RESOLUTION OF BOARD OF NATIONAL BANK OF THE KYRGYZ REPUBLIC

of July 14, 2005 No. 22/2

About the Provision "About the Minimum Requirements to External Audit of the Banks and Financial Credit Institutes Licensed by National Bank of the Kyrgyz Republic"

Board of National Bank of the Kyrgyz Republic for the purpose of strengthening of public supervision and ensuring reliability of the financial reporting of the banks and other financial credit institutes licensed by NBKR based on the Law of the Kyrgyz Republic "About modification and amendments in some legal acts of the Kyrgyz Republic" of 14.12.2004, having considered the project of the Provision "About the Minimum Requirements to External Audit of the Banks and Other Financial Credit Institutes Licensed by National Bank of the Kyrgyz Republic", decides:

1. Approve the Provision "About the Minimum Requirements to External Audit of the Banks and Other Financial Credit Institutes Licensed by National Bank of the Kyrgyz Republic" it (is applied).

2. To management of methodology of supervision and licensing together with Legal department to carry out state registration of this resolution in the Ministry of Justice of the Kyrgyz Republic in accordance with the established procedure.

3. This resolution becomes effective after 15 calendar days from the date of official publication after state registration in the Ministry of Justice of the Kyrgyz Republic.

4. From coming into force of this resolution to declare invalid Provisional regulations "About the minimum requirements to external audit of the banks and financial credit institutes licensed by National Bank of the Kyrgyz Republic", NBKR approved by the resolution of Government of 5.02.2003 No. 3/3, registration number MU of the KR No. 22-03 of 11.03.03.

5. To impose control of execution of this resolution on Omurzakova G. M., the Vice-chairman of National Bank of the Kyrgyz Republic.

Approved by the Resolution of Board of National Bank of the Kyrgyz Republic of July 14, 2005 No. 22/2

Regulations on the minimum requirements to external audit of the banks and other financial credit institutes licensed by National Bank of the Kyrgyz Republic

This Provision is developed according to the Laws of the Kyrgyz Republic "About banks and banking activity in the Kyrgyz Republic", "About auditor activities", "About financial accounting" and establishes the minimum requirements (criteria) for audit of the banks including performing activities according to the Islamic principles of banking and financing, and other financial credit institutes (specialized financial credit institute JSC Finance Company of Credit Unions and microfinance companies) licensed by National Bank of the Kyrgyz Republic (further - banks).

This Provision extends to National bank of development of the Kyrgyz Republic in the part which is not contradicting the Law of the Kyrgyz Republic "About National bank of development of the Kyrgyz Republic".

I. The used determinations

For the purposes of this provision the following determinations are used:

External audit of bank - independent check of financial accounting and the financial reporting of bank by the external auditor of bank for the purpose of expression of opinion on reliability of the financial reporting and compliance of financial accounting to the established standards.

The external auditor of bank - the independent auditing organization formed according to requirements of the legislation of the Kyrgyz Republic.

Requirements to audit include requirements which the bank shall expose to auditing organization, its state, the involved auditors (physical persons and legal entity), audit inspection (at any stage), to audit opinion, according to the legislation of the Kyrgyz Republic and this Provision.

The letter to management - the written address the external auditor of bank to the customer of external audit of bank with information on shortcomings of accounting records, systems of financial accounting and internal control which can lead to mistakes in accounting records, and the corresponding recommendations about correction of the revealed shortcomings.

Independence of the external auditor of bank - capability of the external auditor of bank to be effective independently, irrespective of someone's influence on results of its conclusions, conclusions and in the conditions excluding any foreign impact on opinion expression by the external auditor of bank.

The explanatory note (disclosures) to the financial reporting of bank - the document, which:

- provides information on the basis of preparation of the financial reporting of bank and specific accounting policy chosen and applied to accounting of essential transactions and events;

- opens information required by International accounting standards the standards approved by the Organization of financial accounting and audit for Islamic financial institutions (1), but not provided somewhere else in the financial reporting of bank;

- provides the additional information which is not provided in the most financial reporting of bank, but necessary for its objective representation.

Terms Officials of bank, Insiders and affiliates, Considerable subsidiary company of bank or bank holding company, Islamic bank, the bank having "Islamic window", the Islamic principles of banking and financing, Sharia council - have the values determined by the Law of the Kyrgyz Republic "About banks and banking activity in the Kyrgyz Republic".

II. Independence of the external auditor of bank

2.1. The external auditor of bank shall remain independent, objective, avoid situations which give the grounds to consider that there is conflict of interest.

2.2. In case of determination of independence of auditing organization all available information on availability of the relations falling under determination insider and/or affiliation shall be taken into account. The auditing organization cannot be acknowledged independent of bank or from any his insider and the affiliate if actually auditing organization independent is not according to requirements of the legislation of the Kyrgyz Republic and this provision.

2.3. When carrying out external audit of bank the external auditor of bank shall observe the restrictions set by the Law of the Kyrgyz Republic "About auditor activities".

2.4. The auditing organization or auditors participating in audit of bank, or the involved auditors participating in audit of bank are not considered independent of bank if they are or were within two last years:

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