Institute of Accountants and Auditors of Montenegro

The Law on Auditing No. 001 of 2017 introduced the requirement to establish a mandatory quality assurance (QA) review system for all audits, to be implemented by the Ministry of Finance under the oversight of the Council on Audit. The Council on Audit has carried out QA reviews since 2018.

The Institute of Accountants and Auditors of Montenegro (IAAM) has no direct responsibility for the establishment or operation of the QA review system, and its membership includes very few auditors. Accordingly, audit-related activities generally fall outside the primary scope of IAAM’s mandate. Within the scope of its authority, IAAM views its role as raising awareness among the Ministry of Finance and the Council on Audit of the requirements of Statement of Membership Obligations 1 (SMO 1) and promoting awareness among professional accountants of the importance of quality management, compliance with International Standard on Quality Management 1 (ISQM 1), International Standards on Auditing (ISA), other related standards, and ethical requirements.

IAAM reports that, as part of its best endeavors, it intends to continue engaging with the Council on Audit regarding SMO 1 best practices, highlight implementation support materials available in Montenegrin or Bosnian through IFAC resources, and disseminate technical articles and guidance through the IAAM Magazine.

IAAM is also considering introducing a voluntary and educational QA system for its members to assess the quality of accounting services. This is a longer-term initiative and includes potential collaboration with regional professional accountancy organizations. In addition, IAAM previously organized a conference in 2018 on International Standard on Quality Control 1 (ISQC 1) and ISA 220 in cooperation with the State Audit Institution.

IAAM’s plans to support the QA review system operated by the Council on Audit and to continue raising awareness of SMO 1 requirements and quality management best practices appropriately reflect the best endeavors concept within the scope of its authority.

Going forward, IAAM should focus on advancing the proposed voluntary and educational QA review process for its membership, particularly for accountants providing services to small- and medium-sized entities, as part of its strategic planning and continuous improvement efforts.

Current Status: Review & Improve

The Institute of Accountants and Auditors of Montenegro (IAAM) is licensed by the Ministry of Education as a provider of educational programming for accountants and maintains a two-tier certification scheme offering voluntary qualifications of Accounting Technician and Authorized Accountant.

Education of accountancy professionals is conducted in accordance with the Montenegrin National Accounting Educational Standard, CORS-1, published in the Official Gazette of Montenegro in August 2014. CORS-1 is based on the 2009 International Education Standards (IES) and the International Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants (IESBA). IAAM reports that its educational programming is aligned with CORS-1 and that any changes to the program require approval by the Ministry of Finance.

The Accounting Technician certification prepares candidates to provide services to small- and medium-sized entities. Entry requires completion of secondary education, with exemptions available for candidates holding a university degree, and successful completion of five examinations. The Authorized Accountant certification is designed for professional accountants in business and as a pathway toward the Certified Accountant qualification. Entry requires a university degree and between three and five years of practical experience depending on the degree obtained, followed by successful completion of final examinations. IAAM indicates that all candidates are required to submit evidence of practical experience in accordance with CORS-1 requirements.

All IAAM members are subject to continuing professional development (CPD) requirements as stipulated in the Rulebook on Continuous Education, updated in 2021 and effective January 2022. Members are required to complete 40 hours of CPD annually, equivalent to 120 hours over a three-year period, through courses, seminars, and professional publications. Under the revised Rulebook, members are required to submit evidence of compliance, and this information is published on IAAM’s website.

IAAM also reports that it has expanded its training activities, including weekly training sessions to strengthen digital and information technology skills in response to evolving labor market demands. In addition, the institute is working with the Croatian Chamber of Tax Advisers and the Slovenian Chamber of Tax Advisers to strengthen competencies in tax advisory services.

In 2023, IAAM completed a self-assessment of the initial professional development (IPD) and CPD requirements of its two certifications against the latest IES requirements. According to the self-assessment, IAAM’s requirements incorporate a number of the current IES requirements to the extent permitted by CORS-1. However, areas for improvement remain within IES 2, IES 3, IES 4, and IES 5, particularly in relation to prescribed competencies, learning outcomes, and the verification and demonstration of competencies.

Completion of the IFAC IES self-assessment is an important step in strengthening IAAM’s educational framework. Going forward, IAAM should focus on engaging with the Ministry of Finance, the Ministry of Education, universities, and peer professional accountancy organizations to address identified gaps, particularly in competency verification, learning outcomes, and practical experience requirements, and to advocate for updates to CORS-1 aligned with the latest IES.

Current Status: Execute

To date, the Serbian translation of the 2016–2017 International Standards on Auditing (ISA) continues to be used in Montenegro through an agreement between the Institute of Certified Accountants of Montenegro (ICAM) and the Serbian Association of Accountants and Auditors (SAAA).

The Institute of Accountants and Auditors of Montenegro (IAAM) has no direct responsibility for the translation, adoption, or publication of auditing standards. In addition, as the majority of its membership consists of accountants rather than auditors, audit-related activities generally fall outside the primary scope of IAAM’s mandate.

Within the scope of its best endeavors, IAAM reports that it continues to support implementation of ISA by monitoring new and amended standards issued by the International Auditing and Assurance Standards Board (IAASB) and disseminating information on updates through workshops, seminars, conferences, and professional publications. IAAM recently shared information on new and revised standards from the 2021 IAASB Handbook through its magazine and related educational activities.

IAAM further reports that it notifies its members of exposure drafts issued by the IAASB in order to encourage members involved in quality management, auditing, review, other assurance, or related services to provide technical input and professional feedback. These activities appropriately reflect the best endeavors concept within the scope of IAAM’s authority and membership profile.

Going forward, IAAM should focus on further integrating new and revised IAASB pronouncements, including relevant auditing and quality management standards, into its educational programming and continuing professional development (CPD) offerings to ensure that members who may provide assurance-related services remain informed of current international requirements.

Current Status: Review & Improve

The Law on Accounting No. 052 of 2016 and the Law on Auditing No. 001 of 2017 require Certified Accountants and Certified Auditors, the two legally protected designations in Montenegro, to adhere to the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA) and adopted and published by the designated competent authority. The Ministry of Finance has delegated this responsibility to the Institute of Certified Accountants of Montenegro (ICAM), which, in cooperation with the Serbian Association of Accountants and Auditors (SAAA), has translated the 2018 version of the Code.

The Institute of Accountants and Auditors of Montenegro (IAAM), which brings together accountants who are not otherwise subject to jurisdiction-level ethical requirements, reports that it requires its members to comply with the IESBA Code.

IAAM supports implementation through ethics-related training as part of its qualification framework and continuing professional development activities. The institute includes one dedicated ethics training within its qualification program and organizes an annual webinar focused on anti-corruption. IAAM also reports that it disseminates updates and developments relating to the IESBA Code through its quarterly magazine, website, and email communications.

These activities demonstrate active implementation efforts in support of Statement of Membership Obligations 4 (SMO 4) and represent an improvement over the previous assessment. IAAM has also indicated that it is considering additional support mechanisms, including the development of an ethics education toolkit and workshops using practical examples of ethical dilemmas and professional judgment scenarios.

Going forward, IAAM should focus on expanding the frequency and practical application of ethics-related training and member support activities, including case-based workshops and implementation guidance, to further strengthen members’ understanding and application of the Code in practice.

Current Status: Execute

Public sector accounting standards in Montenegro are prescribed by the Law on State Property of 2009 and the Law on Financing of Local Self-Government of 2010, with the Ministry of Finance (MoF) responsible for their adoption. The Rulebook on the Method of Making and Submitting Financial Statements of the Budget, State Funds and Units of Local Self-Government of 2010 prescribes the application of accounting standards based on a modified cash basis of accounting.

In November 2019, the Government of Montenegro adopted the Law on Accounting in the Public Sector, which came into effect in 2022. The law introduces accrual accounting through national standards that reference the International Public Sector Accounting Standards (IPSAS). The transition to accrual-based standards is expected to begin in 2027. IAAM notes that a limited number of ministries have begun applying accrual-based accounting; however, the broader public sector continues to require significant capacity building to support full implementation.

The Institute of Accountants and Auditors of Montenegro (IAAM) reports that it is seeking to become more actively involved in supporting the development of public sector accountants, although this remains within the authority of the MoF. The MoF is currently the only authorized training provider for public sector accountants and has initiated a training program, including plans to translate IPSAS 33.

Within the scope of its authority, IAAM sees its role as promoting full adoption of IPSAS to the government and supporting public institutions, where possible, in the education and awareness raising of public sector accounting professionals. In 2016, IAAM signed a memorandum of cooperation with the State Audit Institution of Montenegro, under which it organizes seminars for public sector employees tailored to state auditors, including training on specific IPSAS standards and the fundamentals of accrual accounting.

These activities appropriately reflect IAAM’s best endeavors within the scope of Statement of Membership Obligations 5 (SMO 5). Going forward, IAAM should continue engaging with the MoF on opportunities to contribute to technical training, education, and qualification pathways for public sector accountants, and should support the 2027 transition to accrual accounting through targeted awareness raising, IPSAS-related training, and dissemination of relevant IFAC implementation resources.

Current Status: Review & Improve

The Institute of Accountants and Auditors of Montenegro (IAAM) is authorized to investigate and discipline its members and reports that it has established an investigative and disciplinary (I&D) system.

According to IAAM’s Statement of Membership Obligations (SMO) Action Plan, the system comprises an Investigations Committee, Disciplinary Committee, and Appeals Committee. Upon receipt of a complaint, or awareness of potential non-compliance through other sources such as news reports, the Investigations Committee assembles a three-person panel that includes individuals independent of both the matter and the member(s) concerned. The committee reviews the complaint, assesses its complexity, requests additional information where necessary, and determines whether the matter should proceed to the Disciplinary Committee.

Where a case is pursued, the Disciplinary Committee determines the appropriate sanction, which may include expulsion from membership in cases of serious breaches of professional or ethical requirements. IAAM also reports that it conducts training sessions on the I&D system to ensure that members understand its purpose, procedures, and potential outcomes.

In 2022, IAAM introduced a new membership registry system to register members and monitor continuing professional development (CPD) compliance. IAAM expects that this system will strengthen its ability to identify and address potential non-compliance and support more effective use of disciplinary procedures going forward.

At the same time, IAAM has identified areas for further strengthening. In comparison with the Statement of Membership Obligations 6 (SMO 6) benchmark, IAAM notes that the members of its Disciplinary Committee currently comprise only professional accountants and that the results of proceedings may not yet be fully available to the public. While IAAM reports that members and the public are informed of complaint procedures through its publications and website, as of the date of the assessment, this information does not appear to be clearly accessible online. These activities demonstrate that IAAM has established and is implementing its I&D framework.

Going forward, IAAM should focus on operationalizing the system in practice, improving public visibility of complaint procedures and sanctions, and continuing engagement with regional professional accountancy organizations to strengthen independence, transparency, and effectiveness of the enforcement process.

Current Status: Execute

The Law on Accounting No. 052 of 2016 requires legal entities in Montenegro to prepare financial statements in accordance with International Financial Reporting Standards (IFRS Accounting Standards) as adopted and published by the designated competent authority. The responsibility for translation and publication has been delegated by the Ministry of Finance to the Institute of Certified Accountants of Montenegro (ICAM).

The Institute of Accountants and Auditors of Montenegro (IAAM) does not have direct responsibility for the adoption or publication of IFRS Accounting Standards. However, within the scope of its mandate, IAAM supports implementation through its qualification framework, continuing professional development (CPD) activities, seminars, workshops, technical articles, and professional publications aimed at strengthening members’ understanding and application of IFRS requirements, particularly for small- and medium-sized entities.

IAAM reports that it regularly disseminates updates on new and amended IFRS Accounting Standards through its website, publications, and member communications and provides training activities to support implementation in practice. As Montenegro continues its transition toward more current IFRS requirements, IAAM’s role in supporting awareness and technical capacity building among professional accountants remains important. These activities demonstrate ongoing support and implementation efforts within the scope of Statement of Membership Obligations 7 (SMO 7).

Going forward, IAAM should continue strengthening member support for the implementation of the latest IFRS Accounting Standards, including targeted training on newly issued and amended standards and practical application guidance for entities affected by the ongoing jurisdictional transition.

Current Status: Review & Improve