Kosovo

Member Organizations

Member Organization Associate Other PAOs

  Society of Certified Accountants and Auditors of Kosovo

Legal and Regulatory Environment

  • Overview of Statuatory Framework for Accounting and Auditing

    The financial reporting framework in Kosovo is laid out in the Law No.04/L–014 on Accounting, Financial Reporting and Audit (Law No.04/L–014) adopted in 2011, which superseded the UNMIK Regulation No. 2001/30 on the Establishment of the Kosovo Board for Standards for Financial Reporting and a Regime for Financial Reporting of Business Organizations.

    The Law No.04/L–014 requires application of international standards on accounting and auditing for business entities, except for entities subject to the supervision of the Central Bank of Kosovo (CBK), as issued by the respective international standard-setting boards, translated into Albanian, and approved by the Kosovo Council for Financial Reporting (KCFR).

    The Law specifies a differentiated financial reporting requirements for entities depending on size criteria as follows. Large companies that meet two of the three size criteria must use full IFRS as issued by the IASB and adopted by KCFR. Medium and small companies may use either full IFRS or IFRS for SMEs as adopted by the KCFR. Micro-sized entities below the specified size criteria must follow simplified standards issued by the KCFR. Under the Law, all companies have an option to directly apply IASB-issued standards. The CBK mandates the use of full IFRS for financial reporting of banks and insurance companies. As of 2017, the 2016 edition of IFRS is translated into Albanian and being applied.

    All large and medium entities must have their financial statements audited in line with the requirements of the Law No.04/L–014. All statutory audits shall be carried out in accordance with ISA and related interpretations, guidance and pronouncements issued by the IAASB and approved by the KCFR. KCFR reviews ISA after they have been translated into Albanian and approves for application in the jurisdiction. As of 2017, the 2015 IAASB Handbook is being applied. During 2016, the Society of Certified Accountants and Auditors of Kosovo (SCAAK) has translated and disseminated to its members the latest revised ISA related to audit opinion (ISA 700, 701, 705, 706, 720) as published by IAASB. Audits must be conducted by auditors approved to carry out statutory audits by the competent authorities as defined in the law.

  • Regulation of Accountancy Profession

    Under the Law No.04/L–014 on Accounting, Financial Reporting and Audit (Law No.04/L–014), the Kosovo Council for Financial Reporting (KCFR) regulates the audit and accounting profession in the country. The KCFR is effectively part of the Ministry of Finance, funded by the Kosovo budget and small income raised through licensing fees. Certification of accountants and auditors is delegated to the professional accounting and auditing associations.

    The mandate of the KCFR as defined under the Law No.04/L–014 includes (i) approving auditing and accounting standards; (ii) establishing and issuing standards for the professional training of accountants and auditors; (iii) licensing individual auditors and audit firms; (iv) licensing professional associations; and (v) operating the quality assurance system as well as the investigative and disciplinary system.

    Under the Law, licensed professional associations are responsible for certification of accountants and auditors. Professional accounting and auditing associations are defined under Law as non-profit organizations established to promote and advance the position, efficiency, and usefulness of public accounting profession as general interest.

    In order to be licensed by the KCFR, professional accounting and auditing associations must fulfill the requirements of Law No.04/L–014 and those of IFAC and act in compliance with their Codes of Professional Conduct. As of 2017, there are three licensed professional associations: Society of Certified Accountants and Auditors of Kosovo, Institute for Accounting, Auditing and Finance, and AAB Institute for Certified Accountants and Auditors.

    The Law No.04/L–014 requires licensed auditors to be members of professional accounting and auditing associations. No mandatory membership requirement has been established for accountants. However, accountants may choose to become members of professional accounting and auditing associations and be subject to their regulation.

  • Audit Oversight Arrangements

    There is no independent audit oversight arrangement in Kosovo. However, as of 2017, the Law No.04/L–014 on Accounting, Financial Reporting and Audit (Law No.04/L–014) of 2011 is being revised to allow, among other changes, for the establishment of an oversight board modeled on EU Directive conditions that require an independent public oversight mechanism to monitor the quality of auditing of public interest entities.

    Until this revision process is complete, auditors are regulated by the Kosovo Council for Financial Reporting (KCFR) and professional accounting and auditing associations, which are licensed by the KCFR under the Law No.04/L–014 on Accounting, Financial Reporting and Audit (Law No.04/L–014).

    The mandate of the KCFR as defined under the Law No.04/L–014 includes (i) approving auditing and accounting standards; (ii) establishing and issuing standards for the professional training of auditors; (iii) licensing individual auditors and audit firms; (iv) licensing professional associations; and (v) supervising the quality assurance system as well as the investigative and disciplinary system.

    Under the Law, licensed professional associations are responsible for certification of auditors. As of 2017, there are three licensed professional associations: Society of Certified Accountants and Auditors of Kosovo, Institute for Accounting, Auditing and Finance, and AAB Institute for Certified Accountants and Auditors (IAAB). Auditors are required to be members of one of the associations and are subject to their respective regulations.

  • Professional Accountancy Organizations

    Professional accounting and auditing associations are defined in Kosovo in the Law No.04/L–014 on Accounting, Financial Reporting and Audit (Law No.04/L–014) as non-profit organizations established to promote and advance the position, efficiency, and usefulness of public accounting profession as general interest. Professional accounting and auditing associations are responsible for certification of accountants and auditors. Membership in one of the associations is mandatory for all auditors and is voluntary for other professionals.

    As of 2017, there are three professional associations licensed by the Kosovo Council for Financial Reporting (KCFR): the Society of Certified Accountants and Auditors of Kosovo (SCAAK), the Institute for Accounting, Auditing and Finance (IKAF), and the AAB Institute for Certified Accountants and Auditors (IAAB).

    The Society of Certified Accountants and Auditors of Kosovo (SCAAK)

    SCAAK is one of the oldest and well-recognized bodies in the region with a vast membership representing different sectors and institutions in Kosovo. SCAAK was established in May 2001 as an independent, self-regulated professional association of auditors, certified accountants, accounting technicians, and students. The SCAAK was recognized by the KCFR as a licensed professional association in 2008 and until 2013 was the only recognized professional body. In addition to the certification of certified accountants, auditors, accounting technicians, the SCAAK certifies public sector accountants, insolvency specialists, and internal auditors.

    SCAAK is a member of the IFAC, the Federation of Mediterranean Accountants (FCM), and the European Federation of Accountants and Auditors (EFAA). SCAAK is also represented in the IFAC PAODC committee, FCM Executive Committee, and EFAA Accounting Expert Group. Since 2006, SCAAK has been actively involved with the World Bank REPARIS program, which brings together the professional bodies, universities, audit regulators, standard-setters, and Ministries of Finance from the Western Balkans region. The society is also an active participant in the working groups of various public and independent institutions and organizations both nationally and internationally.

    Other PAOs

    There is limited information available about the AAB Institute for Certified Accountants and Auditors (IAAB) and the Institute for Accounting, Auditing and Finance (IKAF), which are not member organizations of IFAC. IKAF was established in 2005 and has been recognized by KCFR as a licensed professional association in 2013. IAAB obtained recognition from KCFR in 2016.

  • Projects or Other Information

    Taking into consideration that Kosovo is a country in transition with political instability, the Society of Certified Accountants and Auditors of Kosovo (SCAAK), an IFAC member, actively contributes not only to developments related to accounting and auditing profession, but also to those that lead to economic growth and public interest in general.

    In this regard, SCAAK is part of different working groups and committees, including working groups for drafting the Law no. 05/L-083 on Bankruptcy (2016), the Law on Accounting, Financial Reporting and Auditing (2017–2018), 2 – 5 the Law on Tax and Customs Agency of Kosovo (2016); the Law no. 05/L-096 on the Prevention of Money Laundering and Prevention of Terrorist Financing; the Law No. 04/L -249 on Health Insurance (2016–2017); the National Framework of Qualifications (2017), among other. SCAAK is also a member of Business Community Office within Kosovo Parliament, EU Kosovo Stabilization and Association Agreement, Tax Committee in American Chamber of Commerce (Amcham); advisory group for finance and budget in University of Prishtina, among other institutions.

Adoption of International Standards

  • Quality Assurance

    The Law No.04/L–014 on Accounting, Financial Reporting and Audit (Law No.04/L–014) forms the legal foundation for the establishment of the quality assurance (QA) review system in Kosovo.

    Under the Law, the Kosovo Council for Financial Reporting (KCFR) is the competent authority for performing mandatory QA reviews for the licensed statutory auditors and firms. However, as of 2017, the QA system has not been implemented. The Society of Certified Accountants and Auditors of Kosovo (SCAAK), a member of IFAC, reports that amendments to the Law No.04/L–014 will be necessary in order to provide a solid legal basis and institutional arrangements for effective implementation of a QA review system.

    In the absence of an operational QA review system, in 2008, the SCAAK established a Quality Control Committee and with the assistance of Royal NBA (Netherlands) performed a pilot QA review system with a limited scope of the audits of certain public interest entities. In 2015, SCAAK established a QA Department responsible for performing mandatory QA reviews for statutory auditors that are members of SCAAK. The review process commenced in 2016.

    In cooperation with KCFR, the SCAAK is working on developing the approach to QA suitable for Kosovo circumstances in accordance with SMO 1 requirements.

    Information on whether other professional accounting and auditing associations licensed by the KCFR have established QA review systems for their members is not available.

    Current Status: Partially Adopted

  • International Education Standards

    Under the Law No.04/L–014 on Accounting, Financial Reporting and Audit (Law No.04/L–014), certification program for certified accountants and auditors should be in compliance with IES. The Kosovo Council for Financial Reporting (KCFR) is responsible for establishing and issuing standards for the professional training leading to the certification of accountants and the licensing of auditors and overseeing their implementation.

    As far as continuing professional development (CPD) is concerned, the CPD requirement for Certified Auditors is prescribed by law and is subject to monitoring by the KCFR. Certified Accountants and Certified Accounting Technicians are not required to complete CPD.

    Certification of accountants and auditors under law is performed by the licensed professional associations (three associations as of 2017).

    The Society of Certified Accountants and Auditors of Kosovo (SCAAK), an IFAC Member and one of the licensed professional associations, developed certification programs that overall meets the requirements of IES, according to the World Bank 2017 Accountancy Education: Benchmarking Study. Although not required by law, SCAAK established voluntary CPD requirements for Certified Accountants and Certified Accounting Technicians.

    Information on whether other professional accounting and auditing associations licensed by the KCFR have developed certification programs in line with IES is not available.

    The university’s accountancy education program, according to the World Bank, falls short in some areas from the requirements of IES and needs to be further aligned with the professional certification program.

    Current Status: Partially Adopted

  • International Standards on Auditing

    The Law No.04/L–014 on Accounting, Financial Reporting and Audit (Law No.04/L–014) requires financial statements of large and medium-size enterprises to be audited. Audits must be conducted in accordance with the standards and pronouncements issued by the IAASB as adopted by the Kosovo Council for Financial Reporting (KCFR).

    International standards are translated by the Society of Certified Accountants and Auditors of Kosovo (SCAAK) under formal agreements with the Albanian Institute of Certified Accountants (IEKA) and the Government of Kosovo. As of 2017, the 2015 IAASB Handbook is being applied. During 2016 SCAAK and IEKA have translated and disseminated to its members the latest new and revised ISA related to audit opinion (ISA 700, 701, 705, 706, 720) 2015 version as published by IAASB.

    Current Status: Adopted

  • Code of Ethics for Professional Accountants

    Under the Law No.04/L–014 on Accounting, Financial Reporting and Audit (Law No.04/L–014), the Kosovo Council for Financial Reporting (KCFR) requires all licensed professional associations to adopt a Code of Ethics and is responsible for enforcing compliance with its requirements. The KCFR Administrative Instruction on Recognition Criteria for Professional Associations of Accounting/Auditing No. 1, 2014 requires that the Code of Ethics be harmonized with the IESBA Code.

    As of 2017, there are three professional associations licensed by the KCFR. The Society of Certified Accountants and Auditors of Kosovo, an IFAC member, has adopted the 2015 version of the IESBA Code for application by its members. Information on the adoption of the IESBA Code by the Institute for Accounting, Auditing and Finance, and the AAB Institute for Certified Accountants and Auditors (IAAB), which are not member organizations of IFAC, is not available.

    Current Status: Adopted

  • International Public Sector Accounting Standards

    The Ministry of Finance is responsible for setting public sector accounting standards in Kosovo. Financial Management and Control Rules are consistent with the EU requirements, IPSAS, and local laws. Although Kosovo was among the first countries to adopt cash-basis IPSAS in 2004, accrual-based IPSAS have not been adopted and no timeline for their adoption has been indicated.

    Current Status: Partially Adopted

  • Investigation and Discipline

    The Law No.04/L–014 on Accounting, Financial Reporting and Audit (Law No.04/L–014) authorizes the Kosovo Council for Financial Reporting (KCFR) to impose sanctions and penalties for non-compliance with the requirements outlined in the Law. To this effect, under the KCFR Administrative Instruction No. 2012/06 on the Investigation and Discipline Procedures, the Commission for Investigation and Discipline of KCFR conducts investigations, and subsequently disciplines, (I&D) of licensed associations, audit firms, and statutory auditors. It is not clear whether the system operated by KCFR is aligned with the requirements of SMO 6.

    In addition, KCFR–licensed professional associations are responsible for establishing and maintaining an I&D system of their members as well as reporting to the KCFR on their I&D results.

    The Society of Certified Accountants and Auditors of Kosovo, an IFAC member, reports to have established an I&D system, which is aligned with most of the requirements of SMO 6.

    The Institute for Accounting, Auditing and Finance, which is not an IFAC member organization, appears to have in place a policy on I&D for its members; however, it is not clear whether the system is operational and is aligned with the requirements of SMO 6. Lastly, information on the AAB Institute for Certified Accountants and Auditors (IAAB), which is also not a member organization of IFAC, is unavailable.

    Current Status: Partially Adopted

  • International Financial Reporting Standards

    According to the Article 14 of the Law No.04/L–014 on Accounting, Financial Reporting and Audit (Law No.04/L–014), large companies that meet two of the three size criteria must use full IFRS as issued by the IASB and adopted by the Kosovo Council for Financial Reporting (KCFR). Medium and small companies may use either full IFRS or IFRS for SMEs as adopted by the KCFR. Micro-sized entities below the specified size criteria must follow simplified standards issued by the KCFR that are based on IAS as they existed in 2001. Under the Law, all companies may elect to directly apply IASB-issued standards. The Central Bank of Kosovo mandates the use of full IFRS for financial reporting of banks and insurance companies.

    KCFR has an agreement with National Accounting Council of Albania for using the Albanian translated version of official IFRS as published by the IASB. As of 2017, the 2016 edition of IFRS is translated into Albanian and being applied.

    Current Status: Adopted

Disclaimer

IFAC bears no responsibility for the information provided in the SMO Action Plans prepared by IFAC member organizations. Please see our full Disclaimer for additional information.

Methodology

Methodology
Last updated: 06/2017
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