Association of Accountants and Auditors of Republic of Srpska
Member | Established: 1996 | Member since 2004
The AAARS was established in 1996 and its membership is comprised of Authorized Auditors, CAs, CATs as well as Forensic Accountants. The activities of the association are overseen by the Ministry of Finance.
The association’s mission is to develop and improve the profession, and it aims to fulfill its mission by assisting with the education, examination, training, certification, and continuing professional development of its members, as well as translating, publishing, and implementing professional and technical standards.
The association collaborates with other regional professional accountancy organizations on the advancement of the profession. Within a framework of regional cooperation, the AAARS works with the Association of Accountants and Auditors of Serbia and the Institute of Certified Accountants of Montenegro to translate IFRS, IFRS for SMEs, IPSAS, ISA, and the IESBA Code of Ethics. In addition to being a member of IFAC, the AAARS is a founding member of the South Eastern European Partnership on Accountancy Development and in December 2015, the AAARS became a full member of Accountancy Europe.
Statements of Membership Obligation (SMO)
The Statements of Membership Obligations form the basis of the IFAC Member Compliance Program. They serve as a framework for credible and high-quality professional accountancy organizations focused on serving the public interest by adopting, or otherwise incorporating, and supporting implementation of international standards and maintaining adequate enforcement mechanisms to ensure the professional behavior of their individual members.
SMO 1: Quality Assurance
The AAARS is responsible for the establishment and operation of the quality assurance (QA) review system in the Republic of Srpska under the oversight of the Ministry of Finance. The system is designed to cover all professional accountants in the jurisdiction, including auditors, accounting technicians, and certified accountants. AAARS indicates that the Standards Act on Quality Control in Accounting and Auditing Profession in Republic of Srpska of 2012 is based, among other sources, on SMO 1 and the design of its QA review is in line with the best practices outlined in SMO 1.
The association has been working on the initial design and implementation of the QA system since 2011 in cooperation with the French professional accountancy organizations: Conseil Supérieur de l'Ordre des Experts-Comptables (CSOEC) and Compagnie Nationale des Commissaires aux Comptes (CNCC).
In 2012, regulations were issued to guide the implementation and operation of the QA review system. AAARS’s Commission for monitoring, implementation and implementation control of regulations in the field of accounting and auditing was established to carry out the necessary activities.
In the period from December 2014 to the end of 2015, six QA reviews of audit firms were conducted based on risk assessment and the analysis of a questionnaire, with the same number planned for 2016. The results of the reviews are presented at the annual congress of AAARS and are incorporated in the continuing professional development (CPD) program.
According to the SMO Action Plan submitted by AAARS in 2017, system of QA reviews was expected to become fully operational by year-end 2018, when the first QA review were expected to take place. However, in 2019 AAARS reported that the system has not become operational pending the adoption of the revised law that is expected to reassign the responsibility for QA reviews to the Ministry of Finance.
To prepare for the implementation of the QA reviews, the association reports that since 2011 it has been establishing requirements for reviewers and organizing trainings for them. However, there is no indication that these activities have been implemented due to expected regulatory changes. AAARS also indicates that it raises audit firms’ awareness of ISQC 1 and offers CPD courses and trainings on quality control standards for members in the profession. The AAARS also intends to ensure that future educational materials and CPD courses address common weaknesses of audit firms that are highlighted during QA reviews.
An important line of activity in recent years has been cooperation with six other professional organizations in the region to design and introduce a QA review system for accountants. To this effect, a regional working group, Quality Assurance Network, Accountancy Services Providers was established in September 2014 under the mentoring guidance of the Institute of Chartered Accountants in England and Wales (ICAEW). In addition to exchanging best practices between PAOs from the region and learning from ICAEW, the group promotes establishment of QA review system(s) throughout the Western Balkans region. As of 2019, several meetings, in addition to the Accountancy Profession Strategic Forum (APSF), have been conducted. The status of the development of the QA review system in Republika Seprska is not clear, however.
Considering that the design and implementation of a QA review system continues to be in the development stage, AAARS is encouraged to work with other stakeholders in the jurisdiction to launch the QA review system in the Entity as soon as possible and to ensure that the resulting system is in line with the international best practices formulated in SMO 1. Experiences of other PAOs in this respect may be beneficial.
SMO 2: International Education Standards
The AAARS has the authority to implement a program to acquire professional titles and certificates to all members of the profession in Republika Srpska (Authorized Auditors, Certified Accountants (CA), and Certified Accounting Technicians (CAT)) upon completion of the required education, examination, and practical experience requirements established at the jurisdictional level by the Accounting and Auditing Commission of Bosnia and Herzegovina (AACBiH).
The association is also responsible for licensing CAs and CATs (auditors are licensed by the Ministry of Finance) and establishing continuing professional development (CPD) requirements for its members (Authorized Auditors CAs and CATs must be members in good standing with the AAARS to receive or renew their audit licenses). CPD requirements are prescribed by law for auditors, and through the association’s regulations for AAARS members. In addition to the 120 hours of admissible CPD required by law for auditors, AAARS also requires at least 40 hours for its members annually.
Originally, AAARS’s education and certification programs were developed in 2005 under the United States Agency for International Development (USAID) Accountancy Reform Project based on the Association of Chartered Certified Accountants (ACCA-UK) syllabus and amended to incorporate additional material contained in the United Nations Conference on Trade and Development (UNCTAD) ‘model curriculum.’
In line with the requirement at the jurisdiction level that education of professional accountants be in line with IES, the association reports to have incorporated IES into its programming and promotes IES to key stakeholders such as universities, the AACBiH, the Ministry of Finance of Republika Srpska and its advisory body on accounting and auditing, and the Accounting and Auditing Council of the Republika Srpska. Following incorporation of the 2010 IES into its programs, AAARS worked at the jurisdictional level to update common education and examination programs since they were originally developed in 2005. However, it is unclear whether AAARS’s professional educational program was updated to incorporate the developments in the international standard-setting and whether it is aligned with the revised IES of 2015. It is also not clear whether CAs and CATs who choose not to join AAARS are subject to CPD requirements.
The association consults with international organizations and other professional accountancy organizations in Europe on compliance with IES and best practices in accountancy education. It also conducts member surveys to determine education and CPD needs, and to design targeted training, educational courses, and material.
While progress has been made in bringing accountancy education requirements in the Republika Srpska closer to the requirements of the revised IES, a further comprehensive gap analysis of the overall national requirements and programs for professional accountants in the country against the revised IES in cooperation with other stakeholders involved in the education of accountants in the jurisdiction is recommended. If gaps exist, specific actions need to be planned and incorporated in the SMO Action Plan aimed at fully aligning the educational requirements with those of the revised international standards. WB The association should work with universities to establish linkages/exemptions for graduates wishing to join the profession and establish ongoing processes to update its educational curriculum to incorporate developments in the international standard-setting.
SMO 3: International Standards on Auditing
With delegated responsibility from the Accounting and Auditing Commission of Bosnia and Herzegovina (AACBiH) for the translation and publication of auditing standards in the Republika Srpska, the AAARS collaborates with the Serbian and Montenegrin professional accountancy organizations (PAOs) on common translations of the pronouncements issued by IAASB. As of 2019, the 2016–2017 IASB Handbook has been translated by the Serbian Association of Accountants and Auditors (SAAA) and disseminated by AAARS on its website. No plans to translate the most recent version of ISA into Serbian have been reported.
AAARS reports to support implementation of the standards by incorporating the translated standards into the initial and continuing professional development (IPD and CPD, respectively) program, teaching materials and trainings. In particular, the association reports that it has incorporated the 2009 ISA into all its programs; it is not clear, however, whether the programs have been subsequently updated. Trainings and seminars for members are conducted twice a year and focus on adoption and implementation of international standards, recent changes, and practical application.
It also reportedly disseminates the standards to members and develops and disseminates implementation guidelines—such as the Guide to Using ISAs in the Audits of Small-and Medium-Sized Entities, Third Edition and audit manuals—on its website.
AAARS is encouraged to work with other stakeholders in the region to reduce the time lag in the translation of the most recent international standards and to showcase activities it undertakes to support its members with the implementation of auditing standards in its SMO Action Plan. The 2018 Handbook is now effective, which includes revised standards ISA 250 and 540. AAARS should consider including the most recent standards into its programming and outlining its planned implementation support. AAARS must also ensure that it obtains IFAC permission to use the translated standards. If deemed relevant and necessary, the association could consider participating in the international standard-setting process by providing comments on Exposure Drafts and other IAASB pronouncements.
SMO 4: Code of Ethics for Professional Accountants
The AAARS is responsible for the implementation aspects (translation and publication) of the IESBA Code of Ethics that has been required for application by all categories of professional accountants by law. Nevertheless, the time lag in translations of the standards persists, and the recent changes made to the Code have not yet been translated and made publicly available.
AAARS, in cooperation with the Serbian and Montenegrin professional accountancy organizations (PAOs), has made Serbian versions of the 2012 and subsequently of the 2015 version of the IESBA Code of Ethics available, both in print, and electronically, on its website. The 2016 version is available in printed form. AAARS also collaborates with the PAO in the Federation of Bosnia and Herzegovina and the Accounting and Auditing Commission of the Federation of Bosnia and Herzegovina to ensure that the Code of Ethics is available in the other languages spoken in the jurisdiction.
AAARS supports its members with the implementation of the Code by providing continuing professional development on ethical requirements and informing members of new IESBA pronouncements in trainings, regular and periodic publications, seminars, and through its website. Public interest and the strengthening the profession’s credibility have been the main topics of the 2019 annual Congress.
AAARS is encouraged to work with other stakeholders in the region to reduce the time lag in the translation of the IESBA Code. Considering the June 2019 effective date of the 2018 International Code of Ethics, a completely restructured and rewritten Code that includes the important NOCLAR standard issued in 2016. AAARS is encouraged to develop a plan with a specific timeline for the translation of the Code and to raise awareness of its requirements. AAARS must also ensure that it obtains IFAC permission to use the translated Code It is recommended that AAARS also consider enhancing its activities to support its members with the implementation of the Code. Such activities may include holding seminars and focused trainings, establishing a hotline for confidential questions, and disseminating information on the developments in the area through different communications means, among other activities. If deemed relevant and necessary, the association could also consider participating in the international standard-setting process by providing comments on Exposure Drafts and other IESBA pronouncements.
SMO 5: International Public Sector Accounting Standards
Although the AAARS has no direct responsibility for the adoption or implementation of IPSAS in the Republika Srpska, it reportedly collaborates with the government in the Republika Srpska and professional accountancy organizations in Serbia and Montenegro on developing a sustainable approach for the translation of IPSAS and implementation guidance issued by the IPSASB. Nevertheless, the latest translated version of IPSAS that is applicable in the Entity is that of 2013.
The association reports that it supports the implementation process by providing education and training to its members in the public sector (15% of its membership). Biannual training events cover new and revised standards, as well as guidance on the application of the standards. AAARS publishes manuals, which include topics addressed in training seminars along with articles and examples on IPSAS implementation. The association reports that it participates in the international standard-setting process by regular submission of comments to IPSASB consultations on technical issues.
AAARS also collaborates on an ongoing basis with other professional organizations in the region to exchange experiences related to implementation of IPSASs and participates in the World Bank PULSAR project, which conducted an IPSAS ToT in October 2019, with the second ToT to be held in December 2019 in Sarajevo.
AAARS could consider, if deemed practical and needed, assisting the Government in the translation process to reduce the time lag between the issuance of new IPSASs pronouncements and their application in Republika Srpska. The institute is also encouraged to review its existing implementation support to its members providing services in the public sector to determine whether enhancements are needed.
SMO 6: Investigation and Discipline
The AAARS shares responsibility for the investigation and discipline (I&D) of professional accountants in the Republika Srpska with the Ministry of Finance. In 2002, AAARS established its I&D system administered by the Honor Court. The Honor Court fuctions under AAARS Rules on Disciplinary Procedures, Code of Ethics, AAARS Statute, among other regulations and laws. The Honor Court refers cases to the Commission for monitoring, implementation, and implementation control of regulations in the field of accounting and auditing of the AAARS, which initiates disciplinary proceedings, in its turn referring cases to the criminal courts. In accordance with the AAARS Rules on Disciplinary Procedures, notice of any disciplinary action that results in suspension and expulsion from AAARS shall be published in AAARS publications. The AAARS reports that it cooperates with the Ministry of Finance on I&D matters.
The association works to ensure that members of the profession are kept informed of the requirements and sanctions under the I&D system via its professional magazine and by posting the Rules on Disciplinary Procedures on its website. AAARS also informs the public about its members’ obligations.
In its SMO Action Plan, AAARS reports that in 2011 it conducted a review of its I&D system against SMO 6 and planned to develop a new system based on the review. As of 2019, the system continues to fall short of the requirements of SMO 6. Based on the self-assessment conducted by the AAARS, its I&D proceedings are not linked to quality assurance review system; there is no separate investigative or disciplinary committees; and a process for the independent review of complaints on which there was no follow-up has not been established.
AAARS is encouraged to review the results of the self-assessment and develop plans, specific and with a defined timeframe to bring the system fully in line with the international best practices formulated in SMO 6. In addition, AAARS is also encouraged to raise awareness of the Ministry of Finance about the requirements of SMO 6 with a view to bring the overall I&D system in the jurisdiction fully in line with the international best practices.
SMO 7: International Financial Reporting Standards
The AAARS is responsible for the implementation aspects (translation and publication) of IFRS and IFRS for SMEs, which have been adopted for application in the jurisdiction. AAARS reports that as of 2019, the 2013 version of IFRS as translated by the Serbian Association of Accountants and Auditors is being applied. Translation of the most recent version of IFRS is underway by the Ministry of Finance of Serbia.
Although a time lag in the translation of IFRS exist, the association reports to have incorporated the latest IFRS and IFRS for SMEs into its continuing professional development programs. It supports its members with the implementation of the standards through developing and publishing manuals that provide practical implementation guidance on specific IFRS. AAARS also reports that it arranges training for accountancy education providers. However, no recent activities have been indicated.
AAARS reports that it participated in the consultative process on the adoption of the IFRS and IFRS for SMEs both at the European Union and the Bosnia and Herzegovina levels, and submitted comments to the European Financial Reporting Advisory Group. No recent activities have been indicated.
AAARS is encouraged to update its SMO Action Plan focusing on providing specific examples of activities it plans to undertake or is undertaking to support its members with the implementation of the standards. Given a significant time lag in the translation of IFRS and recognizing that translation of international standards is a complex, resource-intensive undertaking, the association is encouraged to work with other stakeholders in the region to ensure that the most recent version of IFRS is available for application in the jurisdiction. To make the voice of the profession heard, AAARS should consider participating in the international standard-setting process by providing comments on Exposure Drafts and other IAASB pronouncements, if deemed relevant and feasible.
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