Published
06/30/2025, 15:08An independent audit of the financial statements of Kyrgyz Telecom JSC for the year ended 2024 revealed violations in the accounting of the company's assets. The audit firm RSM Kyrgyzstan expressed a qualified opinion, pointing to possible misstatements in the valuation of the company's assets, including inventories, fixed assets, and settlements with counterparties.
According to the auditor, the company's balance sheet includes inventories worth 1.3 billion KGS, but Kyrgyz Telecom did not perform the mandatory impairment test. This violates international standards (IFRS 2 and 36) and does not allow for an objective assessment of how accurately these assets have been valued. As a result, their value may be either overstated or understated.
In addition, the company has unfinished construction projects worth 324.9 million KGS.
“Work on these projects has not been carried out for more than three years. We were unable to obtain sufficient appropriate audit evidence of the fair value of construction in progress as of December 31, 2024, due to the specific nature of these assets. Consequently, we were unable to determine whether adjustments to the amounts stated were necessary,” — stated in the conclusion of RSM Kyrgyzstan.
Some of the fixed assets have a zero carrying amount, but the company did not perform a revaluation as required by IFRS 16. Also, dozens of land plots are not reflected in the accounts, despite the existence of state acts of ownership.
"The Group has more than 300 state acts of ownership of land plots. However, the Group's financial position report reflects only five items with a total value of 33,000 KGS. The Group did not reflect the value of these plots separately as fixed assets in accordance with the requirements of IAS 16 “Property, Plant, and Equipment.” We were unable to determine the effect of this deviation on financial indicators, including income tax, total income, and changes in equity," RSM Kyrgyzstan emphasizes.
KyrgyzTelecom also has problems with counterparty data. The number of confirmations of accounts receivable and accounts payable was limited, and reconciliation with the tax authorities revealed significant discrepancies. This may also affect the reliability of the financial statements.
As a result, the auditors emphasize that due to the lack of sufficient evidence, it is impossible to determine the exact extent of the deviations, but the risk of misstatement in the financial statements remains high.
It is worth noting that at the end of 2024, Kyrgyz Telecom's net profit fell almost eightfold, from 723.2 million KGS to 90.95 million KGS. The main reason for the decline was a sharp drop in income from non-operating activities — from 908.7 million in 2023 to 205.3 million KGS in 2024.
It should be added that the key source of this income was previously the sale of the subsidiary KT Mobile, which was wholly owned by Kyrgyz Telecom. The sale of the mobile operator took place in March 2023. The amount was 616.6 million KGS.
