Kosovo

Member Organizations

Member Organization Associate

  Society of Certified Accountants and Auditors of Kosovo

Legal and Regulatory Environment

  • Overview of Statuatory Framework for Accounting and Auditing

    Accounting

    The financial reporting framework in Kosovo is detailed in the Law No. 06/L–032 on Accounting, Financial Reporting and Auditing, which 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).

    The Law No.6/L–032 requires all business organizations registered as limited liability companies or shareholder companies in Kosovo, depending on their size, to apply either IFRSs or IFRS for Small and Medium-sized Entities (SMEs) as translated into Albanian and approved by the Kosovo Council for Financial Reporting (KCFR). KCFR has an agreement with National Accounting Council of Albania (NACA) for using the Albanian translations of IFRS as published by IASB. As of 2020, the 17th Edition, 2020/21 of IFRSs and 2015 IFRS for SMEs as translated into Albanian are required for application in Kosovo.

    Provisions of this Law do not apply to organizations licensed by the CBK. Banks, insurance companies, pensions, and other entities conducting financial activities are regulated by the Law No. 03/L–209 on the Law on Central Bank of the Republic of Kosovo. The CBK mandates the use of full IFRSs for financial reporting of banks and insurance companies.

    The Law No.6/L–032 establishes a differentiated financial reporting requirement for other entities depending on size criteria as follows. Large enterprises are organizations that exceed two of the following criteria—(i) net annual turnover greater than EUR 40 million, (ii) total assets greater than EUR 20 million, and (iii) average number of employees during the fiscal year of more than 250.

    Medium-sized enterprises cannot exceed the limits of at least two of the aforementioned criteria. Small enterprises cannot exceed two of the following criteria (i) net annual turnover greater than EUR 8 million, total assets greater than EUR 4 million, and (ii) average number of employees during the year more than 8. Micro-enterprises are enterprises that do not exceed the limits of at least two of the following criteria (i) net annual turnover of EUR 700,000, (ii) total assets greater than EUR 350,000, and (iii) average number of employees during the year more than eight.

    Large companies that meet two of the three size criteria must use full IFRSs as adopted by KCFR. Medium and small companies may use either full IFRSs 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.

    Auditing

    All large and medium-size entities must have their financial statements audited in line with the requirements of the Law No.6/L–032. 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 the standards for application in the jurisdiction. As of 2020, the 2018 IAASB Handbook is being applied.

  • Regulation of Accountancy Profession

    Under the Law No. 06/L–032 on Accounting, Financial Reporting and Auditing, 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 income raised through licensing fees.

    The mandate of the KCFR as defined under the Law No.6/L–032 includes (i) approving auditing, accounting, and ethical standards; (ii) establishing and issuing standards for the professional training of accountants and auditors; (iii) licensing individual auditors and audit firms and maintaining registers; and (iv) licensing and overseeing professional associations of accountants and auditors.

    The Law No.06/L-032 defines the role of the certified accountant and requires financial statements of SMEs, large entities, and some other companies to be signed by a certified accountant.

    Certification of accountants and auditors is delegated to the professional accounting and auditing associations, which are also responsible for adopting the IESBA Code of Ethics for their members and investigating and disciplining their members.

    In order to be licensed by the KCFR, professional accounting and auditing associations must fulfill the requirements of the Law No. 06/L–032 and the KCFR Administrative Instruction NO. 012014, Criteria for Recognition of Professional Accounting and Auditing Associations: be a non-profit, non-governmental organization acting in public interest, be an associate member of IFAC within a period of three (3) years from the entry into force of the Law and a member of IFAC within five (5) years from the entry into force of the Law; act in the public interest; comply with IFAC SMOs; adopt IESBA Code of Ethics for application by its members; and have an investigative and discipline system in place.

    As of 2020, 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).

    Certified Accountant

    Candidates for a certified accountant qualification must have a university degree, three (3) years of work experience in the field of accounting and pass the certification program offered by licensed professional associations. Educational programming for a certified accountant must be in accordance with the IFAC International Education Standards, according to the Law No.06/L-032. Certified accountants must be members of a professional association.

    Certified Auditor

    To be licensed as an auditor by the KCFR, candidates must be qualified as a certified accountant; have participated in vocational training and have passed auditor exams; have three (3) years of work experience under the supervision of a statutory auditor or an audit firm; and be a member of a licensed professional association; among other requirements. Educational programming for certified auditors must also be in accordance with the IFAC International Education Standards, according to the Law No.06/L-032

    The Law No.6/L–032 that became effective in 2019 also provides for the establishment of a Public Oversight Board (POB). The POB functions as an executive branch of the KCFR and is responsible for overseeing continuing professional development, quality assurance, and investigative and disciplinary systems. The POB is mandated to implement quality assurance reviews of auditors and audit firms on the basis of a risk analysis.

  • Audit Oversight Arrangements

    The Law No. 06/L–032 on Accounting, Financial Reporting and Auditing, which became effective in 2019 and is modeled on the EU 8th Company Law Directive requirements that requires an independent public oversight mechanism to monitor audit quality of public interest entities, provides for the establishment of the Public Oversight Board (POB).

    The POB functions as an executive branch of the Kosovo Council for Financial Reporting (KCFR), which regulates the audit profession, and is responsible for overseeing continuing professional development, quality assurance systems, and investigative and disciplinary systems. The POB is mandated to implement quality assurance reviews of auditors and audit firms on the basis of a risk analysis. The POB is responsible for the (i) development of inspection methodologies to be approved by the KCFR, (ii) preparation of inspection reports and accompanying reports to be approved by the KCFR; (iii) approval and appointment of inspectors; (iv) preparation and execution of semi-annual and annual inspection plans to be approved by the KCFR, among other tasks.

    The mandate of the KCFR as defined under the Law No.6/L–032. includes (i) approving auditing, accounting, and ethical standards; (ii) establishing and issuing standards for the professional training of accountants and auditors; (iii) licensing individual auditors and audit firms and maintaining registers; and (iv) licensing and overseeing professional associations of accountants and auditors.

  • Professional Accountancy Organizations

    The Law No. 06/L–032 on Accounting, Financial Reporting and Auditing and the KCFR Administrative Instruction No. 012014, Criteria for Recognition of Professional Accounting and Auditing Associations define licensed professional associations of accountants and auditors, tasked with some regulatory functions.

    In order to be licensed, a professional association must be a non-profit, non-governmental organization, be an associate member of IFAC within a period of three (3) years from the entry into force of the Law and a member of IFAC within five (5) years from the entry into force of the Law; act in the public interest; comply with IFAC SMOs; adopt IESBA Code of Ethics for application by its members; and have an investigative and discipline system in place. Membership in one of the associations is mandatory for all certified accountants and auditors.

    As of 2020, 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. As the first professional accountancy organization licensed by the KCFR, SCAAK represents about seven thousand professionals, who are engaged in various sectors, in key institutions of the Republic of Kosovo, such as the Office of The Prime Minister, Ministries, Central Bank, National Audit Office, Kosovo Customs, Tax Administration of Kosovo, Municipalities as well as businesses and audit firms.

    SCAAK is a member of the IFAC, the Federation of Mediterranean Accountants (FCM), and the European Federation of Accountants and Auditors (EFAA).

    The Institute for Accounting, Auditing and Finance (IKAF)

    IKAF was established in 2005 and has been recognized by the KCFR as a licensed professional association in 2013. The institute unites about 2000 auditors, accountants, internal auditors, and evaluators. IKAF offers trainings, certification, continuing education, technical support, and advocacy. 

    AAB Institute for Certified Accountants and Auditors (IAAB)

    IAAB was licensed by the KCFR as a licensed association of accountants and auditors in 2016. No further information is available.

  • Projects or Other Information

    Since 2006, the Society of Certified Accountants and Auditors of Kosovo (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.

Adoption of International Standards

  • Quality Assurance

    The Law No. 06/L–032 on Accounting, Financial Reporting and Auditing of 2019 forms the legal foundation for the establishment of the quality assurance (QA) review system in Kosovo and requires application of ISQC 1 and other related IAASB pronouncements. As of 2020, the Albanian translation of the 2018 IAASB Handbook is being applied.

    Under the Law, the Public Oversight Board (POB), an executive branch of the Kosovo Council for Financial Reporting (KCFR), is the competent authority for performing mandatory QA reviews for the licensed statutory auditors and firms. As of 2020, the QA system is being operationalized.

    In the absence of an operational QA review system, the Society of Certified Accountants and Auditors of Kosovo (SCAAK), a member of IFAC, has performed QA reviews of its members who provide auditing services since 2016. According to the self-assessment conducted by SCAAK in 2020, its system fully complies with the requirements of SMO 1.

    Current Status: Partially Adopted

  • International Education Standards

    Under the Law No. 06/L–032 on Accounting, Financial Reporting and Auditing of 2019, educational programming for certified accountants and auditors, the two segments of the profession regulated at the state level, should be in compliance with IESs. 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. Certification of accountants and auditors under law is performed by the licensed professional associations (three associations as of 2020).

    Continuing professional development (CPD) for certified auditors is prescribed by law and is subject to monitoring by the KCFR. Other professionals are not required to complete CPD under the law.

    Candidates who apply for certified accountant must have a university degree, three (3) years of work experience in the field of accounting and have passed the certification program offered by licensed professional associations.

    To be licensed as an auditor by the KCFR, candidates must be qualified as a certified accountant; have participated in vocational training and have passed auditor exams; have three (3) years of work experience under the supervision of a statutory auditor or an audit firm; and be a member of a licensed professional association; among other requirements.

    The Society of Certified Accountants and Auditors of Kosovo (SCAAK), an IFAC Member and one of the licensed professional associations, developed certification and CPD programs that, according to SCAAK, have been continually updated to include international developments and the requirements of IESs. The 2019 IES Handbook (2019 Edition) and other supporting materials issued by the IAESB have been translated and disseminated. In 2021, SCAAK plans to incorporate the revised IESs 2, 3, 4, and 8 that are effective in 2021 into its educational programming. Although not required by law, SCAAK also established CPD requirements for certified accountants and certified accounting technicians, who are its members.

    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 2017 Accountancy Education: Benchmarking Study, falls short in some areas of the IES requirements.

    Current Status: Partially Adopted

  • International Standards on Auditing

    The Law No. 06/L–032 on Accounting, Financial Reporting and Auditing requires financial statements of large, medium-size, and small enterprises with an annual turnover of EUR 4 million 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 2020, the Albanian translation of the 2018 IAASB Handbook is being applied.

    Current Status: Adopted

  • Code of Ethics for Professional Accountants

    The Law No. 06/L–032 on Accounting, Financial Reporting and Auditing requires all licensed professional associations to adopt the IESBA Code of Ethics for application by their members. Membership in professional associations is mandatory for certified accountants and auditors. The Kosovo Council for Financial Reporting (KCFR) is ultimately responsible for approving the Codes of the associations and enforcing compliance of certified auditors with the requirements of the Codes.

    As of 2020, there are three professional associations licensed by the KCFR. The Society of Certified Accountants and Auditors of Kosovo, an IFAC member, has translated and adopted the 2018 International Code of Ethics for Professional Accountants for application by its members.

    Information on the adoption of the IESBA Code by the Institute for Accounting, Auditing and Finance, and the Institute for Certified Accountants and Auditors (IAAB), which are not member organizations of IFAC, is not available.

    Current Status: Partially 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. Cash-basis IPSAS were adopted 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. 06/L–032 on Accounting, Financial Reporting and Auditing of 2019 authorizes the Kosovo Council for Financial Reporting (KCFR) to impose sanctions and penalties for non-compliance of auditors and audit firms 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 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 and whether certified accountants are subject to national I&D procedures.

    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. As of 2020, there are three professional associations licensed by the KCFR.

    The Society of Certified Accountants and Auditors of Kosovo, an IFAC member, reports in 2020 to have established an I&D system for its members, which include certified accountants. The system, according to SCAAK, is aligned with the requirements of SMO 6 except for a lack of process for the independent review of complaints on which there was no follow-up.

    The Institute for Accounting, Auditing and Finance, which is not an IFAC member organization, appears to have 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

    The Law No. 06/L–032 on Accounting, Financial Reporting and Auditing requires all business organizations registered as limited liability companies or shareholder companies in Kosovo, depending on their size, to apply either IFRSs or IFRS for Small and Medium-sized Entities (SMEs) as translated into Albanian and approved by the Kosovo Council for Financial Reporting (KCFR).

    Large companies that meet two of the three size criteria must use full IFRSs; medium and small companies may use either full IFRS or IFRS for SMEs. 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 IFRSs 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 IFRSs as published by the IASB. As of 2020, the 2020-21 version of IFRSs and 2015 IFRS for SMEs as translated in Albanian are 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: 02/2021
We welcome feedback. Please email membership@ifac.org

 

Thank you for your interest in our publications. These valuable works are the product of substantial time, effort and resources, which you acknowledge by accepting the following terms of use. You may not reproduce, store, transmit in any form or by any means, with the exception of non-commercial use (e.g., professional and personal reference and research work), translate, modify or create derivative works or adaptations based on such publications, or any part thereof, without the prior written permission of IFAC.

Our reproduction and translation policies, as well as our online permission request and inquiry system, are accessible on the Permissions Information web page.

For additional information, please read our website Terms of Use. ALL RIGHTS RESERVED.

Agree