Agricultural reform in Uzbekistan involved liquidation of collective farms established in the Soviet era and their replacement by some 220,000 farms based on leasehold, with an average landholding of 10-15 hectares. In addition, large numbers of so-called Dekhan farms were also created. Also based on leasehold (with land ownership retained by the State), these involve very small landholdings and average 0.05 hectares.

Farm accounting systems were previously designed for the collective farms, which were large-scale operations, involving landholdings which averaged 1,000 hectares and the production of a range of crops. Although a new accounting system had replaced that installed under the planned economy, accounting under the National Standard of Accounting and Financial Report (NSAFR) system was still largely adapted to agriculture of industrial proportions. In practice, these accounting requirements placed an undue and unrealistic burden on the much smaller farms which emerged from the reforms (although, under present legislation Dekhan farmers are not required to submit accounts).

In response, in 2008 the UNDP’s Area Based Development Programme, working in collaboration with the National Association of Accountants and Auditors of Uzbekistan, the Association of Farmers, and the Chamber of Commerce and Industry, developed the Simplified Accounting System. Following pilots in Kitab and Nishan districts in Kashkadarya region, the government has now accepted and endorsed this accounting system and all farm accounts must now be submitted in this format.

The Simplified Accounting System (SAS) greatly reduces the accounting requirement for farms, while ensuring that tax obligations are accurately calculated and that information required for statistical purposes and by local authorities (Khokimiyat) can be obtained. Further, the new accounting system is designed to help farmers in their dealings with commercial banks and, in particular, in accessing finance.

The chief difference between the SAS and the National Standard of Accounting and Financial Report is a reduction in the number of accounts that farmers are obliged to keep to record financial information. Thus, the SAS involves 40-45 accounts, whereas the Chart of Accounts under the National Standard of Accounting and Financial Report involves over 250 accounts. Many of these are unrelated to farming activities so could be removed from the SAS without prejudicing the quality of the accounting. In addition, the Ledger required in the National Standard of Accounting and Financial Report has been replaced in the SAS by a shorter and simplified form. This serves both to record transactions and the balance sheet. Through its installation, 15 accounting forms that were not appropriate to farms were eliminated. Further, the SAS is designed for electronic bookkeeping, whereas the National Standard of Accounting and Financial Report was completed manually.

In summary, the SAS is an example of successful transition from a cumbersome manual accounting system geared to the needs of a centralized economy to an electronic simplified accounting mechanism to meet the needs of private farmers working in a market economy. Initial evaluations of the SAS suggest that farmers now have a much better understanding of the financial position of their farm. It has also reduced the time required for completion of accounts and has improved the timeliness of submission.

The Area Based Development Programme is now conducting practical demonstrations in other district regions of the country where it implements similar projects, for example in the Fergana Valley under the EU funded project Enhancement of Living Standards.