Macedonia, The former Yugoslav Republic of

Member Organizations

Member Organization Associate Other PAOs

  Institute of Certified Auditors of the Republic of Macedonia

Legal and Regulatory Environment

  • Overview of Statuatory Framework for Accounting and Auditing

    The Trade Companies Law of 2004 establishes basic financial reporting and auditing requirements for all companies in the Republic of Macedonia. The law sets out the accounting and financial reporting framework to be used; identifies responsible parties for the preparation, approval and distribution of financial statements; and defines four classes of companies based on size: micro, small, medium, and large.

    All companies, including micro enterprises, are required to prepare financial reports in accordance with the standards issued by the Ministry of Finance as published in the Official Gazette of the Republic of Macedonia. In December 2009, the Ministry of Finance published a Rulebook of Accounting which prescribes the 2009 IF RS translated into Macedonian as the applicable accounting standards for the following entities: large and medium-sized commercial companies; banks, insurance companies, pension funds, and financial institutions; listed companies; other commercial entities specified in by law; and all subsidiaries of the above. Additionally, regulated companies such as banks, insurance companies, listed companies, pension funds, and other financial institutions are subject to the supervision of their respective regulators—the National Bank of Republic of Macedonia, the Insurance Supervisory Authority (InSA), the Securities and Exchange Commission, the Agency for Supervision of Fully Funded Pension Insurance, and the Ministry of Finance—which set out additional reporting requirements for entities under their supervision in accompanying Rulebooks (bylaws).

    Finally, IFRS for Small- and Medium-sized Entities (SMEs) has been required for small companies, including micro entities, since 2012; however, in the 2014 Report on the Observance of Standards and Codes—Accounting and Auditing: Republic of Macedonia, the World Bank notes that in practice, these entities generally only prepare an “annual account” report, which comprises a balance sheet, income statement, and notes to the accounts using IFRS for SMEs as guidance.

    The Trade Companies Law also sets thresholds for statutory audits. The following entities are subject to statutory audit: (i) large and medium-sized entities organized as joint-stock companies; (ii) listed companies, and (iii) large and medium-sized entities organized as limited liability companies. The Audit Law 2010 stipulates that audits must be conducted in accordance with ISA as issued by the IAASB and published in the Official Gazette of the Republic of Macedonia. The 2009 ISA were translated into Macedonian and gazetted in 2010 as the applicable auditing standards.

    Audits of regulated companies are subject to additional requirements, such as mandatory audit rotation schedules and relevant industry experience, established by the respective regulators.

  • Regulation of Accountancy Profession

    All professional accountants in Macedonia are regulated based on their respective designations. Certified auditors are regulated by the 2010 Audit Law, the Council for Advancement and Oversight of Audit (CAOA), and the Institute of Certified Auditors of the Republic of Macedonia (ICARM). Accountants and certified accountants—which includes all accountants employed in business, including bookkeepers as well as accountants working for accounting service provider companies—are regulated by the 2012 Law on Accounting Services, the Ministry of Finance, and the Institute of Accountants and Certified Accountants (IACA).

    The 2010 Audit Law and its subsequent amendments govern the audit profession and is designed to align the audit framework of Macedonia with the requirements of the EU Statutory Audit Directive. The law outlines the roles of the CAOA and the ICARM; establishes initial and continuing professional development requirements (IPD and CPD, respectively); applicable auditing and ethical standards; and stipulates the creation of a quality assurance (QA) review system and investigative and disciplinary (I&D) measures.

    The CAOA—the audit oversight authority—is responsible for: (i) issuing licenses to practice auditing; (ii) overseeing the work of ICARM; and (iii) may investigate and discipline auditors where necessary. In turn, the ICARM is responsible for: (i) maintaining registries of auditors, certified auditors, audit firms, certified auditors sole proprietors, and registries of revoked licenses; (ii) organizing and conducting examinations for auditors; (iii) issuing auditor’s certificates; (iv) developing and delivering CPD activities; (v) enforcing compliance with applicable auditing and ethical standards as well as CPD requirements; (vi) translating the ISA, IESBA Code of Ethics, and ISQC 1; (vii) initiating I&D procedures for members; (viii) carrying out QA reviews; and (ix) undertaking any other activities that promote high professional standards and improve the quality of auditing services.

    To become a certified auditor in Macedonia, the Audit Law stipulates that candidates must have a bachelor’s degree in economics, law, or other relevant area; pass the professional exam offered by ICARM; have at least three years of practical experience in audit, at least two of which must be under the supervision of a practicing auditor; and have a clean professional record. Once certified by ICARM, auditors are then issued practicing licenses by the CAOA and may offer statutory audit and related assurance services. The law also provides for the acknowledgement of foreign qualifications and authorizes ICARM to recognize professional qualifications that were obtained abroad for individuals who wish to practice in Macedonia.

    In 2012, a new regulatory framework was instituted for accountants and chartered accountants. In accordance with the Law on Accounting Services, accountants are able to receive an accountant’s certificate to prepare and sign the annual accounts of sole proprietors and non-profit organizations having completed a secondary education along with one to three years of practical experience depending on the level of accounting education obtained. Chartered accountants may obtain a chartered accountants’ certificate and are permitted to prepare and sign the annual accounts and/or financial statements of any legal entity if they have a university degree and at least three years of experience in accounting. Candidates for both designations must submit their application to IACA, which will issue the appropriate certificate within thirty days of the application submission.

    Under the law, IACA is responsible for (i) keeping a register of accountants, certified accountants, sole proprietors-accountants, sole proprietors-certified accountants, and of companies doing accounting work; (ii) organizing and conducting exams for both qualifications; (iii) issuing and revoking certificates for accountants and certified accountants and licenses for sole proprietors-accountants, sole proprietors-certified accountants, and of companies doing accounting work; (iv) organizing CPD; (v) enforcing the implementation of the IESBA Code of Ethics; and (vi) translating the IFRS and IFRS for SMEs.

    Additionally, auditors of banks and insurance companies are subject to the additional requirements established by the respective regulators. Requirements for auditors of banks are specified in the Banking Law. In particular, auditors of banks and insurance companies must have at least three years’ audit experience, and must not have provided consulting services to the financial institution over the previous two years or been subject to disciplinary measures by the ICARM over the previous three years.

  • Audit Oversight Arrangements

    The Audit Law of 2010 established the Council for Advancement and Oversight of Auditing (CAOA) with a mandate to perform independent public oversight of the audit profession.

    The principal duties of CAOA detailed in Article 8 of the Audit Law of 2010 include: (i) issuing licenses to practice auditing; (ii) overseeing the work of the Institute of Certified Auditors of Republic of Macedonia (ICARM); and (iii) may investigate and discipline auditors where necessary.

    In turn, the ICARM is responsible for the following areas as it pertains to the auditing profession: (i) maintaining registries of auditors, certified auditors, audit firms, certified auditors – sole proprietors and permanently revoked licenses; (ii) organizing and conducting examinations for auditors; (iii) issuing auditor’s certificates; (iv) developing and delivering continuous professional development (CPD) activities; (v) enforcing compliance with applicable auditing and ethical standards as well as CPD requirements; (vi) translating the ISA, IESBA Code of Ethics, and ISQC 1; (vii) initiating I&D procedures for members; (viii) carrying out QA reviews; and (ix) undertaking any other activities that promote high professional standards and improve the quality of auditing services.

    CAOA is not a member of the International Forum of Independent Audit Regulators.

  • Professional Accountancy Organizations

    The Institute of Accountants and Certified Accountants (IACA)

    In 2012, the Law on Accounting Services mandated the establishment of a new professional accountancy organization to service professional accountants (non-auditors). In November 2012, IACA was established as a professional association with mandatory membership for Accountants and Certified Accountants. The IACA is an independent, non-political and non-profit organization and is responsible for the following areas: (i) keeping a register of Accountants, Certified Accountants, sole proprietors-accountants, sole proprietors-certified accountants, and of companies doing accounting work; (ii) organizing and conducting exams for both qualifications; (iii) issuing and revoking certificates for Accountants and Certified Accountants and licenses for sole proprietors-accountants, sole proprietors-certified accountants, and of companies doing accounting work; (iv) organizing continuing professional development (CPD); (v) enforcing the implementation of the IESBA Code of Ethics; and (vi) translating the IFRS and IFRS for SMEs.

    The Institute of Certified Auditors of Republic of Macedonia (ICARM)

    The ICARM was established under the Audit Law of 2005. ICARM’s mandatory membership is comprised solely of certified auditors, audit firms, and certified auditors–sole proprietors. The competences of the institute are stated in the Audit Law of 2010 as the following: (i) maintaining registries of auditors, certified auditors, audit firms, and certified auditors – sole proprietors as well as registries of those whose license have been revoked; (ii) organizing and conducting examinations for auditors; (iii) issuing auditor’s certificates; (iv) developing and delivering CPD activities; (v) enforcing compliance with applicable auditing and ethical standards; (vi) translating the ISA, IESBA Code of Ethics, and ISQC 1; (vii) initiating I&D procedures for members; (viii) carrying out QA reviews; and (ix) undertaking any other activities which promote high professional standards and improve the quality of auditing services.

    ICARM became an IFAC Member in 2013 after being an Associate since 2010.

  • Projects or Other Information

    After the 2003 Report on the Observance of Standards and Codes—Accounting and Auditing: Republic of Macedonia, a Country Strategy and Action Plan (CSAP) was formed to enact the recommendations in the report. Actions included in the CSAP were implemented from 2007–2010 under the Road to Europe–Program for Accounting Reform and Institutional Strengthening (REPARIS). The stakeholders continued the reform process when REPARIS funding ended. These reforms included establishing a quality assurance (QA) function, developing the professional examination and continuing professional development (CPD) program, financing the translation of 2009 ISA, IFRS, and IESBA Code of Ethics, reforming the accounting and auditing laws, establishing an audit oversight agency, and adopting IFRS for SMEs.

    From 2010 onwards, Institute of Certified Auditors of Republic of Macedonia has received further support from the Compagnie Nationale des Commissaires aux Comptes and Conseil Supérieur de l'Ordre des Experts-Comptable, the French professional accountancy organizations, to strengthen the QA review system, secure tools to support the application of ISA, and conduct CPD and training on the practical application of ISA.

Adoption of International Standards

  • Quality Assurance

    The 2010 Audit Law stipulates that a quality assurance (QA) review system for all audits be established and operated by the Institute of Certified Auditors of Republic of Macedonia (ICARM) subject to the oversight of the Council for Advancement and Oversight of Auditing of the Republic of Macedonia.

    The scope of the QA program covers all audits and other assurance engagements. Reviews are conducted at both the firm and partner-level and selections for review are based on both a risk-based and a cyclical approach, with both firms and partners being reviewed at least once every three years. Amendments to the Audit Law in 2014 introduced additional requirements such as qualification criteria of QA inspectors and the publication of individual QA reports on the ICARM’s website.

    ICARM reports the QA review system is operational and is aligned with the SMO 1 requirements except that the quality control standards are based on the 2009 ISQC 1 and ISA 220 translated into Macedonian.

    Current Status: Adopted

  • International Education Standards

    Initial and continuing professional development requirements (IPD and CPD, respectively) for professional accountants are stipulated in national legislation. The 2010 Audit Law outlines the requirements for auditors while the 2012 Law on Accounting Services establishes requirements for accountants and certified accountants.

    The Institute of Certified Auditors of Republic of Macedonia (ICARM), under the oversight of the Council for Advancement and Oversight of Auditing, is responsible for implementing the IPD and CPD requirements for auditors that overall meet the requirements of IES, according to the World Bank 2017 Accountancy Education: Benchmarking Study. Certified auditor candidates must have a bachelor’s degree in economics, law, or other relevant area; pass the professional exam offered by ICARM; have three years of practical experience in audit, two of which must be under the supervision of a practicing auditor; and have a clean professional record.

    As members of ICARM, auditors are subject to 120 hours of CPD over a three-year period. In the same benchmarking study, the World Bank notes that adopting an output-based approach aligned to the requirements of IES 8 is necessary.

    The Institute of Accountants and Certified Accountants (IACA) carry out the requirements for other professional accountants. Accountants need a secondary education and one to three years of practical experience based on the level of education obtained to offer services to sole proprietors and non-profit organizations. Certified Accountants are required to have a university degree and three years of accounting experience to prepare and sign financial statements of any legal entity. Candidates must submit an application with this information to the IACA, which will then issue the appropriate certificate. IACA members must also fulfill CPD requirements. The extent of alignment of these educational and CPD requirements with the IES remains to be clarified.

    Current Status: Partially Adopted

  • International Standards on Auditing

    According to the 2010 Audit Law, audits must be conducted in accordance with ISA as issued by the IAASB, translated by the Institute of Certified Auditors of Republic of Macedonia (ICARM), and published in the Official Gazette of the Republic of Macedonia.

    As of 2017, the 2009 ISA are considered the official applicable auditing standards in Macedonia and were published in the Official Gazette in 2010. ICARM reports that one its priorities for the 2017–2018 is to translate the 2016 ISA into Macedonian.

    Current Status: Partially Adopted

  • Code of Ethics for Professional Accountants

    All professional accountants in the Republic of Macedonia are required to abide by the IESBA Code of Ethics as stipulated in the respective laws: the 2012 Law on Accounting Services and the 2010 Audit Law.

    The 2010 Audit Law mandates the adoption of the Code of Ethics as issued by the IESBA, translated by the Institute of Certified Auditors of Republic of Macedonia (ICARM), and published in the in the Official Gazette of the Republic of Macedonia. ICARM reports that as of 2017, the 2009 version of the IESBA Code was promulgated and is being applied.

    The Institute of Accountants and Certified Accountants (IACA), in accordance with the 2012 Law on Accounting Services, is responsible for enforcing accountants’ and certified accountants’ compliance with the IESBA Code of Ethics as published in the Official Gazette of the Republic of Macedonia. IACA members therefore also adhere to the 2009 IESBA Code of Ethics.

    The jurisdiction is accordingly assessed as having partially adopted the IESBA Code of Ethics since the 2016 IESBA Code is yet to be translated into Macedonian and published in the Official Gazette.

    Current Status: Partially Adopted

  • International Public Sector Accounting Standards

    IPSAS have been adopted by Macedonian Government in 2002 under the Law on Accountancy of the Budget and Budget Beneficiaries. In 2005, a Macedonian translation of cash-basis IPSAS (the Rulebook on Financial Reporting) was published in the Official Gazette No. 116, December 29, 2005 by the Ministry of Finance. The government has not publicly reported any plans to incorporate accrual-based IPSAS.

    Current Status: Partially Adopted

  • Investigation and Discipline

    In accordance with the 2010 Audit Law, the Institute of Certified Auditors of Republic of Macedonia (ICARM), under the oversight of the Council for Advancement and Oversight of Auditing (CAOA), is responsible for establishing an investigative and disciplinary (I&D) mechanism for auditors.

    ICARM has established a Disciplinary Committee and a Managerial Board responsible for the implementation of its I&D procedures. The Disciplinary Committee conducts investigations and will make recommendations to the Managerial Board regarding the basis of initiating disciplinary procedures and a proposed sanction. In turn, the Managerial Board conducts the disciplinary hearings and imposes disciplinary measures based on the recommendation of the Disciplinary Committee. ICARM conducted a review of its I&D procedures and reports that it mostly aligns with the SMO 6 requirements except for the present composition of the Committee and Board. ICARM notes that other experts, lawyers and other specialists may be included if needed, as stated in the I&D Rulebook. ICARM reports it is undertaking a review of its I&D policies to align with national legislation.

    The CAOA may also conduct I&D procedures when deemed necessary and in accordance with the 2010 Audit Law. The CAOA may revoke the practicing license of an auditor.

    The Institute of Accountants and Certified Accountants, in accordance with the 2012 Law on Accounting Services, may revoke certificates for accountants and certified accountants and licenses for sole proprietors-accountants, sole proprietors-certified accountants, and of companies doing accounting work in cases of non-compliance. However, as of the date of the assessment, the institute’s I&D Rulebooks are not yet prepared and published.

    Current Status: Partially Adopted

  • International Financial Reporting Standards

    According to the Trade Companies Law 2004, the Minister of Finance (MoF) is authorized to prescribe applicable corporate accounting standards. All companies, including micro enterprises, are required to prepare financial reports in accordance with the standards issued by the MoF as published in the Official Gazette of the Republic of Macedonia. In December 2009, the Ministry of Finance published a Rulebook of Accounting which prescribes the 2009 IFRS translated into Macedonian as the applicable accounting standards for the following entities: large and medium-sized commercial companies; banks, insurance companies, pension funds, and financial institutions; listed companies; other commercial entities specified in by law; and all subsidiaries of the above.

    Under the new Law on Accounting Services, the responsibility for translating IFRS and IFRS for SMEs will be under the remit of the new professional accountancy organization for accountants and Chartered Accountants—the Institute of Accountants and Certified Accountants (IACA).

    Regulated entities are also subject to additional reporting requirements contained in accompanying Rulebooks (bylaws) set by their respective regulators.

    All other entities apply IFRS for Small- and Medium-sized Entities adopted and published by the MoF in 2011.

    No plans to incorporate the subsequent changes to IFRS have been reported by the government and IACA as of the time of the writing of this report.

    Current Status: Partially 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: 03/2018
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