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.
Наука и научный потенциал: основа
Устойчивого инновационного развития
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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.
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
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