Member | Established: 1996 | Member since 2004
The AAARS was established in 1996 and its membership is comprised of Authorized Auditors (AAs), Certified Accountants (CAs), and Certified Accounting Technicians (CATs). The activities of the association are overseen by the Ministry of Finance. The AAARS has the authority to implement programs for acquiring professional titles and issuing the relevant certificates to all members of the profession in Republika Srpska upon completion of the required education, examination, and practical experience requirements. It is also responsible for licensing CAs and CATs and establishing CPD requirements for its members (CPD requirement for auditors is established by law), and implementing investigation and disciplinary procedures for its members. The association collaborates with other regional professional accountancy organizations on the advancement of the profession and 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 Southeastern European Partnership on Accountancy Development and is also a 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 Standards Act on Quality Control in Accounting and Auditing Profession in Republic of Srpska of 2015 provides the legal foundation for the establishment of a mandatory QA review system. Certified auditors, certified accountants, certified accounting technicians, audit firms and firms performing accounting services are subject to QA reviews. The 2016-2017 version of ISQC 1 and ISA 220 have been adopted. With the amendments to the Law on Accounting and Auditing of the Republika Srpska from 2020 now effective, the Ministry of Finance of the Republika Srpska is responsible for carrying out QA reviews for statutory audits of financial statements. The AAARS reports that the main requirements of SMO 1 will be fulfilled by the MoF’s system when it begins carrying out reviews.
Prior to this transition of responsibility, the AAARS had been responsible for creating and implementing QA review procedures under the oversight of the MoF. From 2011 to date, the AAARS carried out several actions to advance the implementation of a QA review system that met SMO 1 best practices. With the support of and cooperation with the French professional accountancy organizations, the AAARS established a Commission for monitoring, implementation and implementation control of regulations in the field of accounting and auditing and published related rules and regulations. In 2014-2015, 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 were presented at the annual congress of AAARS and incorporated in the continuing professional development (CPD) program. Going forward, the AAARS will be supporting the MoF and intends to ensure that future educational materials and CPD courses address common weaknesses of audit firms that are highlighted during QA reviews.
To prepare for the implementation of the QA reviews, the association reports that since 2011 it has been organizing trainings for members. Most recently, in 2021, AAARS signed an agreement with the French PAOs to access their audit software for SMEs and translate the program into Serbian. Training on the software is expected to commence in 2022. AAARS reports that given the shift in QA responsibility, it believes its efforts are best directed toward supporting SMPs to prepare for upcoming QA reviews and educating them on the benefits of participating in the reviews. The use of the software will permit SMPs to assess their systems of quality control, review documentation, ensure compliance, and adjust as necessary prior to the MoF reviews. Already the AAARS has provided training on and shared IFAC’s Guide to Quality Control for SMPs.
An additional 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. To date, several meetings, in addition to the Accountancy Profession Strategic Forum (APSF), have been conducted for knowledge-exchanges.
With the legal responsibility for QA reviews now with the MoF and given its capacity, the AAARS’s plans to support SMPs in advance of QA reviews is a demonstration of its best efforts. The AAARS should be preparing both members and the MoF for the shift from quality control to quality management standards that are effective December 2022 through education, advocacy, and outreach. The new standards are intended to strengthen and modernize the audit firm’s approach to quality management. Additionally, given the AAARS’s experience in striving to start a QA review system, it is encouraged stay in communication and collaboration with the MoF so that the QA review system in the jurisdiction incorporates international best practices, including those formulated in SMO 1, and so that it continues to remain aware of any deficiencies among its membership that require either additional education or disciplinary action as necessary.
SMO 2: International Education Standards
The AAARS has provides the implementation support for acquiring professional titles and certificates to all members of the profession in Republika Srpska (RS) (i.e., 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 also licenses CAs and CATs (auditors are licensed by the Ministry of Finance) and establishes 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. All AAARS members must fulfill 120 hours of CPD over a three-year period, which meets the input-based approach under IES 7. AAARS provides several CPD opportunities for its members each year. It conducts member surveys to determine education and CPD needs that reflect what members need to know for practical purposes in day-to-day work, and to design targeted training, educational courses, and material.
The RS IPD and certification programs were originally 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.’ Since then, the AAARS indicates that it strives to maintain a high-quality accountancy education program through its representation on the AACBiH. It has incorporated revisions to the IES over the last several years into programming – the 2015 requirements being the most significant changes to date. To prepare candidates, the AAARS provides the yearly curriculum and example questions and cases from previous exams. According to the World Bank’s 2016 Accountancy Education Benchmarking Study, the qualification program could benefit from further review and improvements to several areas, including Governance, Risk Management and Internal Control, Economics, Business and Organizational Environment, Commitment to Public Interest and Ethics, to better align with the 2015 IES. Additionally, practical experience requirements are measured using an input-based approach. Learning outcomes for professional skills and professional values, ethics and attitudes are not formally prescribed by the AAARS nor are they formulated in a narrative style and documented.
AAARS indicates that it 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 – which has the ultimate authority to set the requirements around curricula, exams, etc. AAARS indicates that the AACBiH has made efforts to cooperate more with BiH universities. The same World Bank 2016 Accountancy Education Benchmarking Study noted that the RS accounting program scores relatively well at the undergraduate and master’s level against the 2015 IES benchmarks but could also benefit from improvements that would strengthen comparability with the IES.
The association is part of the World Bank / CFRR's EduCop which permits it to consult and engage with other professional accountancy organizations in Europe on compliance with IES and best practices in accountancy education.
There seems to be a solid foundation of accountancy education in the Republika Srpska as programs align fairly well with the 2015 IES requirements. Utilizing the analysis from the World Bank’s 2016 report as a basis, the AAARS is encouraged to continue advocating and engaging with the AACBiH to address the recommendations wherever feasible – either as it relates to preparation and curricula for examinations (e.g., enhancing the subject areas identified) or in support of universities and employers (e.g., articulating learning outcomes in collaboration with employers) — to bring accountancy education fully in line with the international benchmarks (now the 2019 Handbook). All stakeholders should be made aware of the revised IES 2, 3, 4 and 8 effective January 2021 which enhance the Information and Communications Technologies (ICT) and Professional Skepticism learning outcomes and clarify accompanying explanatory material. The AAARS can leverage IFAC’s Accountancy Education e-Tool and the IES Self-Assessment developed by IFAC to take stock and develop plans as necessary. These plans with reasonable timeframes should then subsequently be outlined in its Action Plan.
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. To date, the 2016–2017 IAASB Handbook has been translated by the Serbian Association of Accountants and Auditors (SAAA) and disseminated by AAARS on its website. The AAARS indicates that the SAAA will produce a Serbian translation of the 2020 IAASB Handbook by the end of 2022.
AAARS states that it supports implementation by publishing the translated standards and incorporating them into the initial and continuing professional development (IPD and CPD, respectively) program, teaching materials and trainings. It is not clear, however, whether the programs have been subsequently updated to include the latest revisions effective as of 2021. Seminars for members are conducted twice a year and focus on adoption and implementation of international standards, recent changes, and practical application.
AAARS has also shared 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 should wherever possible work with other stakeholders (including obtaining the proper IFAC permissions) in the region to reduce the time lag in the translation of the most recent international standards. Since the last SMO Action Plan update, the 2020 Handbook is now effective, which includes revised standards ISA 250 and ISA 540 effective in 2019 and ISA 315 revised effective December 2021. AAARS should be including the most recent standards into its education (both IPD and CPD) to support members with implementation and outlining its planned implementation support.
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. The AAARS collaborates with the Serbian and Montenegrin professional accountancy organizations (PAOs) on common translations of the pronouncements issued by IESBA. To date, the 2018 International Code of Ethics has been translated into Serbian by the Serbian Association of Accountants and Auditors (SAAA); the AAARS has submitted a reproduction request to update its published version from the 2015 IESBA Code of Ethics.
The AAARS indicates it 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. The 2018 International Code of Ethics and revisions effective as of December 2021 have been translated and published by the UAAFWFBH in Bosnian.
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, periodic publications, seminars, and through its website. Public interest and the strengthening the profession’s credibility were the main topics of the 2019 annual Congress.
The 2018 International Code of Ethics has been translated into Serbian by the Serbian Association of Accountants and Auditors (SAAA). Moreover, the UAAAFWFBH translated revisions effective in the 2021 Handbook (e.g., revisions to Part 4B and revisions to Parts 1 & 2 on role and mindset of professional accountants). If appropriate, AAARS may consider sharing these translated revisions with members via CPD, seminars, its website, etc.
As previously recommended, AAARS may consider enhancing or further demonstrating its activities to support its members with the implementation of the Code, referencing examples from other PAOs.
SMO 5: International Public Sector Accounting Standards
The Law on Accounting and Auditing of the Republika Srpska No. 94/15 and 78/20 adopted IPSAS for in the Republic by all levels of government. Under the Law, the Ministry of Finance of Republika Srpska is responsible for overseeing the implementation of this requirement. According to the World Bank’s Stocktaking of Public Sector Accounting and Reporting Environment in PULSAR Beneficiary Countries—Bosnia & Herzegovina (2020), IPSAS are adopted and applied directly on an accrual basis for financial statements and modified accrual basis for budget and budget execution (revenue on cash basis and expenditure on modified accrual basis).
The AAARS has no authority over the adoption of IPSAS in the Republika Srpska. It uses its best efforts to collaborate with the government and professional accountancy organizations in Serbia and Montenegro on providing translations of IPSAS and implementation guidance issued by the IPSASB. The latest translated version of IPSAS that is available of 2013. The 2021 IPSASB Handbook is being translated as of the timing of this assessment.
The association reports that it supports the implementation process by providing education and training to its members in the public sector (approximately 15% of its membership). Biannual training events cover new and revised standards, as well as guidance on the application of the standards. AAARS issues 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, through which the AAARS participated in two Training of Trainers in 2019.
AAARS has demonstrated that, within the scope of its authority, it is committed to meeting the SMO 5 obligations. AAARS is encouraged to continue its advocacy and support toward accrual-basis IPSAS.
The association is encouraged to further consider opportunities in the area of public sector accounting and it may find IFAC’s Train the Trainers: Introduction to IPSAS resource helpful for training and educational activities it offers.
SMO 6: Investigation and Discipline
The Law on Accounting and Auditing of the Republika Srpska No. 94/15 grants authority to the Ministry of Finance of Republika Srpska to monitor and discipline audit firms and members of the audit profession for failure to comply with accounting and auditing requirements as stipulated by law. In addition, the AAARS implemented an investigative and disciplinary system for its members in 2002 (auditors are required to be members of AAARS; other categories may join on a voluntary basis), outlined in its Rules on Disciplinary Procedures. The AAARS is legally required to report to the Ministry of Finance on its I&D activities.
Presently, the AAARS has an Honor Court which will receive the complaint or information, investigate, and impose a disciplinary action if necessary. The Honor Court fuctions under AAARS Rules on Disciplinary Procedures, Code of Ethics, AAARS Statute, among other regulations and laws.
AAARS has reviewed its I&D system against SMO 6 several times as part of fulfilling the SMO 6 requirements. Previously it had identified that there was no linkage with the QA review system. With the transfer of QA review responsibility to the MoF, this gap is being addressed. AAARS has continued to identify the following areas for improvement: separate committees for performing investigations and disciplinary decisions; and a process for independent reviews of complaints where no follow-up was established. AAARS notes that over the last three years it has made four proposals to the MoF to amend legislation that it would permit it to change its enforcement committee structure but to no avail. The association notes it will consider how it can make procedural adjustments to establish an independent review process of complaints.
The association works to ensure that members of the profession are kept informed of the requirements and sanctions under the I&D system. AAARS also informs the public about its members’ professional and ethical obligations.
I&D procedures that meet the SMO 6 benchmark are a key component of maintaining public trust and confidence in the profession. It is important for AAARS to continue its advocacy with regulators, like the MoF, regarding the design and implementation of its enforcement mechanism that meets best practices (e.g., no person should be a member of both the investigation committee and the disciplinary committee at the same time) and it is encouraged to share the SMO 6 benchmark with the Ministry. Giving visibility to the disciplinary procedures on the AAARS website would also be helpful for members and the public.
SMO 7: International Financial Reporting Standards
The AAARS is legally responsible for the implementation aspects (translation and publication) of IFRS and IFRS for SMEs, which have been adopted for application in the jurisdiction. The latest translated version of IFRS is that of 2019 (which was translated by the Ministry of Finance of Serbia) and that of 2015 for IFRS for SMEs.
A slight time lag in the translation of IFRS exists and relevant stakeholders (e.g., national PAOs and governments) are formalizing respective responsibilities in the translation process. The association reports that it incorporates the latest IFRS and IFRS for SMEs into its IPD and CPD programming and other seminars to keep members up to date. Trainings are provided on an ongoing basis to cover the IFRS, practical implementation issues, the scope, and boundaries of IFRS, differences between IFRS and IFRS for SMEs, and upcoming changes. It also develops and publishes manuals that provide practical implementation guidance on specific IFRS. AAARS also arranges training for accountancy education providers.
Previously, 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.
There is a 2022 volume of the IFRS. Efforts to adopt and translate the latest IFRS are strongly encouraged as part of bringing transparency, accountability, and efficiency to national, regional, and global markets. As part of its defined role in supporting adoption, AAARS is encouraged to continue its collaboration and efforts around timely translations to ensure that professionals have access to and can properly implement the most recent version of IFRS once effective. Building upon its regional engagements, AAARS may consider participating in the international standard-setting process by providing comments on exposure drafts and other IASB pronouncements, if deemed relevant and feasible.
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Petra Ko?i?a 59
Bosnia and Herzegovina