World Bank Document

79. Much like general purpose financial statements, users tend not to find audit reports 
particularly useful for decision-making purposes. Some business managers believe financial 
statements are useful only for tax calculations and do not base their business decisions on the 
statements. They also do not believe that audit reports add any credibility to the underlying 
financial statements. Banks often base their lending decisions on their own due diligence, as well 
as the collateral available, rather than looking at audited financial statements. Paradoxically, it 

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The Republic of Uzbekistan – Accounting and Auditing ROSC 
 
- 21 - 
 
may be that the tax authorities are most interested readers of audit reports. This may be changing 
as more important enterprises are prepared for privatization and foreign investment becomes 
more desirable. 
VI. POLICY RECOMMENDATIONS 
80. Without attempting to provide a detailed tactical design for reforms, this report makes 
policy recommendations to support the implementation of accounting reform and to 
enhance the quality of corporate financial reporting in the Republic of Uzbekistan.
81. The recommendations of this ROSC are interrelated and mutually supportive. For 
example, good accounting standards are jeopardized if practitioners do not understand how to 
translate them into journal entries; a rigorous statutory and regulatory framework is unlikely to be 
effective if it is not enforced. Additionally, some recommendations will not have an immediate 
effect but will still remain of high priority if the financial reporting environment in the Republic 
of Uzbekistan is to be upgraded to international standards within a reasonable timeframe. 
Achievement of these objectives requires continuous reorganization and improvement of the 
Uzbek legal framework, institutions, the accounting and auditing professions and the education 
system. Policies should not be developed and enacted, however, without giving due regard to a 
country’s ability to carry them out (both in terms of capacity and resources). A relatively lenient 
rule that is robustly and consistently enforced is preferable to a good, rigorous one that is 
unenforceable, as the lenient rule can be progressively made more rigorous as the circumstances 
allow. The policy recommendations below, while challenging, can be carried out in the short to 
medium term and will support the Republic of Uzbekistan’s long-term objectives. They fall into 
three key areas:

Statutory Framework 

Institutional Capacity Building 

Professional Education and Training 
82. These recommendations require a holistic approach to implementation. The Republic of 
Uzbekistan should establish a multidisciplinary (inter-departmental) Coordination Working 
Group (CWG)
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to champion and coordinate the accounting and auditing reforms necessary for 
achieving the objectives outlined below. The CWG should advise policymakers and regulators on 
how to best implement the recommendations. Based on the successful experience of other 
countries, this report recommends that the CWG develop a Country Strategy and a detailed 
Country Action Plan (CAP) which clearly sets out the key actions and allocates responsibilities 
for implementing the necessary reforms; the CAP should include an itemized budget indicating 
the resources necessary for successful implementation and the government, policymakers and 
development partners should work together to secure those resources. To ensure that the CAP 
provides information on all relevant objectives, actions and required resources, as well as 
summary budgets and critical assumptions, its development will require the assistance of both 
local and international consultants.