IFRS IN THE SYSTEM OF CORPORATE GOVERNANCE IN UZBEKISTAN

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Azamov, M., & Kasimova, N. (2022). IFRS IN THE SYSTEM OF CORPORATE GOVERNANCE IN UZBEKISTAN. Наука и научный потенциал: основа устойчивого инновационного развития общества, 1(1), 15–17. https://doi.org/10.47689/inlibrary-SSPBSIDS-2022-pp15-17
Muxammadyusuf Azamov, University of world economy and diplomacy

master student, department of “System analysis and management”, faculty of “International Economics and Management”

Naima Kasimova, University of world economy and diplomacy

Ph.D., Associate Professor, Department of “System analysis and management”, Faculty of “International Economics and Management”

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Аннотация

This article discusses corporate governance and International Financial Reporting Standards as interrelated systems. The exploration of the principles of regulation of economic relations by these two systems made it possible to identify and prove this relationship, which has a positive effect on the practice of corporate governance and international accounting on the activities of joint-stock companies.


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Наука и научный потенциал – Основа

Устойчивого инновационного развития

общества (Ташкент, 15 мая 2022 года)

15

IFRS IN THE SYSTEM OF CORPORATE GOVERNANCE IN

UZBEKISTAN

Azamov Muxammadyusuf Adham o‘g‘li

Master student, Department of “System analysis and management”, Faculty of

“International Economics and Management” University of World Economy and

Diplomacy, Uzbekistan, Tashkent

azamovmukhammadyusuf@gmail.com

Mrs Kasimova Naima Dzhakhongirovna

Ph.D., Associate Professor, Department of “System analysis and management”,

Faculty of “International Economics and Management” University of World

Economy and Diplomacy, Uzbekistan, Tashkent;

Annotation:

This article discusses corporate governance and International

Financial Reporting Standards as interrelated systems. The exploration of the

principles of regulation of economic relations by these two systems made it possible

to identify and prove this relationship, which has a positive effect on the practice of

corporate governance and international accounting on the activities of joint-stock

companies.

Key words:

corporate governance, International Financial Reporting

Standards, joint-stock company, shareholders

Corporate governance is a vital tool in business development because it

creates a system of rules and practices that determine how a company operates and

how it aligns the interest of all its stakeholders. Good corporate governance leads to

ethical business practices, which leads to financial viability. The basic principles of

corporate governance are accountability, transparency, fairness, and responsibility.

Therefore, a strong, transparent corporate governance leads a company to make

ethical decisions that benefit all of its stakeholders, allowing the company to place

itself as an attractive option to investors if its financials are also stable. Bad corporate

governance leads to a breakdown of a company, often resulting in scandals and

bankruptcy. Hence, in order to develop international business and investment in the

country, measures are implemented to apply IFRS in local companies, which also

contribute to the development of corporate governance.

On February 24, 2020, the President of Uzbekistan signed the Decree “On

additional measures for the transition to international financial reporting standards”

No. PP–4611. According to the resolution, from 2021, insurance organizations,

commercial banks, joint-stock companies and legal entities related to large tax

payers are required to keep accounting in accordance with IFRS. And, starting from

the results of 2021, to form financial statements in accordance with international

standards.


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Наука и научный потенциал: основа

Устойчивого инновационного развития

общества (Ташкент, 15 мая 2022 года)

16

The purpose of the transition to IFRS is to improve the quality and

comparability of financial information in the reports and reduce the possibility of

interpreting the information presented differently. IFRS allow investors, creditors

and borrowers to evaluate and compare the results of the financial and economic

activities of the organization, including at the international level, in a more detailed

and efficient manner. Since uniform standards are not based on strict rules, but on

established principles. For our country, the transition to the international reporting

system involves a change in the basis of financial accounting and reporting. These

changes will affect the entire system of financial and credit relations, as well as the

system of production of goods, works and services. The implementation of IFRS

implies a fundamental change both in the internal environment of economic

entities (accounting, financial management, marketing, etc.) and in external areas

(with counterparties, financial intermediaries, government agencies, etc.). Due to

the inefficient use of a large amount of state property and for other reasons, large-

scale privatization work is expected to begin in Uzbekistan in 2021. The biggest

obstacle in the process of privatization, or, to be more precise, one of the reasons

slowing down this process, is the discrepancy between the accounting of these

organizations with IFRS. A prospective foreign investor will not understand the

reports prepared by organizations in Uzbekistan, so he will not believe that the

figures are reflected correctly.

It may at first appear that corporate governance measures and IFRS are

unrelated. But upon closer examination, this opinion can be refuted. The following

is a figure showing between the principles of corporate governance and the

framework provisions of IFRS.

Based on the figure, the following

relationships can be found:

A) The purpose of financial

statements is directly related to

the obligation of the company to

disclose information.

B) The

Framework

Regulation on Users of Financial

Statements serves as a tool for

protecting

the

rights

of

shareholders, stakeholders and

reflects the administration's

obligation to the chairmen of the

board and shareholders of the

company, and also contributes to

an effective internal management

system and ensuring the strategic management of the enterprise.

C) Qualitative characteristics of financial statements will help managers

and shareholders make the right strategic decisions based on financial results.


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Наука и научный потенциал – Основа

Устойчивого инновационного развития

общества (Ташкент, 15 мая 2022 года)

17

D) The conditions for recognition of the elements of financial statements

determine the criteria for disclosure of information and provide an effective

system of strategic management and internal control of the enterprise.

Thus, the effectiveness of corporate governance in the company also

depends on the quality of implementation of these Framework Provisions of IFRS.

Today, in the conditions of civilized market relations, Uzbekistan strives for full

integration into the world community and the processes of economic

globalization. To achieve this goal, global market participants, such as

international companies and investors, must fully understand the information

provided by our local companies.

IFRS are an important tool for such mutual understanding. And from the

point of view of corporate governance, the most acceptable option for the

presentation of financial statements for investors and shareholders of the

company is the use of IFRS. In this regard, timely and high-quality implementation

of IFRS is impossible without an effective corporate governance system in

Uzbekistan, as it is a fundamental basis that establishes the rules for doing

business. At the same time, it should be clearly understood that for Uzbek

companies all this means the need to introduce new standards of information

transparency, amend existing internal documents and develop new ones, as well

as reconsider the role of the board of directors, shareholders and managers.

References

1.

Arora, Ramesh K. and Tanjul Saxena (ed.) (2004). Corporate Governance,

Issues and Perspective. Jaipur: Mangaldeep Publications.

2.

Bradley, M., Schipani, C. A., Sundaram, A. K., & Walsh, J. P. (1999). The

purposes and accountability of the corporation in contemporary society: Corporate

governance at a crossroads. Law and Contemporary Problems, 62(3), 9–86.

3.

https://www.bss.uz/rubric/37-mejdunarodnye-standardty-finansovoy-

otchetnosti.

4.

Ball, I. 2009. Serving the public interest: How the IFAC fulfills its mission

in a globalized economy. Cost Management (January/February): 34-39.

5.

Daske, H., L. Hail, C. Leuz and R. Verdi. 2008. Mandatory IFRS reporting

around the world: Early evidence on the economic consequences. Journal of

Accounting Research (December): 1085-1142.

6.

Wu, J. S. and I. X. Zhang. 2019. Mandatory IFRS adoption and the role of

accounting earnings in CEO turnover. Contemporary Accounting Research 36(1):

168-197.

7.

Werner, C. A. 2012. IFRS for privately owned businesses. The CPA Journal

(August): 6, 8-9.

Библиографические ссылки

Arora, Ramesh K. and Tanjul Saxena (ed.) (2004). Corporate Governance, Issues and Perspective. Jaipur: Mangaldeep Publications.

Bradley, M., Schipani, C. A., Sundaram, A. K., & Walsh, J. P. (1999). The purposes and accountability of the corporation in contemporary society: Corporate governance at a crossroads. Law and Contemporary Problems, 62(3), 9-86. DOI: https://doi.org/10.2307/1192226

https://www.bss.uz/rubric/37-mejdunarodnye-standardty-finansovoy-otchetnosti.

Ball, I. 2009. Serving the public interest: How the IFAC fulfills its mission in a globalized economy. Cost Management (January/February): 34-39.

Daske, H., L. Hail, C. Leuz and R. Verdi. 2008. Mandatory IFRS reporting around the world: Early evidence on the economic consequences. Journal of Accounting Research (December): 1085-1142. DOI: https://doi.org/10.1111/j.1475-679X.2008.00306.x

Wu, J. S. and I. X. Zhang. 2019. Mandatory IFRS adoption and the role of accounting earnings in CEO turnover. Contemporary Accounting Research 36(1): 168-197. DOI: https://doi.org/10.1111/1911-3846.12428

Werner, C. A. 2012. IFRS for privately owned businesses. The CPA Journal (August): 6, 8-9.

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