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ORDER OF THE MINISTRY OF FINANCE OF THE REPUBLIC OF TAJIKISTAN

of November 24, 2004 No. 141

About approval of the Instruction about procedure for filling with business entities of forms of the quarter and annual accounting (financial) accounts constituted according to IFRS

In pursuance of Item 2 of the order of the Government of the Republic of Tajikistan of 04.11.2002 "About international accounting standards" and taking into account the recommendation of the Project of development of the companies of Pragma Corporation (YuSAID) I rasporyazhat No. 428:

1. Approve the Instruction "About procedure for filling with business entities of forms of the quarter and annual accounting (financial) accounts constituted according to IFRS" (appendix 1).

2. To management of Methodology of financial accounting, reporting and audit (R. Kurbonov) to place the order for production of the specified instruction and to provide with it the business entities transferring system of financial accounting to IFRS.

 

Minister Nazhmiddinov S. M.

Appendix 1

to the Order of the Ministry of Finance of the Republic of Tajikistan of November 24, 2004 No. 141

The instruction about procedure for filling with business entities of forms of the quarter and annual accounting (financial) accounts constituted according to IFRS

GENERAL PROVISIONS

This Instruction determines procedure for creation and submission of quarter and annual accounting (financial) accounts, and also relation by these questions of the companies, organizations, organizations, being legal entities by the legislation of the Republic of Tajikistan for internal and external users of accounting (financial) information. The accounting (financial) records of general purpose provide information on financial position, financial results of activities and cash flow of the subject useful to wide range of users in case of adoption of economic decisions.

This Instruction is constituted for the subjects which passed to the new Chart of accounts of financial accounting of financial and economic activities of business entities constituted according to IFRS, the Ministry of Finance of the Republic of Tajikistan approved by the order of 5.03.04 No. 28. (It is registered in the Ministry of Justice of the Republic of Tajikistan 31.03.04g. (No. code 114)).

Part I. General instructions for the subjects which passed to the new chart of accounts of financial and economic activities

The essence of new approaches of financial accounting is that on the basis of international accounting standards and accounting rules subjects independently develop accounting policy, the most suitable for them which in the best way will be able to reflect financial position and results of transaction. Being guided by the legislation of the Republic of Tajikistan, by regulatory legal acts in the field of financial accounting, subjects for implementation of statement of financial accounting are granted the right to independently create the accounting policy, proceeding from structure, industry accessory and other features of activities.

The accounting (financial) records shall include the data necessary for forming of fair and complete idea of financial position, financial results of activities of the subject and changes in its financial position and cash flow. If insufficiency of data for forming of complete idea of financial position of the subject, financial results of its activities comes to light, then the subject includes the corresponding additional indicators and explanations in accounting (financial) records, for ensuring objective representation and application of IFRS.

PURPOSE AND PRINCIPLES OF ACCOUNTING (FINANCIAL) RECORDS

The purpose of accounting (financial) records consists in submission of information on financial position, results of activities, and changes in financial position of the subject useful to wide range of users.

The financial position depends on the economic resources which are available for the subject, its financial structure, liquidity, solvency, capability to adapt to changes of the environment. Information on financial structure is necessary for forecasting of future needs for borrowed funds, and how future cash flows and their equivalents in the future will bring economic benefit. Information on results of activities of the subject, in particular, about its profitability, is required for assessment of potential changes in economic resources whom it will control in the future. Information concerning changes in financial position of the subject is useful to assessment of investing, financial and operating activiies during the accounting period. This information provides basis for assessment of capability to create money and their equivalents and needs of the subject for use of these cash flows.

Creation of accounting (financial) reports under accounting standards assumes observance of fundamental rules which determine general approach by their preparation and representation. Submission of accounting (financial) records provides base for achievement of comparability as with own financial reporting of the subject for preceding periods, and with accounting (financial) records of other subjects. Application of IFRS is based on the basic fundamental principles: going concern and accrual method.

Going concern principle - in case of creation of accounting (financial) records the management shall estimate capability of the subject to continue the activities. The accounting (financial) records shall prepare on the basis of the assumption of going concern if only the management does not intend to liquidate the company or to liquidate the company or to stop business activity.

The accounting (financial) records are usually constituted on the basis of assumption that the subject functions, and will conduct transactions in the near future. Thus, the going concern assumes that the subject acts and will continue to be effective in the near future (at least, during 1 year), from this it follows that the subject has neither intention, nor need to liquidate or reduce scales of the activities.

The accrual basis - recognizes that the income and expenses of the subject are reflected in process of their origin, but not in process of the actual receipt or payment of money or their equivalents, results of transactions and other events are recognized in case of their approach (but not during the obtaining or payment of money and their equivalents) and are considered in that accounting period and are reflected in accounting (financial) reports of those accounting periods in which they occurred.

The accounting (financial) report prepared on the basis of accrual method informs users not only on the last transactions including payment and cash receipt but also on future obligations to pay money and future receipts of money resources. The subject shall constitute accounting (financial) records, except for the cash flow statement, according to accrual method.

There are also following high-quality criteria of information, containing in accounting (financial) reports which are designed to do information useful to users: transparency, importance, reliability, comparability, etc.

STRUCTURE OF THE FINANCIAL REPORTING

The financial reporting is submission of information on financial position, the subject, results of activities and changes in financial position of the subject. The financial reporting preparation of general purpose is regulated by the International Accounting Standards (IAS) which establish the general principles of creation and accounts presentation, the recommendation about its structure, the minimum requirements on its content.

Annual accounting (financial) accounts are included:

"Balance sheet", form No. 1

"Report on results of financial and economic activities", form No. 2

"Cash flow statement", form No. 3

"Statement of changes in equity", form No. 4

"Explanatory note"

The structure of quarter accounting (financial) records consists from:

"Balance sheet", form No. 1

"Report on results of financial and economic activities", form No. 2

"Cash flow statement", form No. 3

The balance sheet - shall include such indicators as: money and their equivalents, inventories, receivables and payables, fixed assets, intangible assets, financial assets, investments, income tax and obligations, capital and reserves. Creation of the balance sheet consists in disclosure of company funds and their sources by main items of assets and liabilities, and, also in comparison of data for the accounting period with data for preceding period. The additional materials opening contents of Articles are given in the balance sheet and in appendices to it according to requirements of standards.

The elements which are directly connected with measurement of financial position is assets, obligations and the capital.

Assets are the resources controlled by the subject, which appeared as a result of events of last periods from which the subject expects receipt of economic benefit in the future. Assets can be classified by liquidity on turnover and non-current.

Obligations are the debt of the subject arising from events of last periods which settlement will lead to outflow from the resources of the subject containing economic benefit. Obligations can be subdivided on repayment periods on short-term and long-term.

The capital is the share in the subject's assets remaining after deduction of all its obligations. The capital sum shown in balance depends on measurement of assets and liabilities.

The report on results of financial and economic activities shall include information on revenue, results of operating activiies, costs on financing, shares of profits and losses of associated companies and the joint activities considered by participation method, tax expenses on profit or loss from ordinary activities, results of force majeure, share of minority, net profit or loss for the period. Creation of the Report consists in the adjustment received in the accounting period of revenue by addition of the amount of earned incomes and subtraction of the amount of the made expenses that as a result gives the size of net profit for the accounting period. The additional information opening contents of Articles are provided in the balance sheet or in appendices to the financial reporting.

The elements connected with measurement of results of activities in the report on results of financial and economic activities are the income and expenses.

The income is increase in economic benefits during the accounting period occurring in the form of inflow or increase in assets, or reduction of obligations that leads to increase in the capital. The deposits of owners of the subject increasing its capital the income do not belong to element. The income includes revenue received as a result of the main (authorized) activities of the subject and income gained as a result of nonbasic activities.

The expense is the reduction of economic benefits during the accounting period happening in the form of outflow or depletion of assets or increase in obligations that leads to capital reduction. The cash outflow or other assets connected with capital allocation between the subject's owners. Expenses include the costs and losses arising during the main activities of the subject. The difference between the income and expenses representing net profit (net loss) increases (reduces) equity

The cash flow statement includes information reflected in the "Cash flow statement" IFRS 7 standard. Contents of the Cash flow statement provide representation in the report of operating cash flows by two methods - direct and indirect. Both of these methods are resolved, according to IFRS, however use of direct method is considered preferable.

Elements of the cash flow statement reflect impact of operating, investing and financial activities of the subject on condition of its money for certain accounting period, allows to explain changes of money for this period.

The statement of changes in equity contains information on each element of share capital and reserves (share capital, additional issue, reserve on revaluation of values, reserve on exchange differences), and possible changes (change in accounting policy, change in result of revaluation of fixed assets and investments, etc.). Data on net profit for the accounting period which is equity component are shown, it is informed total on the subject's capital.

Creation of the Report on capital movement consists in consecutive adjustment of remaining balance of the capital for the previous accounting period by subtraction of the added dividends and result of revaluation of investments and addition of result of revaluation of fixed assets, net profit for the accounting period and additional issue that gives the size of the capital of the subject for the end of accounting year.

Elements of the report includes equity and retained earnings. The equity represents residual share after subtraction from assets of obligations.

The explanatory note reflects the basic methodological principles of creation of accounting (financial) records accepted by the subject. The management of the subject shall choose and apply accounting policy so that the accounting (financial) records conformed to requirements of IFRS, independently created the accounting policy, proceeding from the structure, industry accessory and other features of activities.

The explanatory note to accounting (financial) records shall:

provide information on the basis of preparation of the accounting (financial) records and specific accounting policy chosen and applied to essential transactions and events;

open information required IFRS which is not provided somewhere in accounting (financial) records;

provide the additional information which is not provided in the most accounting (financial) records, but is not necessary for objective representation.

Forming of accounting (financial) records establishes the general principles of creation and submission of this reporting, assumes disclosure of accounting policy of the subject, and the corresponding additional indicators and explanations, showing the essential moments of activities of the subject and being part of accounting (financial) reports.

REQUIREMENTS IMPOSED TO ACCOUNTING (FINANCIAL) REPORTS

In accounting (financial) records it shall be accurately allocated and if necessary will repeat the following information where address part of forms of the reporting is filled:

"The company (consolidation)" - is specified full name of the subject (according to the constituent documents registered in accordance with the established procedure);

"The industry (type of activity)" - is specified type of activity according to the Industries of the National Economy qualifier;

"Governing body" - is specified the name of body to which coordination and regulation of activities of the subject are assigned and to which the accounting (financial) records go;

"Pattern of ownership" - pattern of ownership of the subject;

"Unit of measure" - creation of the report by subjects is made in national currency - somoni, and the summary accounting report is constituted in one thousand somoni.

"INN" - the registration identification taxpayer number appropriated to each subject.

"Address" - complete legal address of the subject;

First name, middle initial, last name, phone number of the chief accountant.

Accounting year the period inclusive is considered from January 1 to December 31. The first accounting year for the newly created subject begins from the moment of state registration to December 31 of accounting year.

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