Audit of a Kazakh company, financial statements, accounting, consulting in Kazakhstan

Kazakhstan is a state in the centre of Eurasia, bordering China, Russia, Uzbekistan, Kyrgyzstan and Turkmenistan. Kazakhstan produces textiles, foodstuffs, pharmaceuticals, fertilizers, petrochemicals, oil, gas, uranium, non-ferrous and ferrous metals, coal, and machinery. It is a member of the single customs union with Russia, the EAEU: no customs duties and VAT refund, and the possibility to open a bank account and carry out transactions in rubles. In addition, Kazakhstan has 12 special economic zones (SEZs). Low corporate tax (10%) with a simplified tax regime.

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150 – 400 USD per hour

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General requirements

The main document regulating accounting in Kazakhstan is the Accounting and Financial Reporting Act No. 234-III of the Republic of Kazakhstan of 28 February 2007.

Financial statements include:

balance sheet;
profit and loss statement;
cash flow statement;
statement of changes in equity;
explanatory note.

The manner of making financial statements and additional requirements for them are set out in accordance with the International Financial Reporting Standards (IFRS) and national financial reporting standards, depending on the company’s size.

According to the Enterprise Act, entities in the Republic of Kazakhstan are classified into small, medium-sized and large depending on their asset value expressed in monthly calculation index (MCI) and the number of employees:

1) small:

average annual value of assets does not exceed 60 000 MCI (monthly calculation index),
up to 50 employees;

2) medium-sized:

average annual value of assets is below 325 000 MCI,
not more than 250 employees;

3) large:

average annual value of assets is above 325 000 MCI,
over 250 employees.

Small business entities have the right to apply national financial reporting standards and file accounts with state authorities and make financial statements in a simplified form.

Financial statements shall be in the national currency of the Republic of Kazakhstan: tenge (KZT).

Source documents shall be in Kazakh and (or) Russian.

Entities shall present financial statements to:

the founders;
the authorized government statistics agency at the place of state registration;
state control and supervision authorities of the Republic of Kazakhstan in accordance with their competence;
their parent entity to which they are subsidiaries in the manner prescribed by the parent entity, including the list, forms and due dates.

All entities must also send financial statements and an auditor’s opinion in electronic form to the tax inspectorate (in Kazakh or Russian).

Audit of accounts

The main document regulating audit in Kazakhstan is the Auditing Act No. 304-I of the Republic of Kazakhstan of 20 November 1998.

The following must be audited:

joint stock companies;
state enterprises with the right of economic management with a supervisory board in the fields of education and healthcare;
insurance (reinsurance) entities, insurance groups of companies and entities, where an insurance (reinsurance) entity and (or) insurance holding company are large members, insurance broker;
unified savings pension fund and professional securities market participants incorporated as joint stock companies;
large members of an investment portfolio manager;
in cases provided for by the Subsurface Resources and Management Code of the Republic of Kazakhstan, legal entities that have the right to subsurface management, to exploration and production of hydrocarbons or exploration and production of solid minerals;
banks, banking groups and entities where a bank and (or) banking holding entity is a large member;
civil aviation entities, except for airlines that do aviation work according to the list determined by the Government of the Republic of Kazakhstan;
cereal receiving stations;
insurance payments guarantee fund;
social health insurance fund;
legal entities of the Republic of Kazakhstan that have entered into an investment contract that provides for investment preferences;
special finance companies in accordance with the Project Financing and Securitization Act of the Republic of Kazakhstan;
real estate developers and authorized companies in accordance with the Shared-Equity Housing Construction Act of the Republic of Kazakhstan;
accounting and finance center for support of renewable energy sources in accordance with the Renewable Energy Sources Use Support Act of the Republic of Kazakhstan;
authorized economic operators in accordance with the Customs Regulation Code of the Republic of Kazakhstan;
limited liability partnerships if the following conditions are met simultaneously:

it has members (founders) holding less than 10% share in the authorized capital;
average annual number of employees is more than 250 and (or) average annual income is over 3 000 000 MCI set by the republic’s budget act and effective on 1 January of the relevant financial year (9 189 000 000 KZT for 2022).

Time frame for preparation and submission of financial statements

Annual financial statements must be presented to the National Bank annually by 30 April of the year following the reporting year.

Quarterly accounts must be presented by the 15th day of the second month following the reporting quarter.

Liability for late filing

Late filing of accounts may first result in a warning and, in the case of another violation, in an administrative penalty of 30 MCI. For small and medium-sized legal entities and non-profit organizations, it amounts to 45 MCI. For large legal entities, it amounts to 70 MCI.

Consolidated financial statements

Entities that have subsidiaries, besides financial statements on activity of the parent company, must make and present consolidated financial statements and audit financial statements of the group.

The parent entity has the right to determine the manner in which subsidiaries apply the unified accounting policy and subsidiaries’ property is inventoried and other matters connected with transparency and reliability of data of subsidiaries’ financial statements.

Consolidated financial statements include:

Consolidated statement of financial position;
Consolidated statement of profits and losses and other comprehensive income;
Consolidated statement of changes in equity;
Consolidated statement of cash flows;
Notes to consolidated financial statements.

Frequency Asked Questions

What accounting standards are used in Kazakhstan?

The national accounting standards of Kazakhstan are known as the Accounting Rules of the Republic of Kazakhstan (ARRK). They were adopted in 2001 and are designed to align with International Financial Reporting Standards (IFRS) as much as possible. However, there are some differences between ARRK and IFRS, particularly in areas such as taxation and specific industry regulations. In addition to ARRK, companies in Kazakhstan may also use IFRS if they choose to do so.

What is the supreme audit institution in Kazakhstan?

The supreme audit institution in Kazakhstan is the Accounts Committee for Control over the Execution of the Republican Budget.

When did Kazakhstan adopt IFRS?

Kazakhstan adopted IFRS in 2004 for listed companies and other large entities. However, the use of IFRS is not mandatory for all companies, and some entities may use other accounting frameworks or standards as approved by the Ministry of Finance.

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