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 improve and develop the accounting and auditing profession, implement international accounting, auditing, and ethical standards, represent and advocate on behalf of the profession, and 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.
KoR is an Associate of IFAC.
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
In accordance with the Law on Auditing of 2019, audit firms are obliged to established and maintain a quality control system that is in line with ISQC 1. The Chamber of Authorized Auditors of Serbia (KoR) is tasked by law with carrying out QA reviews for its members—which include all auditors and audit firms in the jurisdiction. The QA review system operated by the KoR is subject to oversight of the SEC, the Audit Public Oversight Board (APOB), and Ministry of Finance (MoF). The MoF has final authority to approve QA review reports prepared by KoR inspectors, which are submitted to APOB for review and approval and then forwarded by the APOB to the MoF. Based on proposals put forth by the KoR and cleared by the APOB, the MoF reviews and issues a decree for appropriate corrective and disciplinary measures. The SEC also reviews KoR’s QA review findings.
The KoR reports that its established QA review system comply with the SMO 1 requirements—it has progressed in closing gaps in its procedures that it identified in 2015 and 2017 such as independence of review teams and linkage to the investigation & discipline. 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. Between 2016 to 2020, the APOB and MoF approved 41 corrective measures identified during QA reviews, which are publicly available on the KoR’s website.
KoR 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 have previously been offered trainings from the Royal Dutch Institute of Chartered Accountants.
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. It also monitors changes in the Serbian business environment as part of risk management and analysis for planning QA review visits.
KoR has demonstrated that it is taking steps to review and improve its fulfillment of SMO 1. KoR is encouraged to continue to monitor and coordinate with the MoF, SEC, and APOB to support the implementation of ISQM1 amongst its members when it becomes effective as of December 15, 2022. Resources on the quality management standards are available on the IAASB website. KoR may also update its SMO Action Plan to show more up-to-date examples of actions it is taking in this area.
SMO 2: International Education Standards
The initial professional development and continuing professional development (CPD) requirements are established only for auditors in the Law on Auditing of 2019 and are implemented by universities and the Chamber of Authorized Auditors of Serbia (KoR) under the oversight of the Audit Public Oversight Board and Ministry of Finance (MoF).
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 reports that it striving to update its curriculum and examinations taking into consideration the latest IES requirements and competency-based approaches. It has strengthened its assessment to include case studies that help demonstrate competencies. The CPD requirements are in line with IES 7’s input-based approach of 120 hours over 3 years.
KoR reports that it operates a monitoring system for IPD (primarily the practical experience component) and CPD requirements for its members and monitors the work of the International Panel on Accountancy Education. 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 align with the IES and safeguard sufficient entry level of candidates for KoR’s programs.
KoR is encouraged to continue as much as possible with its plans to incorporate competency-based approaches for its programming in line with the latest IES requirements. Revisions to IES 2, 3, 4, and 8 became effective in January 2021 and reflect the need for competency-based approaches as well as the increasing demand for accountants skilled in information and communications technologies and place further emphasis on professional skepticism skills and behaviors. KoR may consider utilizing IFAC’s IES Checklist and the IFAC Accountancy Education E-Tool to review the current version of IESs and share these requirements with its members and stakeholders – such as universities and the MoF.
SMO 3: International Standards on Auditing
The Law on Auditing of 2019 requires application of ISA for the performance of audits in Serbia as translated into Serbian and promulgated by the Ministry of Finance. As of 2021, the 2016-2017 IAASB Handbook has been promulgated by the Ministry. The Serbian Association of Accountants and Auditors (SAAA) is responsible for the translation of audit standards in line with IFAC’s Translation Policy and has translated several IAASB Handbook versions over the years.
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. 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.
Through its QA review system, KoR identifies common issues with application of ISA to design appropriate CPD programs to assist members.
The 2018 IAASB Handbook was effective December 2019 and contains revisions to ISA 250 and ISA 540. Although KoR is not responsible for translation, its members are solely auditors. Therefore, it could, where possible, advocate for MoF approval of translations once completed as soon as possible to ensure that the most recent version of ISA is adopted for application in the jurisdiction. Along these lines, the IAASB has issued an exposure draft of the proposed separate standard for audits of Less Complex Entities. KoR is encouraged to participate in the public consultation process for this landmark new draft standard.
SMO 4: Code of Ethics for Professional Accountants
The Law on Auditing of 2019 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. The SAAA has performs has translated the 2018 version of the Code, which is being applied in the jurisdiction by members of both PAOs.
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 institute also monitors and enforces its members’ compliance with the Code of Ethics through the quality assurance review and its investigative and discipline system. 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.
There upcoming revisions to the Code in the 2020 Handbook – also available in the IESBA eCode — including revisions to Part 4B of the Code?to reflect terms and concepts used in the IAASB's International Standard on Assurance Engagements (ISAE) 3000 (Revised), which are effective June 2021 and revisions to promote the role and mindset expected of all professional accountants which are effective in December 2021. KoR is encouraged to continue timely updates and implementation support in this area to ensure that professionals can implement the revisions once effective. KoR could also include more up-to-date examples of implementation support it is providing within its Action Plan. Finally, KoR 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.
SMO 5: International Public Sector Accounting Standards
Cash-basis IPSAS were adopted in Serbia in 2003 through Government Decision on Adoption (49/2010) and the Ministry of Finance is in the process of transitioning to accrual–based IPSAS by 2025. This is reflected in the 2020 IFAC/CIPFA Public Sector Financial Accountability Index and the World Bank/CFRR’s 2020 Stocktaking of Public Sector Accounting and Reporting Environment in PULSAR Beneficiary Countries: Serbia.
The Chamber of Authorized Auditors of Serbia (KoR) has no direct responsibility for the adoption of IPSAS in Serbia. 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 and 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.
SMO 6: Investigation and Discipline
Under the Law on Auditing of 2019 (amended), 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.
Under the amended legislation, KoR has established an Investigation & Discipline Committee which carries out investigations and makes disciplinary recommendations to the Council to approve. The MoF has final authority to impose corrective and disciplinary measures on licensed certified auditors and audit firms. KoR has heard over 30 cases with disciplinary measures sent on to the APOB an MoF.
KoR has been operating its I&D system since 2013 and has made improvements to strengthen its procedures since assessing them against SMO 6 in 2015 and 2018. It used to have its Ethics Committee receive and review complaints while the Quality Assurance Committee identified any non-compliance in inspections and proposed disciplinary measures to the Council. It has since created a distinct and separate investigation and disciplinary committee, linked its QA review results with the disciplinary procedures, and enhanced public interest considerations. To date, KoR reports that only members of KoR serve on the committees, which does not meet the SMO 6 best practice of including non-professionals as well.
KoR has demonstrated that it is executing its plans to advance its fulfillment in SMO 6. If legally feasible, KoR is encouraged to consider ways to incorporate non-professionals into its I&D mechanisms, such as bringing in a lawyer on an ad-hoc basis to serve in disciplinary proceedings. It is important that there is public confidence in KoR’s enforcement mechanism for any misconduct or non-compliance and it should continue to engage with the MoF to ensure procedures are as aligned as possible with global best practices.
SMO 7: International Financial Reporting Standards
The Ministry of Finance (MoF) is responsible for the adoption and promulgation of accounting standards, including translation, in the Republic of Serbia in accordance with the Law on Accounting 2019. The MoF adopted IFRS as translated into Serbian for the preparation of the financial statements of large companies and Public Interest Entities as defined in the Law on Accounting. It also adopted IFRS for SMEs for application by small- and medium-sized entities and grants medium-sized entities the option to use IFRS.
KoR reports that it is an active participant in policy dialogues on corporate sector accounting standards in Serbia with the MoF, Chamber of Commerce, and universities, and provides comments on draft accounting legislation. It also contributes to the IFRS and IFRS for SME translation process through participation in the MoF’s translation review committee.
Moreover, KoR indicates it supports implementation of the standards through its educational programming—both IPD and CPD. KoR also provides regular updates to its members on the international developments in the area and changes to the standards.
There is a 2021 version of the IFRS Standards. As feasible and as part of its role on the MoF translation committee, KoR is encouraged to advocate for and support timely translation efforts in this area to ensure that professionals have access to and can properly implement the most recent version of IFRS once effective. KoR could also include more up-to-date examples of implementation support it is providing within its Action Plan.
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