Chamber of Authorized Auditors of Serbia

Associate | Established: 2006 | Associate since 2014

The KoR was established in 2006 under the Law on Accounting and Auditing of 2006 as a mandatory membership organization for certified auditors, certified internal auditors and audit firms subject to oversight by the Ministry of Finance. In accordance with the 2006 Law (and subsequent amendments), the chamber’s main objectives are to (i) improve and develop the accounting and auditing profession, (ii) implement international accounting, auditing, and ethical standards, (iii) represent and advocate on behalf of the profession, and (iv) administer professional examinations for auditors. With the promulgation of the Law on Auditing of 2013, all licensed auditors as well as audit firms are required to be members of the chamber. In addition, the KoR’s responsibilities were expanded to include administration and delivery of the continuous professional development program for auditors along with other authorized providers, and implementation of a mandatory quality assurance review system for the audits of financial statements in Serbia. 

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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.

Methodology
Last updated: 04/2018
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SMO Action Plan

Status of Fulfillment by SMO

• SMO 1: Quality Assurance

  Since the enactment of the Law on Auditing in 2013, the KoR has been responsible for conducting quality assurance (QA) reviews under the oversight of the Audit Public Oversight Board (APOB) and Ministry of Finance (MoF). In 2015, KoR conducted a self-assessment of the system against the requirements of SMO 1 (revised 2012) and reported that the system almost fully complied with the revised requirements. Areas of less than full compliance included independence of the QA review teams and the linkage of the system with the investigation and discipline system. In 2017, the KoR reviewed the results of the 2015 self-assessment and indicated that independence of the QA team is now assessed annually by its governing council and is being monitored by the Ministry of Finance. The POB is involved when initially approving the QA team member. The QA review system, however, continues to be linked to the POB I&D system only.

  KoR began implementation of the system in 2012 using a phased approach that culminated in on-site reviews and referral of cases requiring corrective or disciplinary actions to the APOB and the MoF. Effective 2015, proposed corrective and corrective measures identified during QA reviews have become publicly available on the KoR’s website.

  The Chamber also prepares technical guidance for its members to aid effective implementation of ISQC 1 and other related standards. It reports to provide ongoing trainings to its members that incorporate updates to ISQC 1 and ISA 220, as well as the most frequent issues identified during QA reviews of audit firms. QA reviewers are offered trainings from the Royal Dutch Institute of Chartered Accountants.

  In 2014, inspections of 10 audit firms were performed, which included review of 30 audits. In 2015, the number of inspections increased to 16 audit firms and 48 audits, and stayed at the same level in 2016. Seventeen audit firms underwent a QA review in 2017.

  In addition, KoR reports that it participates in policy deliberations with MoF, both directly and through APOB and other stakeholders, about proposed law amendments on auditor licensing requirements, use of financial statements, accounting standards, future public oversight, and other related issues. The chamber also is engaged in policy dialogues with representatives of the profession/firms.

  KoR is strongly encouraged to develop plans to bring its QA review system fully in line with the requirements of SMO 1. KoR is also encouraged to update its SMO Action Plan to show case recent and planned activities to support its members and provide an update on the recent regulatory developments, if any.

  Current Status: Execute

• SMO 2: International Education Standards

  The initial professional development (IPD) and continuing professional development (CPD) requirements for auditors are established in the Law on Auditing of 2013 and are implemented by universities and by the KoR under the oversight of the Audit Public Oversight Board and Ministry of Finance (MoF).

  In order to practice as an auditor, an individual must obtain a bachelor’s degree, three years of work experience in an audit firm, complete the professional educational program administered by the KoR, pass KoR’s examination, obtain a license form the MoF, and fulfill mandatory CPD requirements.

  KoR administers a professional educational program, conducts examinations of prospective auditors, and offers a CPD program. According to the World Bank 2017 Accountancy Education: Benchmarking Study, the professional education program should be further brought in line with the revised IES by specifying competencies that should be achieved through practical experience and prescribing learning outcomes and proficiency levels. The CPD program would benefit from an output-based CPD measurement system.

  KoR reports that it operates a monitoring system for IPD and CPD requirements for its members and monitors pronouncements issued by the IAESB. Given its shared responsibility for the IPD and CPD requirements for professional accountants in the jurisdiction, KoR indicates that it cooperates with the Faculty of Economics University of Belgrade and other education providers on an ongoing basis to implement structures and programs for students to safeguard sufficient entry level of candidates for the chamber’s programs.

  KoR, in cooperation with other stakeholders involved in the process of education of professional accountants, should conduct a review of educational requirements against the revised IES, at minimum for certified auditors in the jurisdiction. If gaps exist, plans need to be developed to address the shortcomings. As mentioned above, the chamber is also encouraged to bring its professional educational program and CPD requirements fully in line with the revised IES and to work with Universities to ensure that the university accounting education curricula is updated on an ongoing basis to incorporate new and revised audit requirements. The Chamber could also consider participating in the international standard-setting process by providing comments on Exposure Drafts and other pronouncements issued by the IAESB to ensure that the voice of the Serbian profession is taken into consideration in the international standard-setting process.

  Current Status: Review & Improve

• SMO 3: International Standards on Auditing

  The Law on Auditing of 2013 requires application of ISA for the performance of audits in Serbia as translated into Serbian and promulgated by the Ministry of Finance (MoF). As of 2017, the 2010 version of ISA has been promulgated by the Ministry. Although the 2016 IAASB Handbook that contains the revised standards on auditor reporting has been translated, it is not officially required for application.

  The KoR, with no direct responsibility for the adoption of ISA, supports the implementation of the standards through the education and training of its members. As translation of the standards is performed exclusively by the Serbian Association of Accountants and Auditors, members of KoR purchase the translations from the association.

  KoR organizes and delivers courses on ISA to enhance members’ understanding and implementation of the standards. It reports to have processes in place to ensure that initial and continuing professional development (IPD and CPD, respectively) educational materials incorporate new and revised standard related topics. However, it is not clear whether the recent revisions to ISA related to auditor reporting have been disseminated and included in the IPD and CPD programming.

  The Chamber has established a linkage to the QA review system to identify common issues with application of ISA in order to design appropriate CPD programs to assist members.

  KoR is encouraged to clearly indicate how it is working with the MoF to ensure that the latest effective version of ISA is required for application in the jurisdiction with a minimal time lag. In addition, it needs to be clarified whether the recent revisions to ISA related to auditor reporting have been disseminated and included in the IPD and CPD programming. KoR should also consider participating in the international standard setting process by providing comments on Exposure Drafts and other pronouncements issued by the IAASB to ensure that the voice of the Serbian profession is taken into consideration in the international standard-setting process.

  Current Status: Execute

• SMO 4: Code of Ethics for Professional Accountants

  The Law on Auditing of 2013 authorizes KoR to establish a Code of Ethics for auditors, either by adopting the IESBA Code or issuing its own requirements. The KoR opted to adopt, without modification, the IESBA Code and the 2016 version of the Code as translated into Serbian is being applied in the jurisdiction.

  KoR reports that it supports its members with the implementation of the Code through inclusion of ethics-related topics in its continuing professional development course offerings. The chamber also monitors and enforces its members’ compliance with the Code of Ethics through the quality assurance review and investigative and discipline systems. The members of KoR’s Ethics Board are annually updated on the revisions of the IESBA Code. Additionally, members are informed about the developments in the area at the international and national levels.

  In its Action Plan, KoR is encouraged to showcase the ways in which it assists members with practical application of the Code of Ethics. Also, the Chamber is encouraged to consider participating in the international standard-setting process through the provision of comments on the Exposure Drafts and other pronouncements issued by IESBA to ensure that the voice of the Serbian profession is taken into consideration in the international standard-setting process.

  Current Status: Review & Improve

• SMO 5: International Public Sector Accounting Standards

  The Chamber of Authorized Auditors of Serbia (KoR) has no direct responsibility for the adoption of IPSAS in Serbia, which are in the process of being implemented in the jurisdiction. KoR reports that it has considered ways to comply with the requirements of SMO 5 and, apart from its general intention to perform policy dialogues, promote adoption of IPSAS to government institutions through presentations and meetings when opportunities arise, does not deem further involvement in public sector accounting matters to be feasible at this time.

  Current Status: Sustain

• SMO 6: Investigation and Discipline

  Under the Law on Auditing of 2013, KoR is involved in the investigation and discipline (I&D) of auditors, with the Ministry of Finance (MoF) and the Audit Public Oversight Board (APOB) also involved in the process. The law requires KoR to inform the APOB, the MoF, Police, Public Prosecutor, and the Ministry of Justice about involvement of its members in crimes and offenses.

  KoR has been operating its I&D system since 2013. The Ethical Board reviews the complaints received while the Quality Assurance (QA) Committee identifies instances of non-compliance through regular reviews. Disciplinary measures are proposed by the committees and adopted by the governing council and referred to APOB and the MoF. Since 2014, the chamber reports to have heard 34 cases with the proposals for disciplinary measures sent to APOB and the MoF.

  In 2015, KoR conducted a self-assessment of the system against the requirements of SMO 6 (revised 2012) and reported that the system was less than fully compliant with the revised requirements in the following areas: the scope of the system, lack of a separate disciplinary committee, system of appeals, and public interest considerations. At that time, the Chamber reported that it was aligning its system for enforcement of sanctions to incorporate the roles of the APOB and the MoF. KoR also intended to establish the linkage between the I&D and QA review system by using results from the QA review system to propose corrective and disciplinary measures to the APOB and MoF. In 2018, KoR reviewed the results of the self-assessment of its I&D system against SMO 6 and reported that apart from lack of non-accountants on both committees the Ethical and QA Committees, lack of time targets for disposal of cases, and a process for the independent review of complaints, its I&D system complies with SMO 6. It remains unclear, however, whether overall the I&D system in the jurisdiction is in line with the international best practices as outlined in SMO 6.

  During the next round of update of its SMO Action Plan, KoR is encouraged to provide an overview of the I&D system for professional accountants in the jurisdiction, explaining the roles of all parties involved in the process, and establish plans to conduct an assessment of the overall system against SMO 6, possibly in cooperation with other stakeholders. The Chamber is also encouraged to develop plans to bring its system fully in line with SMO 6 and to put in place mechanisms to raise members and the public’s awareness and provide updates on the requirements of the I&D system on an ongoing basis.

  Current Status: Plan

• SMO 7: International Financial Reporting Standards

  The Chamber has no direct responsibility for the adoption of IFRS or IFRS for SMEs, with the Ministry of Finance (MoF) being responsible for all aspects of the adoption process, including the translation. The MoF has adopted IFRS and IFRS for SMEs and translated the standards into Serbian.

  KoR reports that it is an active participant in policy dialogues on corporate sector accounting standards in Serbia and provides comments on draft accounting legislations. It also contributes to the IFRS and IFRS for SME translation process through participation in the MoF’s translation review Committee.

  Moreover, the Chamber supports implementation of the standards though the incorporation of standard-related topics in its educational programming. KoR also provides regular updates to its members on the international developments in the area and changes to the standards.

  Current Status: Sustain

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.