FEATURES OF AUDIT IN DEVELOPING INVESTMENT LENDING PRACTICES IN COMMERCIAL BANKS
DOI:
https://doi.org/10.5281/zenodo.19698496Keywords:
investment lending, credit audit, IFRS 9, expected credit loss, Basel III, non-performing loans, Uzbekistan, internal audit, audit quality.Abstract
This article investigates the distinctive features of audit as a strategic instrument for developing investment
lending practices in commercial banks, with a focus on the transformation of Uzbekistan’s banking sector since 2017. As
commercial bank investment portfolios expanded from UZS 22 trillion to over UZS 320 trillion between 2017 and 2024, the
quality of audit has emerged as a key determinant of financial system stability. Drawing on Basel III/IV, IFRS 9, International
Standards on Auditing (ISA 540 Revised), and the IMF’s 2025 Financial Sector Assessment Program for Uzbekistan, the
article identifies six principal audit features specific to investment lending: forward-looking expected credit loss (ECL)
estimation; collateral valuation integrity; credit risk classification compliance; model risk auditing; internal controls over
financial reporting; and three-lines-of-defence governance. The study documents a significant audit expectation gap in
Uzbekistan, where official NPL ratios of 3.5% coexist with restructured loans constituting approximately 15% of total
portfolios.
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