Mandatory Audit of a Joint-Stock Company

What the law says

• joint-stock companies are subject to a mandatory annual audit regardless of size (Article 35 of ZRU-677);
• a copy of the audit opinion goes to the tax authorities within 15 days after the audit, but no later than June 15 of the following year;
• annual IFRS financial statements are published after an audit under ISA no later than two weeks before the annual general meeting of shareholders (Article 102 of the Law on Joint-Stock Companies);
• only firms with at least two auditors with three or more years of experience or an international certificate may perform a mandatory audit;
• failure to carry out the audit by year-end after an administrative penalty — a fine of 100 BCV (44 million soums at a BCV of 440,000), which does not release the company from the audit.

Why there are no size thresholds for a JSC

The size thresholds for assets, revenue and headcount apply to commercial organisations that are not named in the list directly. A joint-stock company is named, so any JSC is audited — including one that did not carry out a single transaction during the year.

The practical consequence: a "dormant" company still has to commission an audit of its annual financial statements; having no turnover does not remove the obligation, it only makes the audit cheaper.

What the auditor checks in a joint-stock company

• Formation of and changes to the charter capital, payment for shares
• Accounting for and disclosure of transactions with affiliated persons
• Declaration and payment of dividends
• Major transactions and interested-party transactions — their approval and accounting
• Compliance of the annual financial statements with national accounting standards (NAS) or IFRS, if the company reports under international standards

The audit opinion and the general meeting of shareholders

The audit opinion is the document shareholders see together with the annual financial statements. Its content and form are set by Article 39 of ZRU-677: the auditor's opinion on the reliability of the statements is expressed in standard wording, and any qualifications are disclosed separately.

So it makes sense to finish the audit before the annual meeting is convened, not after: errors found can then still be corrected in the financial statements the shareholders approve.

When to start

The best time is right after the year is closed. Part of the work (testing the accounting policy, major contracts, confirmations from banks and counterparties) can be done before year-end; the final stage then takes less time and is not squeezed by the meeting dates.