The Differences Between The National Accounting System and International Standards of Lease Operations

Abstract

This article examines the significant differences between the national accounting standards of Uzbekistan and the International Financial Reporting Standards (IFRS 16) concerning the recognition and accounting of lease transactions. Using financial data from Uzagroleasing JSC and Uzbek Leasing International JSC for the period 2019-2024, the study highlights the discrepancies in lease classification, balance sheet recognition, and expense reporting. The paper proposes a conceptual model for harmonizing national standards with international requirements to improve financial transparency, risk assessment, and investment attractiveness. This article analyzes the main differences between the national accounting standards of the Republic of Uzbekistan and the International Financial Reporting Standards (IFRS), in particular, the IFRS 16 “Leases” standard in accounting for lease transactions. Lease relationships today play an important role in the financial activities of many enterprises and organizations. However, there are significant differences between national and international approaches to reflecting lease transactions in financial statements. The national system examines in detail the approaches to determining operating and financial leases, the criteria for their reflection in the balance sheet, their recognition as assets and liabilities, and the accounting for depreciation and interest expenses. In international standards, especially with the introduction of IFRS 16, most leases are recognized as finance leases for lessees, which aims to increase the transparency of financial statements and provide more truthful indicators for investors. The article also illustrates the practical significance of these differences, their tax implications, and their impact on a company's balance sheet, profit and loss statement, and cash flows using examples. As a result, the challenges and proposed solutions for businesses in the transition to international standards are discussed.