Inventory Accounting in Uzbekistan: Differences Between Nas 4 and Ifrs 2 and Ways to Converge Them

Abstract

General Background: Inventory accounting significantly influences the accuracy of financial reporting, especially in economies undergoing globalization. Specific Background: In Uzbekistan, inventory accounting is governed by NAS 4, while IFRS 2 is the global standard, creating methodological discrepancies. Knowledge Gap: Limited comparative research exists on the specific divergences between NAS 4 and IFRS 2 and the challenges of harmonizing them within Uzbekistan's regulatory and institutional framework. Aims: This study aims to conduct a comparative analysis of NAS 4 and IFRS 2 in the context of inventory accounting, identify key differences, and propose pathways for convergence. Results: The analysis reveals major contrasts, particularly in valuation (cost vs. lower of cost or net realizable value), write-off methods (inclusion/exclusion of LIFO), impairment recognition, and disclosure requirements. IFRS 2 offers more flexibility and transparency but requires comprehensive adjustments in accounting practices, policies, and systems. Novelty: The study integrates a detailed examination of both domestic and international regulatory frameworks and draws on the experiences of countries like Poland, Russia, and China to suggest a phased, practical transition strategy for Uzbekistan. Implications: Implementing IFRS 2 in Uzbekistan will enhance the transparency and comparability of financial statements, attract foreign investment, and align national accounting with global standards—though this will require reforms in legislation, education, software systems, and professional training.