The Government of Mongolia passed Accounting Law in December, 2001 and subsequently revised the Law in 2002 and in 2003.
According to the Accounting Law the accounts of all Mongolian companies must conform to International Accounting Standards (IAS). In practice this means that, whereas no particular accounting method is specified for particular enterprises, each entity’s accounting methods must be approved by the Minister of Finance and must be consistent with International Accounting Standards.
The purpose of the present law is to determine the legal ground for accounting principles, management and institution and to regulate the relationship pertaining to the maintenance of accounting records and the preparation of financial statements of the business entity or organization.
The business entity and organization shall prepare the financial statements in accordance with the International Accounting Standards. Financial statements shall have the following composition:
- Balance sheet.
- Income statement
- Statement of changes in equity
- Statement of cash flow
- Other required additional disclosures to the financial statements
- The notes and disclosures of the significant events that effected to the operation of business entity or organization along with the auditor’s opinion and managerial report shall be enclosed in the audited financial statements.
The financial year shall begin on January 1 and end on December 31 of each year. Business entity or organization shall prepare and submit their quarterly financial statements by 20th of the month following quarter and annual financial statements by February 10th of the following year to the corresponding financial institution. Business entity or organization, which prepares consolidated financial statements, shall submit quarterly by 25th of the first month following quarter and annual financial statements by February 25th of the following year.
Significantly for the Mongolian government, there are implications for the effectiveness of tax policy. In principle, determination of taxable income by the state tax authorities must be consistent with International Accounting Standards as well as the provisions of other sector-specific laws. A specific example relates to the provisions for depreciation of equipment in the mining sector as specified in the Minerals Law. For taxation purposes, however, the state Taxation Department accepts a range of accounting standards.
Entry filed under: Accounting Law.