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TYPE
Original Research
PAGE NO.
13-17
OPEN ACCESS
SUBMITED
24 December 2024
ACCEPTED
26 January 2025
PUBLISHED
28 February 2025
VOLUME
Vol.05 Issue02 2025
COPYRIGHT
© 2025 Original content from this work may be used under the terms
of the creative commons attributes 4.0 License.
Current Issues of
Improving the Accounting
of Costs for Product
Quality
Umirkulov Berdiyor
PhD, Tashkent branch of Samarkand state university of veterinary
medicine, animal husbandry and biotechnology, Uzbekistan
Abstract:
This article is devoted to the issues of the role
of auditingcosts associated with quality and issues of
reflecting costs related to the audit of prime-cost.
Moreover, the article highlights some peculiarities of
the industry a well as reveals mutual interrelations
between accounting at the quality management and
audit.
Keywords:
Accounting, audit, prime-cost of production,
audit of quality management, assessment of quality
costs, cost analysis, efficiency of costs aimed at quality
improvement, audit of quality costs, production cost,
audit of quality level in foreign trade.
Introduction:
Currently modernization of the economy,
deepening of reforms, creation of new production
capacities, modernization of existing techniques and
technologies, as well as their support are based on the
accurate and efficientimplementation of investment
processes. In this regard a particular attention is being
paid to the development and quality of foreign
investments and loans attracted in the Republic of
Uzbekistan.All spheres in our country are provided with
comprehensive opportunities for further development
of their activities. In particular, favorable conditions and
opportunities are being created for the modernization
of enterprises engaged in the production of goods, their
technical and technological renewal, as well as a
sustainable development of industrial enterprises in the
economy. Meanwhile, the issues of raising productivity
and quality of production at enterprises, as well as
manufacturing of goods that meet the international
quality standards and, ultimately, enhancing exports of
such products have been steadfastly developing in our
country.It should be noted that the level of quality of
manufactured products and the role of quality costs in
the prime-cost of product, in other words, proper and
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adequate quality control is also considered one of the
topical current issues.
Quality-related costs also constitute a part of the
prime-cost of goods. However, additional costs for
raising the quality of goods areapparently reflected in
prime-costs.
Literature Review
The issues of accounting of quality costs, their
theoretical and practical aspects have been studied by
such foreign scientists
–
economists as Glazunov A.I.,
Gludkin O.P., Gorbunov N.M., Gurov A.I., James Evans,
Yegorov I.A, Zorin Yu.V., Ilyenkova S.D., Mazur M.I.,
Mishin V.M., Moskvin V.A., Norta K., Okrepilov V.V.,
Pehtereva N.T., Prokopenko I., Rodopulo A.K.,
Tumasyan R. Z., Tsarunu I.N., Chepurnoy I.P., Shapiro
V.D. and others.
Moreover, our domestic scientists-economists have
also made their significant contribution to the research
of costs associated with the quality improvement. In
this regard we can mention research papers of Beliy
N.D., Jurayev N.Yu, Ibragimov А.К., Dusmuratov R.D.,
Shoalimov A.Sh., Yusupova D., Kodirov S.I. and others.
However, in the scientific research of the
abovementioned economists, a number of suggestions
and recommendations have been made to improve the
quality of the product, but under current conditions
the issues of separating costs of quality management
from prime-cost, its accounting and audit and financial
reporting have not sufficiently been analyzed yet.
Under current market conditions high quality of
products is considered to be one of the key factors that
determine its competitiveness. It should be noted, that
high quality of the product depends on many factors,
which, in turn, causes incurs costs. Different opinions
have been expressed by economist-scientists on
describing the content and essence of quality costs.
In particular, famous American scholars and scientists
Josep Duran and Armand Fiegenbaum were the first
who focused on the quality and with the aim of
achieving a targeted quality they emphasized the need
to compare quality costs with the quality standards.
B.A. Minin, referring to the process of quality analysis,
expressed the opinion that “Quality should be properly
analyzed to manufacture only high quality products”.
In this regard, S.Yu. Krichevskiy focused on quality
planning and developed a planned system of product
quality management.In addition, he divided the whole
process into subsequent groups in terms of scientific,
technical, organizational, economic and social factors
of quality.
Uzbek economist N.D. Beliypointed out that the most
urgent task is to create a product quality management
system to eliminate obstacles and solve problems
indirectly connected with the quality which were
existing during the Ex-Soviet Union period. In his
opinion, the quality management theory focuses on the
quality management system, with emphasis on the
necessity of accounting quality costs involved, as well as
the other theories that are considered to be the
category of processes that need to be studied.
From the point of view of A.Shoalimov, a scientist in
economics, the use of different indicators for the quality
of products manufactured in the industry, as well as the
quality
indicators
depend
on
the
product
type.According to his opinion, “the basic indicators of
the quality of the products are the state standards of the
manufactured products (GOST), industry standards
(OST) and technical specifications (TU)”.
Thus summarizing the opinions of above-mentioned
scientist it is possible to come to the conclusion that in
this research paper we do not deny these points of view,
however, we are studying the issues of reflecting the
costs spent on the quality management system and
organizing their audit.
RESULTS
Strengthening economic potential of any country and
raising the welfare of the population depends on the
productivity and efficiency of the direct production
network because raising production efficiency is the
basic indicator that summarizes the results of economic
activity of the enterprise under conditions of market
relations.
According to the statement expressed bythe President
of the Republic of Uzbekistan Sh. Mirziyoev, “This can be
achieved through the further development of
international economic cooperation, including the
expansion of relations with leading international and
foreign financial institutions, continuation of a
reasonable foreign debt policy, and efficient use of
attracted foreign investments and loans”.One of the
main ways to achieve such positive effects is to raise the
quality of products that meet international standards.
High product quality is one of the key factors that
determine the product’s competitiveness, and it
depends on many factors, which, in turn, creates various
costs. Definitely, the increase in the quality of products
will make a strong positive impact on the exports
growth.
Currently in our country the government pays a
particular attention to the issues of production and
export of export-oriented high quality products.In our
opinion, one of the crucial and urgent issues is to
determine the quality cost in the manufacturing of such
products and to reflect such costs in accounting, as well
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as its arranging performance of their audit because
raising the quality of the product causes additional
quality related costs.
After gaining the independence, to the meet the
requirements of the market economy our country has
been implementing a number of reforms in all areas,
and in the accounting system in particular. The results
of these reforms are precisely seen in the development
and adoption of the Laws of the Republic of Uzbekistan
“On the accounting”, “On the audit activity”, National
Standards of Accounting and Audit, Regulation “On the
structure of costs on production and sales of goods
(works, services) and the order of financial results’
formation” elaborated on the basis of the Reso
lution
of the Cabinet of Ministers of the Republic of
Uzbekistan №54 as of February 5, 1999 and other
statutory acts in the associated with the accounting.
The Regulation states that quality related costs are
included in the cost of production, however their
peculiarities are not fully reflected.In other words,
thisconcept implies thatthe works and services of a
production nature include the performance of
individual operations for the manufacture of products,
processing of raw materials and consumables, testing
to determine the quality of raw materials and
consumables, monitoring compliance with established
technological processes, repair of fixed production
assets and others
In our opinion, it would be efficient to reflect the
following expenses in the above-mention Regulation:
wages calculated for workers and employees involved
in quality management, social security payments
deducted from wages, depreciation of fixed assets
used for raw materials and consumables, the cost of
consumed electricity, certain quality of products
manufactured in some industries, as well as the costs
associated with the testing.
Moreover, we believe, that arranging the performance
of audit of quality cost is considered to be one of the
top target issues because accounting for quality costs
promotes the necessity for their audit.
As far as we know, the objective of auditing the
indicators that constitute production costs and prime-
cost of the product is the actual determination of
economic transactions and identification of the
compliance of the taxation procedure with the applied
statutory acts.
The Regulation “On the structure of costs on
production and sales of goods (works, services) and the
ord
er of financial results’ formation” elaborated on the
basis of the Resolution of the Cabinet of Ministers of
the Republic of Uzbekistan №54 as of February 5, 1999
is considered to be the main statutory act which
regulates accounting of production costs and taxation
matters at the enterprises.
According to this Resolution, the costs associated with
financial and economic activities of the economic entity
are grouped as follows:
1.Production prime-cost of goods (works, services)
include costs directly related to the production of goods
(works, services), due to technology and organization of
production. These include: direct and indirect material
costs, direct and indirect labor costs, other direct and
indirect costs, including overhead costs of a production
properties.
2.Recurrent costs which are not included in the prime-
cost include the costs that are not directly related to the
production process, that is, the costs of managing
business entities, the costs of product sales and other
general business expenses. Thus it is obvious that costs
associated with quality are not reflected in the above-
mentioned statutory act.
The level of the product quality and the fact if the costs
spent on this quality are included or not included in the
prime-cost can be observed on the example of the
recurrent expenses.Taking into account the fact that the
quality of production at the manufacturing enterprises
directly depends on financial and economic activity,
accounting of these costs represents a topical issue.
In both of the above-mentioned statutory acts there
are no opinions and comments on quality
costs.Therefore, in our opinion, it is required to work
out special methodology and technique for performing
an audit of such kind of costs.
From our point of view it is recommended to mention
the following suggestions on accounting and auditing of
costs directly related to quality:
In our opinion, it is necessary to organize accounting for
quality management costs by dividing them into
production costs and recurrent costs. In this regard it
will be required to open the following accounts: 6740
–
for wages of employees and workers engaged in quality
costs management; 6540
–
for social insurance
contributions imposed form wages; 0231 - depreciation
of fixed assets used for processing raw materials and
consumables to improve product quality; 2011 - costs of
electricity consumed; 9450 - for storage and testing
costs so that the products manufactured in specific
industries attain a certain level of quality. In turn, it will
be necessary to include above-mentioned accounts in
the instruction of National Accounting Standard №21
“On charts of accounting in financial and economic
activities of economic entities and their application”.
This creates a sufficient basis for enterprise accounting
to distinguish qualityrelated costs from production
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costs.
Implementation of these measures will enable to
determine the amount of quality costs in the volume
of sales of products, as well as the amount of the
enterprise’s revenue, the quality
of its export share
and other similar indicators.
In addition, performing audit of the quality costs will
enable an auditor to accomplish his activities in the
shortest possible period of time using the information
in the account mentioned above and to make the
optimal decision on regarding the costs of the
enterprise.
Thus we believe that as a result of its quality
improvement, it is one of the topical issues of current
accounting of quality costs.
CONCLUSION
In the period of intensifying market relations in the
country, one of the current high priority objectives is
to improve the quality of products manufactured by
industrial enterprises in order to ensure stability and
development of various sectors of society and
economy.
Nowadays industrial enterprises of our country pay a
particular attention to the quality of their products in a
competitive environment.
In this regard, the scientific article provides an
opportunity to analyze and summarize the theoretical
sources, as well as to make the following conclusions
and proposals on improving the systems of accounting
and audit of quality costs:
1. Reforms implemented by our country in terms
ofenhancing the quality of products give their positive
results and comprehensive support of manufacturers
of industrial products promotes a sustainable
development of these enterprises.
2. It should be noted that currently the focus is made
on raising the cost of manufacturing the goods of a
high quality, including buying raw materials, as well as
the costs associated with their storage and processing
with the application of sophisticated modern
technologies because at some industrial enterprises
the major part of the prime-cost is represented by raw
materials and additional semi-finished products.
3. Cooperation between manufacturing enterprises
and foreign companies is expanding. They are
demonstrating efficient and mutually beneficial
performance in the sphere of production of high-
quality products on the partnership basis.As a result,
high quality products are manufactured since taking
into account the fact that the competition gives an
opportunity to enter the world market with just high-
quality products thus it is particularly important to take
into consideration the costs of such products.
4. Currently scientists conduct various researches
devoted to manufacturing of products that can meet the
needs of our people (introduction of different designs
into products, testing, etc.) and this fact can result in the
increase in quality related costs.That is why
determination and accurate accounting of quality costs
remains an urgent issue for the company directors and
accountants.
5. Establishing appropriate accounting for additional
costs for quality creates the basis for its audit. This, in its
turn, requires conducting scientific research in the field
of audit in our country.
In conclusion it should be noted that enhancing the role
of the raw materials in raising the quality of products,
using new advanced technologies, studyingforeign
experience of the experts in the field of creation of new
types of products - all this leads to the improvement of
production and increase of the export potential of the
domestic market. Consequently, quality and efficiency
have not lost their urgency.
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