The Impact of International Financial Reporting Standards and Digital Technologies on the Audit of Small and Medium-Sized Enterprises

Small and medium-sized enterprises (SMEs) play a crucial role in the economy of Uzbekistan, contributing significantly to GDP, employment, and exports. The transition of these businesses to International Financial Reporting Standards (IFRS) is an essential step toward enhancing financial transparency and aligning with global practices. The Presidential Decree “On Measures to Increase the Role of Small and Medium-Sized Businesses in the Economy” sets ambitious targets for 2025, urging SMEs to adopt IFRS. However, this transition presents challenges such as a shortage of qualified professionals and the need for technological adaptation. Despite the growing relevance of IFRS and digital technologies in auditing, limited research addresses the specific impacts on SMEs in Uzbekistan, particularly concerning the integration of artificial intelligence (AI) and digital tools in the auditing process. This study aims to assess the impact of IFRS on SMEs' financial transparency, analyze the challenges during the transition, and explore how digital technologies and AI are transforming SME audits. The adoption of IFRS improves transparency and efficiency in financial reporting for SMEs, but challenges like the lack of local adaptation, cost constraints, and insufficient skilled professionals persist. Digital technologies enhance audit accuracy, speed, and risk detection. This research introduces the role of AI in auditing small businesses in Uzbekistan, offering insights into how digital transformation reshapes audit practices. The findings suggest that while the transition to IFRS and AI-driven audits presents obstacles, they also offer significant opportunities for improving audit quality and financial reporting, ultimately strengthening SMEs' contribution to the economy.