An external audit of financial statements for 2018, conducted by LLC “Accounting Audit Innovation”, was completed in OJSC “Guarantee Fund”. Based on the audit results, a positive conclusion was obtained confirming that the financial statements of OJSC “GF” reliably reflect the financial position, financial results and cash flow for the year ended December 31, 2018, in accordance with International Financial Reporting Standards (IFRS).
At the same time, we note that OJSC “Guarantee Fund”, through its own efforts, developed and implemented the principles of accounting and financial reporting in accordance with IFRS-9, which was noted in the conclusion of the audit company. This is a big step forward for the Fund as a financial institution in the application of modern financial instruments.
The phased work on the implementation of IFRS 9 in Kyrgyzstan, as known, has been conducted in recent years with the consulting support of international audit organizations. In 2014, the IASB issued a final version of IFRS 9 “Financial Instruments”. In 2017, the National Bank of the Kyrgyz Republic issued recommendations on IFRS 9 for commercial banks. A new standard came into force on January 1, 2018.
Considering that the transition to the new standard took time, the adjustment of the methodology, policies and procedures for classification, accounting for financial instruments and reserves assessment, personnel training, it should be noted the high professional level of specialists of OJSC “GF”.
The Fund, in particular, defined methods for assessing credit and guarantee risks and probabilities of default in accordance with the principles of IFRS 9. To assess systemic and individual risks and probabilities of default, the Fund developed and applied a regression model that takes into account the influence of macroeconomic factors, also uses methods based on analysis of accounting and financial statements, and a systematic approach to determining credit and guarantee risks based on the experience of historical losses.
Special attention is paid to the identification, measurement and evaluation of the guarantee risk as the main risk. OJSC “GF” optimizes procedures and improves approaches to considering projects of entrepreneurs for obtaining guarantees and preliminary risk assessment of projects. In order to minimize the risks, OJSC “GF” uses such methods as diversification, limitation, reservation. As part of measures to manage guarantee risk, reserves are created for potential losses on loans with guarantee provision in accordance with IFRS.