On 1 June 2018, the Law of the Republic of Azerbaijan on Amendments to the Law of the Republic of Azerbaijan on Accounting (hereinafter: the Law) came into force.
Major changes to the law can be classified in several categories.
1. According to the amendments, businesses are divided into 4 groups - micro, small, medium and large businesses. The criteria for the above-mentioned groups are determined by the Cabinet of Ministers. Accounting standards for businesses are also distinguished according to these criterias.
2. New rules for conducting accounting have been established, and accounting entities are obliged to comply with these rules. So subjects must create a separate accountancy section within the entity or maintain a separate accountant.
According to new rules, the chief accountant should be involved in businesses, and senior accountants should be professionals in large legal entities, budget organizations and legal entities that publish annual financial statements or consolidated financial statements. If an accountant is involved with a contract,those entities have to sign an employment contract with at least 2 professional accountants. If an accountant is involved in these businesses with contract, the employment contract must be concluded with at least 2 professional accountants.
3. Also, financial reporting standards will also be changed. International Financial Reporting Standards, International Financial Reporting Standards for Small and Medium-sized Entities, and International Public Sector Accounting Standards will be translated into Azerbaijani by the Ministry of Finance and will be effective from the date of publication of official texts. National Financial Reporting Standards and Accounting Policies will be canceled from that date.
As the new standards have been introduced, standards that entrepreneurship entities will use are determined as well. Thus, for the micro and small, and the medium-sized entities, the Ministry of Finance sets specific rules that these entities may carry out accounting in this form, or in accordance with International Financial Reporting Standards and International Financial Reporting Standards for Small and Medium-sized Entities.
Large entities may compile their financial reportings in accordance with International Financial Reporting Standards for Small and Medium Entrepreneurship Subjects or International Financial Reporting Standards set out by the Ministry of Finance.
It should be noted that the Ministry of Taxes of the Republic of Azerbaijan will also examine the above-mentioned requirements during state financial controls and tax inspections. The absence of finance reporting in accordance with the requirements will result with administrative responsibility. the liability will be borne by the head of the accounting subject, the chief accountant or lthe egal entity or the physical person providing accounting services.
