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THE ORDER OF PUBLIC SERVICE OF REGULATION AND SUPERVISION OF THE FINANCIAL MARKET UNDER THE GOVERNMENT OF THE KYRGYZ REPUBLIC

of August 19, 2015 No. 1

About approval of the Regulations on rating assessment of activities of auditing organizations

According to the order of the Government of the Kyrgyz Republic of September 15, 2014 to No. 530 "About delegation of separate rule-making powers of the Government of the Kyrgyz Republic number of state bodies of the executive authority", and also for the purpose of further development of audit in the Kyrgyz Republic I order:

1. Approve Regulations on rating assessment of activities of auditing organizations according to appendix 1.

2. Publish this order in the Erkin Too newspaper, on the official website of the Government, and also on the website of Public service of regulation and supervision of the financial market under the Government of the Kyrgyz Republic within three working days from the date of registration.

3. Send the copy of this order to the Ministry of Justice of the Kyrgyz Republic for state registration within one working day from the date of official publication.

4. To impose control over execution of this order on the member of Executive council of Public service of the regulation and supervision of the financial market under the Government of the Kyrgyz Republic supervising questions of financial accounting and audit.

Chairman

S. Mukanbetov

Appendix 1

to the Order of Public service of regulation and supervision of the financial market under the Government of the Kyrgyz Republic of August 19, 2015 No. 1

Regulations on rating assessment of activities of auditing organizations

1. General provisions

1. The regulations on rating assessment of activities of auditing organizations regulate procedure for the organization, information collection, its processing and calculation of rating assessment of activities of auditing organizations of the Kyrgyz Republic.

2. Organization and terms of carrying out Rating assessment

2. Activities of auditing organizations the activities term whom from the moment of receipt of the license for implementation of auditor activities exceeds the 3-year period are subject to rating assessment.

3. Rating assessment of activities of auditing organizations with activities term, from the moment of receipt of the license for implementation of auditor activities, less 3-year period can be performed only in case of voluntary declaration of will of such auditing organizations.

4. Calculation of rating is perfromed by the authorized body pursuing single state policy in the field of auditor activities (further - authorized body), based on these State registers of auditors and auditing organizations, reports on auditor activities of auditing organizations, data of the available for authorized body about the announced preventions and the imposed administrative penalties on auditing organizations and other data according to the legislation of the Kyrgyz Republic.

5. Terms of carrying out Rating assessment are determined by the order of the head of authorized body.

6. Rating assessment of activities of auditing organizations is carried out once a year.

7. Results of Rating assessment are published on the website of authorized body and in mass media.

3. Technique of Rating assessment

8. Rating assessment is based on integrated, multidimensional approach to assessment of activities of auditing organization.

For calculation of rating the comparative quantitative and qualitative indexes characterizing activities of auditing organizations are used. Also the weight coefficients determining the importance of each indicator, parameter are used.

The rating of auditing organization is determined by calculation of integrated indicator of rating for three following groups of the indicators which are most in a complex characterizing activities of auditing organization: economic indicators of activities of auditing organization; level of professionalism of auditing organization; goodwill of auditing organization.

Auditing organizations are ranged in ascending order of rating assessment. The organization with the minimum value of comparative assessment has the highest rating.

4. Algorithm of Rating assessment

9. Basic data are presented in the form of matrix (aij), that is the table where:

- in the lines numbers of indicators are written down (i = 1, 2, 3,..., n);

- on columns - numbers of auditing organizations (j = 1, 2, 3,..., m).

10. On each indicator there is the maximum value which is brought in column of conditional reference auditing organization.

11. Initial indicators of matrix of aij are standardized concerning the corresponding indicator of reference auditing organization on formula:

Формула 1 к Приказу КР от 19.08.2015 г. №1

where:

Xij - the standardized indicators of j-y of the analyzed auditing organization;

optjai - the value equal to the best indicator of auditing organization on the 10th ball scale.

Besides, ponderability of groups of indicators is entered into formula.

12. For each analyzed auditing organization value of its rating assessment is determined by formula:

Формула 2 к Приказу КР от 19.08.2015 г. №1

where:

x1j, x2j, xnj - the standardized indicators of j-y of the analyzed auditing organization.

13. Value of weight coefficients for calculation of integrated indicator of rating:

k1 = 0,75;

k2 = 2;

k3 = 2,5.

14. Auditing organizations are ranged in places in ascending order of rating assessment.

15. Numerical value from 0 to 10 is appropriated to each indicator.

5. Structure of intra group indicators

16. When calculating rating the following intra group indicators and points corresponding to their values are used.

On group 1 "Economic indicators of activities of auditing organization"

Indicator

Value

Points

Average revenue of auditing organization in the last two years (To 1)

over 10 million som

10

over 1 million som

8

over 100 thousand som

4

Average cost of one contract for audit (To 2)

over 100 thousand som

10

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