (i) insufficient expertise in preparing explanatory notes 
among both preparers and regulators responsible for collection of financial statements results in 
non-compliance; (ii) few understand the significance of notes to the financial statements; (iii) 
poorly qualified auditors perform low-quality audits; and (iv) no effective enforcement 
mechanism over the financial reporting process. 
IV. AUDITING STANDARDS AS DESIGNED AND AS PRACTICED
The auditing standards gap 
73. The Law on Audit Activity (1992), as amended does not define nor require the 
application of auditing standards. In paragraph 21, however, the law requires the Licensing 
Authority to develop national auditing standards. This, in effect, makes the MoF a standard setter.
74. NSA consist of 21 auditing standards. Because of the delay in adopting revised ISA, 
some NSA do not have an ISA counterpart. Audit risk standard (NSA 9 Materiality and Audit 
Risk) has not been updated since its adoption, i.e., the NSA audit approach is not a risk-based 
approach. Similarly, all performance and reporting standards are based on older audit standards 
predating the IAASB’s clarity and redrafting project (see NSA 3 Audit Planning, NSA 4 
19
As the prudential requirements are based on different principles, the difference between loan loss provisions under 
prudential requirements and under IFRS is significant and, in case of the reviewed bank, approximately 35%. 

---

The Republic of Uzbekistan – Accounting and Auditing ROSC 
 
- 20 - 
 
Requirements Relating to Internal Standards of Audit Firm, NSA 5 Quality Control over an 
Auditor’s Work, NSA 6 Audit Documentation, NSA 10 Audit of Other Information, NSA 11 Audit 
in a Computerized Environment, NSA 12 Evaluation of the Systems of Accounting and Internal 
Control, NSA 13 Analytical Procedures, NSA 14 Sampling, NSA 16 Use of the Work of an 
Expert, NSA 24 Auditing Procedures when Financial Statements are Materially Misstated, NSA 
25 Compliance with Laws and Regulations, NSA 31 Knowledge of the Business, NSA 50 Audit 
Evidence, NSA 55 Obtaining Audit Evidence for Related Party Transactions, NSA 56 Subsequent 
Events, NSA 60 Use of the Work of An Other Auditor, NSA 70 Auditor’s Report and Conclusion, 
NSA 80 Agreed Upon Audit Procedures and NSA 90 Professional Services of Audit Firms). In 
this context, it is important to note that the IAASB completed its “Clarity Project” on February 
27, 2009, under which all 36 ISA and ISQC 1were redrafted and some also revised. NSA should 
be revisited to reflect the changes.