On Audit Activity

The Law of the Republic of Kazakhstan dated 20 November 1998 No. 304

Unofficial translation

      Footnote. The Law is in the wording of the Law of the Republic of Kazakhstan dated 5 May 2006 No. 139 (the order of enforcement see Article 2 of the Law of the Republic of Kazakhstan No. 139).

      Footnote. Through the whole text, the words “on revocation”, “Revocation”, “of revocation” are substituted respectively by the words “on deprivation”, “Deprivation”, “of deprivation” – by the Law of the Republic of Kazakhstan dated 12 January 2007 No. 222 (shall be enforced upon expiry of 6 months from the date of its official publication).

      This Law regulates relations, arising between state bodies, individuals and legal entities, auditors, audit organizations and professional audit organizations in the process of carrying out the audit activity in the Republic of Kazakhstan.

Article 1. Basic definitions, used in this Law

      The following basic definitions are used in this Law:
      1) accredited professional audit organization (hereinafter – professional organization) – non-commercial organization, uniting auditors and audit organizations;
      2) accreditation – official recognition of legal authorities of professional audit organizations by the authorized body, provided by this Law;
      3) audit – verification for the purpose of expression of independent opinion on financial reporting and other information, linked with financial reporting, in accordance with the legislation of the Republic of Kazakhstan;
      4) an auditor – an individual, attested by the Qualifications commission on attestation of candidates for auditors (hereinafter – Qualifications commission), received the qualification certificate on assumption of qualification ”auditor”;
      5) audit report – written official document that is the result of conducted audit;
      6) audit activity – entrepreneurial activity on conducting the audit of financial reporting and other information, linked with financial reporting, and provision of services on the activity profile;
      7) audit organization – commercial organization, created for carrying out of audit activity;
      8) audit subject – a legal entity, branches and (or) representatives of a legal entity, acting from his (her) name, individual entrepreneur, in respect of whom the audit is conducted;
      9) attestation – procedure for determination of knowledge and skills of the candidates for auditors by Qualifications commission;
      10) Code of ethics – handbook of ethics rules of professional activity of auditors;
      10-1) conflict of interests – the situation upon which the interest of audit organization may have an effect on its opinion on credibility of financial reporting of audit subject;
      10-2) uncertain audit report – audit report, composed with violation of the legislation of the Republic of Kazakhstan on audit activity, containing uncertain and (or) incomplete details on financial reporting and on information, provided by the standards of an audit misinforming the users;
      11) deliberately misleading audit report – the audit report, composed without conducting the audit or containing the opinion, deliberately misleading the users;
      12) is excluded by the Law of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2);
      13) standards of organizations – internal documents of audit organization that establish unified requirements to procedure for conducting the audit, not inconsistent with the legislation of the Republic of Kazakhstan;
      14) authorized state body (hereinafter – authorized body) – central executive body, carrying out the regulation in the field of audit activity and control of the activity of audit and professional organizations.
      Footnote. Article 1 as amended by the Law of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2).

Article 2. Legislation of the Republic of Kazakhstan on audit activity

      1. Legislation of the Republic of Kazakhstan on audit activity is based on the Constitution of the Republic of Kazakhstan and consists of this Law and other regulatory legal acts of the Republic of Kazakhstan.
      2. If international treaty, ratified by the Republic of Kazakhstan establishes other rules than those, contained in the legislation of the Republic of Kazakhstan on audit activity, the rules of international treaty shall be applied.

      Note of RCLI!
      Article 3 is provided to be amended by the Law of the Republic of Kazakhstan dated 16.05.2014 No. 203-V (shall be enforced upon expiry of six months after the date of its first official publication).

Article 3. Audit activity

      1. Audit organizations, having a license on carrying out the audit activity shall enjoy the right to engage in audit activity
      2. Beside the audit, the audit organizations may render the following services on profile of their activity as well:
      1) related services on profile of their activity in accordance with the standards of an audit;
      2) restoration and maintenance of business accounting, drawing up of financial reporting;
      3) internal audit;
      4) counseling on the issues of applying the legislation on taxes and other compulsory payments in budget and maintenance of tax accounting;
      5) formation of primary statistics;
      6) analysis of financial and economic activity and financial planning, economic, financial and management counseling;
      7) counseling on the issues of maintenance of business accounting and drawing up of financial reporting;
      8) training on maintenance of business accounting and drawing up of financial reporting, assessed taxation, audit and analysis of financial and economic activity and financial planning;
      9) recommendation on automatization of maintenance of business accounting and drawing up of financial reporting, training of automated maintenance of business accounting and drawing up of financial reporting;
      10) development of methodological benefits and recommendations on maintenance of business accounting and drawing up of financial reporting, audit, analysis of financial and economic activity and financial planning, on rendering related services on profile of their activity in accordance with the standards of an audit;
      11) legal services, linked with audit activity;
      12) is excluded by the Law of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2).
      If rendering of separate types of services on profile of their activity in accordance with the legislation of the Republic of Kazakhstan, provided by this paragraph requires receipt of the relevant license, the audit organizations shall not have the right to render these services without existence of such license.
      3. Audit organizations shall be prohibited to engage in other types of entrepreneurial activity.
      Footnote. Article 3 as amended by the Laws of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2); dated 19.03.2010 No. 258-IV.

Article 4. Main principles of audit activity and standards of an audit

      1. Main principles of audit activity are:
      independence;
      objectivity;
      professional competence;
      confidentiality;
      honesty;
      compliance with the standards of organizations.
      2. Audit shall be carried out in accordance with this Law and international standards of an audit (hereinafter – standards of an audit), not inconsistent with the legislation of the Republic of Kazakhstan, published in official and Russian languages by organization, having written permit to their official publication in the Republic of Kazakhstan from the international auditing practices committee under International Accountant Federation.
      Footnote. Article 4 as amended by the Law of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2).

Article 5. Audit and its types

      1. The types of audit are:
      1) compulsory audit;
      2) initiative audit.
      2. Subject to compulsory audit:
      joint stock companies;
      state enterprises on the basis of economic management with supervisory board in the scopes of education and health care service;
      insurance (reinsurance) organizations, insurance holdings and organizations in which the insurance (reinsurance) organization and (or) insurance holding are bid participants, insurance broker;
      single pension savings fund and managers of investment portfolio;
      big participants of the investment portfolio manager;
      subsurface users;
      banks, banking holdings and organizations in which the bank and (or) banking holding are big participants;
      subjects of natural monopoly, with the exception of subjects of natural low powered monopoly;
      organizations of civil aviation, with the exception of airline carriers, carrying out the aviation works according to the list, determined by the Government of the Republic of Kazakhstan;
      cereal receiving points;
      insurance payment guarantee fund;
      legal entities of the Republic of Kazakhstan, concluded the contract on carrying out of investments, providing investment preferences;
      cotton-processing organizations;
      special financial companies in accordance with the Law of the Republic of Kazakhstan:On project financing and securitization”;
      tenant builders and project companies in accordance with the Law of the Republic of Kazakhstan “On participatory interest in housing construction”;
      accounting and finance centre on maintenance of renewable energy sources in accordance with the Law of the Republic of Kazakhstan “On maintenance of using the renewable energy sources”.
      Organizations for which the audit is compulsory and that publish annual financial reporting in periodical printed publications in accordance with the legislation of the Republic of Kazakhstan, shall be obliged to publish audit report together with annual financial reporting.
      3. Initiative audit shall be conducted at the initiative of audited subject or its participant in recognition of specified tasks, terms and volumes of audit, provided by the agreement on conducting the audit between an initiator and audit organization.
      Footnote. Article 5 as amended by the Laws of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2); dated 11.07.2009 No. 183-IV (the order of enforcement see Article 2); dated 15.07.2010 No. 338-IV (the order of enforcement see Article 2); dated 01.03.2011 No. 414-IV (shall be enforced from the date of its first official publication); dated 28.12.2011 No. 524-IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 12.01.2012 No. 539-IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 21.06.2013 No. 106-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 04.07.2013 No. 128-V (shall be enforced upon expiry of ten calendar days after its first official publication).

      Note of RCLI!
      Article 6 is provided to be amended by the Law of the Republic of Kazakhstan dated 16.05.2014 No. 203-V (shall be enforced upon expiry of six months from the date of its first official publication).

Article 6. Competence of the Government of the Republic of Kazakhstan

      The Government of the Republic of Kazakhstan shall:
      1) determine the authorized state body, carrying out the state regulation in the field of audit activity;
      2) determine organizations with participation of the state, for which the audit is compulsory, unless otherwise provided by the legislative acts of the Republic of Kazakhstan;
      3) confirm the qualification requirements, submitted upon licensing of audit activity;
      4) confirm the list, forms and periodicity of presentation of reporting by professional and audit organizations;
      5) perform other functions, imposed on it by the Constitution, Laws of the Republic of Kazakhstan and acts of the President of the Republic of Kazakhstan.
      Footnote. Article 6 as amended by the Laws of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2); dated 05.07.2011 No. 452-IV (shall be enforced from 13.10.2011); dated 15.07.2011 No. 461-IV (shall be enforced from 30.01.2012).

      Note of RCLI!
      Article 7 is provided to be amended by the Law of the Republic of Kazakhstan dated 16.05.2014 No. 203-V (shall be enforced upon expiry of six months from the date of its first official publication).

Article 7. Competence of the authorized body

      The authorized body in the field of audit activity shall:
      1) ensure implementation of state policy in the field of audit activity;
      1-1) maintain register of auditors;
      1-2) develop and confirm qualification requirements to audit organizations that are allowed to conducting compulsory audit, and in respect of compulsory audit of financial organizations – in coordination with the National Bank of the Republic of Kazakhstan (hereinafter – National Bank);
      2) confirm the procedure for accreditation of professional organizations;
      3) conduct accreditation and maintain register of professional organizations;
      4) develop qualification requirements, submitted upon licensing of audit activity;
      5) carry out licensing if audit activity and maintenance of register of audit organizations;
      6) publish details on issuance, suspension, deprivation and termination of the license validity on carrying out of audit activity in periodical printed publications in official and Russian languages;
      7) confirm the procedure for conducting attestation of candidates for auditors;
      8) confirm the Rules of formation and carrying out of the activity of Qualifications commission;
      9) ensure conditions for distribution of the standards of an audit;
      10) – 12) are excluded by the Law of the Republic of Kazakhstan dated 17.07.2009 No. 188-IV (the order of enforcement see Article 2);
      13) develop the list, forms and periodicity of the representing the reporting by professional and audit organizations;
      14) is excluded by the Law of the Republic of Kazakhstan dated 17.07.2009 No. 188-IV (the order of enforcement see Article 2);
      14-1) carry out the control of compliance with the legislation of the Republic of Kazakhstan by audit organizations on prevention to legitimization (laundering) of incomes, received by illegal means, and financing of terrorism;
      15) confirm the forms of registers of audit and professional organizations;
      16) is excluded by the Law of the Republic of Kazakhstan dated 13.01.2014 No. 159-V (shall be enforced upon expiry of ten calendar days after the date of its first official publication);
      17) carry out the state control in the field of audit activity and the activity of professional audit organizations;
      18) develop and confirm the forms of compulsory departmental reporting, prompt sheets, risk assessment criteria, semi-annual plans of conducting verifications in accordance with the Law of the Republic of Kazakhstan “On state control and supervision in the Republic of Kazakhstan”;
      19) carry out other powers, provided by this Law, other Laws of the Republic of Kazakhstan, acts of the President of the Republic of Kazakhstan and Government of the Republic of Kazakhstan.
      Footnote. Article 7 as amended by the Laws of the Republic of Kazakhstan dated 12.01.2007 No. 222 (shall be enforced upon expiry of 6 months from the date of its official publication); dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2); dated 17.07.2009 No. 188-IV (the order of enforcement see Article 2); dated 28.08.2009 No. 192-IV (shall be enforced from 08.03.2010); dated 19.03.2010 No. 258-IV; dated 06.01.2011 No. 378-IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 05.07.2011 No. 452-IV (shall be enforced from 13.10.2011); dated 15.07.2011 No. 461-IV (shall be enforced from 30.01.2012); dated 05.07.2012 No. 30-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 10.07.2012 No. 36-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 13.01.2014 No. 159-V (shall be enforced upon expiry of ten calendar days after the date of its first official publication); dated 10.06.2014 No. 206-V (shall be enforced upon expiry of ten calendar days after the date of its first official publication).

Article 7-1. State control in the field of audit activity and the activity of professional audit organizations

      1. State control in the field of audit activity and the activity of professional audit organizations shall be carried out in the form of verification and other forms.
      2. Verification shall be carried out in accordance with the Law of the Republic of Kazakhstan “On state control and supervision in the Republic of Kazakhstan”. Other forms of state control shall be carried out in accordance with this Law.
      Footnote. Article 7-1 is in the wording of the Law of the Republic of Kazakhstan dated 17.07.2009 No. 188-IV (the order of enforcement see Article 2); as amended by the Law of the Republic of Kazakhstan dated 06.01.2011 No. 378-IV (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 8. An auditor

      1. An auditor shall carry out his (her) activity as an auditor only being in one audit organization.
      2. An auditor may be a participant of only one audit organization.
      Footnote. Article 8 as amended by the Law of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2).

Article 9. Audit organization

      1. Audit organization shall be created in legal organizational form of a limited liability partnership.
      2. Foreign organization shall be recognized as audit, if its status is confirmed by professional organization of a country, the resident of which it is.
      Professional organization, confirming the status of foreign audit organization shall be a member of International Accountant Federation.
      Foreign organization shall be recognized as audit as well, if its status is confirmed by the competence body of the state, the resident of which it is.
      3. Foreign audit organization may carry out audit activity in the Republic of Kazakhstan only upon formation of the relevant audit organizations by them – residents of the Republic of Kazakhstan.
      4. The quantity of auditors in composition of audit organization shall be no less than two persons.
      5. In a charter capital of audit organization, the share belonged to an auditor (auditors) and (or) foreign audit organizations shall be one hundred percent.
      6. A head of audit organization shall be obliged to have qualification certificate “auditor”.
      An auditor previously headed audit organization that in accordance with the legislative acts of the Republic of Kazakhstan was deprived of a license, may not be the head of other audit organization within one year from the date of enforcement of court decision on deprivation of a license.
      7. Audit organization, carrying out audit activity in the territory of the Republic of Kazakhstan may not be participant of other audit organization – a resident of the Republic of Kazakhstan.
      8. In case of creation of a branch in the territory of the Republic of Kazakhstan, the head of branch shall be obliged to have qualification certificate “auditor”.
      Footnote. Article 9 as amended by the Laws of the Republic of Kazakhstan dated 12.01.2007 No. 222 (shall be enforced upon expiry of 6 months from the date of its official publication); dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2).

      Note of RCLI!
      Article 10 is provided to be amended by the Law of the Republic of Kazakhstan dated 16.05.2014 No. 203-V (shall be enforced upon expiry of six months after the date of its first official publication).

Article 10. Professional organizations

      1. Accreditation of professional organization shall be confirmed by certificate on accreditation in the form, approved by the authorized body. Certificate on accreditation shall be valid in the whole territory of the Republic of Kazakhstan.
      2. Professional organizations are non-commercial organizations and shall act on the basis of a charter, adopted at the general meeting of their members.
      3. Structure and working bodies of professional organizations shall be determined by their charters.
      4. Incorporators and participants of professional organizations may be only auditors and audit organizations. The auditors and audit organizations shall act as members of only one professional organization.
      Auditors – members of professional organization shall have the right to elect and be elected in their managing bodies.
      5. Is excluded by the Law of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2).
      Footnote. Article 10 as amended by the Law of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2).

Article 11. Rights and obligations of professional organizations

      1. Professional organizations shall have the right to:
      1) carry out external control of the quality of audit organizations;
      2) conduct courses on raising of qualification of auditors, issue certificates on taking the courses in the manner, established by the authorized body;
      3) analyze, generalize and distribute work experience of auditors and audit organizations;
      4) represent the interests of auditors and audit organizations in the state, public, foreign and international organizations;
      5) consider the disputes of auditors, audit organizations, being their participants, linked with carrying out of audit activity;
      6) conduct rate of audit organizations and publish in periodical printed publications;
      7) participate in the work of international organizations on business accounting and audit;
      8) develop, issue and distribute study materials, methodological recommendations, periodical printed publications in the field of audit activity;
      9) give recommendations on the standards of an audit and other issues of audit activity;
      10) exclude the persons, admitted violations of the standards of an audit and code of ethics, following the results of conducted external quality control;
      11) develop and confirm education programs of raising of qualification of auditors.
      2. Professional organizations shall be obliged to:
      1) comply with the legislation of the Republic of Kazakhstan on audit activity, standards if an audit, code of ethics;
      2) create Qualifications commission within six months from the moment of receiving the accreditation;
      3) ensure own members by regulatory legal acts of the Republic of Kazakhstan in the field of audit activity;
      4) develop and accept the code of ethics;
      4-1) enable development of an audit, raising of its efficiency, organization and coordination of the activity of auditors and audit organizations;
      5) ensure compliance with requirements of the standards of an audit, code of ethics by auditors and audit organizations;
      6) is excluded by the Law of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2);
      7) is excluded by the Law of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2);
      8) in case of admission (withdrawal, exclusion) of members, as well as change of the personal composition of working managing body – to inform the authorized bodies on these changes;
      9) is excluded by the Law of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2);
      10) provide information on own activity in the authorized body in the manner, established by the legislation of the Republic of Kazakhstan.
      Footnote. Article 11 as amended by the Law of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2).

Article 12. Deprivation of certificate on accreditation

      1. Professional organization shall be deprived of certificate on accreditation in case, if;
      1) is excluded by the Law of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2);
      2) it does not create Qualifications commission within six months from the moment of receiving accreditation;
      3) ten percent of average quantity, but no less than five audit organizations - members of professional organization were deprived of a license on carrying out of audit activity within twelve calendar months without the application from the side of such professional organization;
      4) it violated the Rules of accreditation systematically (more than two times in a row) within a year;
      5) it provided deliberately misleading information in the authorized body about itself and its activity;
      6) the reason on which prevention of the authorized body was issues is not eliminated within three months;
      7) non-compliance of the code of ethics with requirements of code of ethics of the International Accountant Federation.
      2. Professional organizations shall have the right to appeal decision of the authorized body in a judicial proceeding.
      Footnote. Article 12 as amended by the Laws of the Republic of Kazakhstan dated 12.01.2007 No. 222 (shall be enforced upon expiry of six months from the date of its official publication); dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2).

Article 13. Attestation of candidates for assumption of qualification “auditor”

      1. Persons, having higher education and labour experience no less than three years in economic, financial, auditing or legal scopes or in the field of scientific and teaching activity on business accounting and audit in higher educational establishments shall be admitted to attestation.
      2. Attested persons shall receive qualification certificate on assumption of qualification “auditor” and personal stamp of auditor (hereinafter – personal stamp) with specification of number of qualification certificate, last name, own first name, as well as patronymic at will.
      Decision on assumption of qualification “auditor” shall be published in official and Russian languages in periodical printed publications, determined by the Qualifications commission.
      3. Non-attested persons shall be admitted to its repeated undergoing upon expiry of three months from the moment of adoption of decision by Qualifications commission.
      Footnote. Article 13 as amended by the Law of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2).

Article 14. Qualifications commissions

      1. Qualifications commission shall be created by professional organization being its incorporator, with the number no less than ten audit organizations.
      2. Qualifications commission is non-commercial organization, created in legal organizational form of an institute, and shall act on the basis of provision (charter).
      3. Qualifications commission shall not have the right to create branches and representatives.
      4. The composition of qualifications commissions includes one representative from the authorized body.
      5. Chairmen of qualifications commissions shall elect auditors, engaged in audit activity, from among their members by simple majority votes for the term of three years. One and the same person may not be elected by a chairman two times in a row.
      6. Financing and financial and logistical support of the activity of qualifications commissions shall be carried out by chairmen (participants) at the expense of own funds and other sources, not prohibited by the legislation of the Republic of Kazakhstan.
      7. Qualifications commission shall develop and approve the attestation program of candidates for auditors that shall conform to International Financial Reporting Standards, approved by the International Accounting Standards Committee Foundation, standards of an audit and legislation of the Republic of Kazakhstan.
      8. Qualifications commissions shall be obliged to represent the minutes of sitting to the authorized body with specification of number of qualification certificate and notarized copies of documents, presented in Qualifications commission by persons by whom the qualification “auditor” was assigned within fifteen business days from the date of adoption of decision.
      9. In case of violation of the procedure for conducting attestation of candidates for auditors, the authorized body shall have the right to appeal decision of qualification commissions in a judicial proceeding.
      Footnote. Article 14 is in the wording of the Law of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2).

Article 15. Deprivation of qualification certificate “auditor”

      Deprivation of qualification certificate “auditor” shall be carried out in the manner, established by the Code of the Republic of Kazakhstan on administrative infractions.
      Decision on deprivation of qualification certificate “auditor” shall be informed by the authorized body to professional organizations and shall be published in official and Russian languages in periodical printed publication.
      Persons that were deprived of qualification certificate “auditor” shall be admitted to repeated attestation no sooner than after three years.
      Footnote. Article 15 is in the wording of the Law of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2).

      Note of RCLI!
      Article 16 is provided to be amended by the Law of the Republic of Kazakhstan dated 16.05.2014 No. 203-V (shall be enforced upon expiry of six months after the date of its first official publication).

Article 16. Licensing of audit activity

      1. Audit activity shall be subject to licensing in the manner, established by the legislation of the Republic of Kazakhstan.
      2. License shall terminate its validity only in cases, provided by the Laws of the Republic of Kazakhstan.
      3. Suspension of validity and deprivation of a license shall be carried out in the manner, established by the Code of the Republic of Kazakhstan on administrative infractions.
      4. In case of termination of validity of a license, as well as its deprivation, the audit organizations shall be obliged to return the license in the authorized body within ten business days from the date of adoption of decision on termination of validity of the license, as well as its deprivation.
      Upon deprivation of a license, the term shall be calculated from the date of enforcement of court decree.
      5. The application on issuance of a license by audit organization which in accordance with the legislative acts of the Republic of Kazakhstan was deprived of a license shall be considered no sooner than after one year.
      Footnote. Article 16 is in the wording of the Law of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2).

Article 17. Agreement on conducting audit

      1. Relations between audit organizations and audited subjects shall be built on the basis of agreement in accordance with the legislation of the Republic of Kazakhstan.
      2. Agreement on conducting audit and (or) rendering of services on profile of audit activity shall provide as follows: subject of agreement, terms, amount and conditions of payment, rights, obligations and responsibility of parties, confidentiality of received information, as well as membership in professional organization.
      3. Agreement on conducting compulsory audit and related services of audited subject shall conform to requirements, established by the legislation of the Republic of Kazakhstan.
      4. Details, received by an auditor and (or) audit organization upon fulfilling the agreement on conducting audit are commercial secret.
      Violation of obligatoriness of preserving the details, containing commercial secret shall entail responsibility in accordance with the Laws of the Republic of Kazakhstan.
      Footnote. Article 17 as amended by the Law of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2).

Article 18. Audit report

      1. Audit report shall be drawn up following the results of conducted audit and shall conform to requirements of this Law and standards of an audit.
      Audit report shall contain independent opinion of an auditor-executer and audit organization on financial reporting and other information, linked with financial reporting, audited subject in accordance with requirements of the legislation of the Republic of Kazakhstan.
      2. Audit report shall be signed by an auditor-executer with specification of number and date of issuance of qualification certificate, certified by his (her) personal stamp, approved by signature of a head of audit organization and shall be certified by the seal of audit organization.
      Number and date of issuance of a license of audit organization shall be specified in audit report as well.
      For improper use and storage of personal stamp, an auditor shall bear responsibility in accordance with the Laws of the Republic of Kazakhstan.
      3. In case of non-compliance of audit report with the legislation of the Republic of Kazakhstan or factual data, such report shall be recognized invalid under court decision.
      Footnote. Article 18 as amended by the Law of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2).

Article 18-1. Special aspects of conducting audit of financial organization

      1. Terms of drawing up audit report of financial organizations and its representation in the National Bank shall be determined by the regulatory legal act of the National Bank.
      2. Audit report of financial organization shall be represented both to financial organization and the National Bank.
      3. In case of violation of established terms of representing the audit report of financial organization to the National Bank, the National Bank shall refer written prescription on representing the audit report in established term.
      4. In case of non-fulfillment of written prescription by audit organization, the National Bank shall apply to the authorized body with application on necessity of suspension of validity of a license.
      Footnote. Article 18-1 is in the wording of the Law of the Republic of Kazakhstan dated 19 February 2007 No. 230 (the order of enforcement see Article 2); as amended by the Laws of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2); dated 27.04.2012 No. 15-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 05.07.2012 No. 30-V (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 19. Quality control and its types

      1. Quality control is oriented to compliance with requirements of the standards of an audit by auditors and audit organizations.
      2. Types of quality control are internal and external quality control.
      Internal quality control shall be carried out by audit organization independently in accordance with the standards of an audit.
      External quality control shall be carried out by professional organization in respect of own members once every three years.
      3. Rules of conducting external quality control shall be developed by the relevant professional organizations in the manner, determined by the authorized body.
      External quality control may be conducted only by auditors, carrying out their activity as auditors.
      4. Audit organization shall have the right to appeal conclusion of a professional organization in a judicial proceeding.
      Footnote. Article 19 as amended by the Laws of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2); dated 10.07.2012 No. 36-V (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 20. Rights and obligations of auditors

      1. Auditors shall have the right to:
      1) receive and verify necessary accounting and other financial and economic documents of audited subject for fulfilling the conditions of agreement on conducting the audit;
      1-1) enter into professional organization;
      2) receive clarifications in oral and written forms on questions arising in the course of audit from civil servants of audited subject;
      3) appeal decision of professional organizations in a judicial proceeding.
      2. Auditors shall be obliged to:
      1) comply with the legislation of the Republic of Kazakhstan on audit activity, standards of an audit;
      2) not to disclose commercial secret;
      3) provide information on detected violations in maintenance of business accounting, financial reporting and other information, linked with financial reporting to the audited subject;
      4) inform the head of audited organization, the participant of which he (she) is, details in accordance with the legislation of the Republic of Kazakhstan on prevention of legitimization (laundering) of incomes, received by illegal means, and financing of terrorism.
      Footnote. Article 20 as amended by the Laws of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2); dated 28.08.2009 No. 192-IV (shall be enforced from 08.03.2010); dated 10.06.2014 No. 206-V (shall be enforced upon expiry of ten calendar days after the date of its first official publication).

Article 21. Rights and obligations of audit organizations

      1. Audit organizations shall have the right to:
      1) determine methods of conducting an audit on an independent basis;
      2) request and verify necessary accounting and other financial and economic documents for fulfilling conditions of the agreement on conducting an audit;
      3) involve specialists of different profile in participation in conducting an audit, with the exception of persons, mentioned in Article 24 of this Law;
      4) refuse from conducting an audit or issuance of audit report in case of violation of conditions of the agreement on conducting an audit by audited subject;
      5) verify documentation in full measure, linked with financial and economic activity of audited subject, as well as factual existence of a property, considered in this documentation.
      2.Audit organizations shall be obliged to:
      1) comply with the legislation of the Republic of Kazakhstan on audit activity, standards of an audit;
      2) not to preclude conduct of external quality control, verifications, conducted by the authorized body;
      3) enter into professional organization within one month from the date of receiving a license on carrying out of audit activity or voluntary withdraw from professional organization, or exclusion from it;
      4) enter into other professional organization within three months upon deprivation of accreditation of professional organization, the members of which they are;
      5) not to disclose commercial secret;
      6) provide information to audited subject on detected violations in maintenance of business accounting, financial reporting and other information, linked with financial reporting.
      In case of conducting an audit in state institutions, state enterprises, in legal entities with participation of the state, the audit organizations shall be also obliged to provide information to audited subjects on detected violations of the legislation of the Republic of Kazakhstan upon use of budget means, credits, associated grants, assets of the state, loans guaranteed by the state;
      7) inform the National bank with notifying the audited subjects on detected violations of the legislation of the Republic of Kazakhstan in the result of audit of financial organizations, organizations included in composition of banking conglomerate, organizations included in insurance group, for which the conduct of audit is compulsory;
      8) present reporting to the authorized body in accordance with the qualification requirements, submitted upon licensing, as well as information on insurance of its civil responsibility in the form, approved by the Government of the Republic of Kazakhstan;
      9) present an audit report of financial organizations, organizations, included in the composition of banking conglomerate, organizations, included in insurance group to the National Bank in the terms, established by the legislation of the Republic of Kazakhstan;
      10) inform the details to the authorized body on financial monitoring in accordance with the Law of the Republic of Kazakhstan “On prevention of legitimization (laundering) of incomes, received by illegal means, and financing of terrorism”.
      3. Illegal interference of state bodies, audited subjects and other third parties in the activity of audit organizations shall not be allowed.
      Footnote. Article 21 as amended by the Laws of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2); dated 28.08.2009 No. 192-IV (shall be enforced from 08.03.2010); dated 15.07.2010 No. 338-IV (the order of enforcement see Article 2); dated 05.07.2011 No. 452-IV (shall be enforced from 13.10.2011); dated 15.07.2011 No. 461-IV (shall be enforced from 30.01.2012); dated 21.06.2012 No. 19-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 05.07.2012 No. 30-V (shall be enforced upon expiry of ten calendar days after its first official publication); dated 10.06.2014 No. 206-V (shall be enforced upon expiry of ten calendar days after the date of its first official publication).

Article 22. Insurance of audit activity

      1. Audit organizations shall be obliged to conclude the insurance agreement of civil responsibility on the obligations, arising due to infliction of property damage upon carrying out of an audit.
      2. Insurance of civil responsibility of audit organizations shall be carried out in the manner, established by the legislative acts of the Republic of Kazakhstan.

Article 23. Responsibility of auditors and audit organizations

      Auditors and audit organizations shall bear responsibility in accordance with the Laws of the Republic of Kazakhstan for violation of the legislation of the Republic of Kazakhstan on audit activity, as well as conditions of the agreement.
      Footnote. Article 23 as amended by the Law of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2).

Article 24. Restriction of the right to conduct an audit

      It shall be prohibited to conduct an audit by audit organization as follows:
      of customers, whose participant, creditor is this audit organization or its workers, carrying out this audit;
      organizations, with which the insurance agreement of civil responsibility was concluded;
      organizations that were rendered by services for the last three years on profile of their activity, mentioned in subparagraph 2) of paragraph 2 of Article 3 of this Law;
      executers of which are in labour relations or are close relatives or legal relative of civil servants of an audited subject, as well as a shareholder (participant), having ten and more percent of shares of stock (or participatory shares in charter capital) of an audited subject;
      executers of which have personal property interests in audited subject;
      if it has pecuniary obligations before audited subject or an audited subject has them before it, with the exception of obligations on conduct of an audit;
      in cases, involving creation of the conflict of interests or creating a threat to create such conflict, with the exception of obligations, arising from concluded public agreements.
      Footnote. Article 24 as amended by the Law of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2).

Article 25. Rights and obligations of an audited subject

      1. An audited subject shall have the right to:
      1) receive necessary information from an audit organization on requirements of the legislation of the Republic of Kazakhstan, concerning the conduct of an audit;
      2) familiarize with regulatory legal acts, on which the commentaries and summaries of an audit organization are based;
      3) receive information from an auditor, audit organization on detected violations in maintenance of business accounting, financial reporting and other information, linked with financial reporting;
      4) refuse from the services of audit organization in case of its violation of the agreement’s conditions.
      2. An audit subject shall be obliged to:
      1) create conditions of an audit organization for the well-timed and qualitative conduct of an audit, represent necessary documentation, give clarifications and explanations in oral or written form;
      2) not to interfere in the activity of an audit organization for the purpose of restricting the circle of questions, subject to audit, unless otherwise provided by the agreement;
      3) refer a written request from own name towards third parties for receiving necessary information upon request of an audit organization.
      3. Audited subjects represented by state institutes and state enterprises, legal entities with the participation of the state shall represent information on detected violations of the legislation of the Republic of Kazakhstan upon use of budget funds, credits, associated grants, assets of the state, loans guaranteed by the state within monthly term after conducted audit of financial reporting of their activity.
      4. Fulfillment of requirements of audit organization, arising from obligations according to agreement shall be compulsory for an audited subject.
      Footnote. Article 25 is in the wording of the Law of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2).

Article 26. Obligations of an audited subject

      Footnote. Article is excluded by the Law of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2).

Article 27. Responsibility of an audited subject

      1. An audited subject shall bear responsibility for completeness and credibility of financial reporting and other information, linked with financial reporting, represented by an audit organization for conducting the audit.
      2. A head of a legal entity, evading from conducting compulsory audit or precluding its conducting, or not ensuring its conducting in accordance with requirements of the legislation of the Republic of Kazakhstan, shall bear responsibility in accordance with the Laws of the Republic of Kazakhstan.
      3. Conduct of an audit shall not release an audited subject from responsibility for non-compliance of represented financial reporting and other documents with requirements of the legislation of the Republic of Kazakhstan.
      Footnote. Article 24 as amended by the Law of the Republic of Kazakhstan dated 20.02.2009 No. 138-IV (the order of enforcement see Article 2).

Article 28. Consideration of disputes

      Disputes arising between auditors, audit organizations, as well as between them and audited subjects shall be resolved in the manner, established by the legislation of the Republic of Kazakhstan.

Article 29. Transitional provisions

      1. Auditors being the individual entrepreneurs may carry out audit activity within six months from the date of enforcement of this Law.
      2. Licenses of audit organizations, issued by the authorized body, with the exception of those issued by the authorized body on regulation and supervision of financial market and financial organizations, and qualification certificates “auditor”, issued before enforcement of this Law shall be valid.

Article 30. Order of enforcement of this Law

      This Law enters into force from the date of its official publication, with the exception of paragraphs 4, 5 of Article 9, Articles 10, 12 and 14 that enters into force upon expiry of six months from the date of enforcement of this Law.

      The President
      of the Republic of Kazakhstan