What do Kyrgyz entrepreneurs need to know to avoid illegal inspections? (Part 1)
Prepared by Daniyar Ubyshev,
a lawyer in Partner law firm,Bishkek
Tel.: 00996 312 906 268
It is well known that entrepreneurs are still faced with cases of unwarranted inspections by regulatory authorities, which often hinder businesses in carrying out their economic activities. In this regard, it is important to know and use some advice that can help companies when they meet inspectors.
First of all, the company's management should determine what law will govern their relationship with the inspectors. The fact is that the audit procedure is governed not by one, but by different laws, and it should be immediately clear which of them will be applied. In particular, the Law ‚ÄėOn Procedure for Conducting Inspections of Businesses‚Äô (hereinafter - the Law on Inspections), approved in 2007, clearly and specifically regulates all relations regarding most of public inspections.
It should be also remembered that this Law does not regulate the inspections conducted by the National Bank; inspections of businesses within the limits of criminal, administrative, civil and executive proceedings; inspections to ensure road safety; inspections of agencies performing border, customs, immigration, health, quarantine, phytosanitary and veterinary control at checkpoints at the state borders; inspections conducted by the Ombudsman; and inspections by the State Transport Inspectorate under the Ministry of Transport and Communications. Moreover, the Law on Inspections prohibits law enforcement agencies, except for tax and customs agencies, to conduct financial audits of businesses.
The Jogorku Kenesh (parliament) has also approved a list of state bodies authorized to conduct inspections of business entities (The List), and the Law on Inspections requires that all competent authorities be obliged to develop and approve their departmental normative legal acts regulating their activity for audits. Therefore, if the auditors from a state agency, which is not included in the abovementioned List, came to your company, you have a right to deny them in conducting an audit.¬†
The Law on Inspections contains a comprehensive list of inspections: scheduled, unscheduled, counter, control and re-checking. Scheduled inspections are conducted only once a year. In this case, an entrepreneur must be notified in writing not less than ten days prior to the inspection.
Unscheduled inspections are conducted if there is information on law violations by a company; on circumstances that may cause harm, and in cases of complaints from people on violations of their rights and lawful interests. It must be remembered that it is prohibited to conduct inspections by anonymous signals. Unscheduled inspection should not exceed three days and should be based on the requirements of the authorized body.
Counter inspections are carried out solely by the tax service. The reason is the perceived need to check the documents on transactions of the audited company by third parties.
In accordance with the Law on Inspections, businessmen can: require the production base for inspection; deny in conducting an audit by the persons or bodies who have no authority to do so; refuse to fulfill the requirements of auditors on matters not related to the inspection; require the auditor to make a record in a book of inspections; obtain from an auditor a copy of the act with the results of the audit; in case of disagreement with the results of the audit ‚Äď appeal to the superior inspection body or a court.