Institute of Accountants and Auditors of Montenegro
Associate | Established: 2002 | Associate since 2003
The Institute of Accountants and Auditors of Montenegro (IAAM) is a voluntary organization of professional accountants in Montenegro. It was established in 1956 as the Association of Bookkeepers of Montenegro under the Law on Accounting and Auditing of 2002 as an educational institution. The IAAM currently maintains a two-tiered certification scheme that offers recognition of progress and achievement at two different levels: Accountant and Authorized Accountant. IAAM’s membership includes professional accountants, management accountants, and bookkeepers.
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
With no responsibility for the adoption and implementation of the planned quality assurance (QA) review system, and pending the adoption of a mandatory QA system at the jurisdictional level, the IAAM initiated cooperation with the responsible parties, such as the Ministry of Finance, the Chamber of Auditors, and the Institute of Certified Accountants of Montenegro, in developing and considering the future QA review system. The IAAM sees coordination and cooperation among the professional accountancy organizations and regulators as integral to the establishment of a strong, well-functioning system of quality assurance. The IAAM reports that it will develop specific activities in the areas once the QA review system has been established. Meanwhile, it reports that it increases member awareness about quality control and quality assurance through seminars and publications.
The IAAM is encouraged to promote the requirements of SMO 1 to those charged with the development of the QA review system. It is also encouraged to review its existing SMO Action Plan once the pending legislation has been finalized and to share with IFAC’s Quality and Membership staff its role and specific activities aimed at achieving compliance with the requirements of SMO 1.
SMO 2: International Education Standards
The IAAM has no direct responsibility for establishing initial and continuing professional development (IPD and CPD) requirements for professional accountants at the jurisdictional level. The IAAM does maintain, however, a two-tiered certification scheme that offers recognition of progress and achievement at two different levels: Accountant and Authorized Accountant. The IAAM reports that if has undertaken measures to review its certification programs and their alignment with IES. The IAAM also reports that it maintains a dialogue with university economics professors about changes to IES, international accountancy standards, and implementation guides, and has undertaken outreach with national universities to strengthen economics programs.
The IAAM is encouraged to review the requirements of the revised IES and report to IFAC’s Q&M staff during the next update of its SMO Action Plan on the areas where improvements may be needed. Clarifications on the IPD and CPD requirements for the accountancy profession overall—as pointed out in this report—would also be beneficial. It is also encouraged to review its existing SMO Action Plan once the pending legislation has been finalized and share with IFAC’s Q&M staff its role and specific activities aimed at achieving compliance with the requirements of SMO 2.
SMO 3: International Standards on Auditing
The IAAM has no direct responsibility for either the adoption or translation of IAASB pronouncements in the jurisdiction. It does, however, promote the idea of cooperation among the professional accountancy organizations (PAOs) in the jurisdiction to develop and enhance the profession, including in the area related to SMO 3, and has made steps to initiate such cooperation. The IAAM reports that it supports the implementation of ISA by its members by disseminating information about international developments in this area, as well as about the new standards and exposure drafts issued by the IAASB. Future IAAM activities in the area of ISA adoption and implementation will depend on the provisions of the new legislation, which is expected to clarify the roles of Montenegrin PAOs in this area.
The IAAM is encouraged to review its existing SMO Action Plan once the pending legislation has been finalized and share with IFAC’s Q&M staff its role and specific activities aimed at supporting effective implementation of IAASB pronouncements in Montenegro, especially those related to its membership.
SMO 4: Code of Ethics for Professional Accountants
With no direct responsibility for either the adoption or the translation of the IESBA Code of Ethics in Montenegro, the IAAM promotes cooperation with national PAOs and the Serbian Association of Accountants and Auditors to raise awareness of the IESBA Code and ensure its timely translation. The IAAM has adopted the IESBA Code of Ethics for application by its members, has included ethics in its educational programs, and notifies its members of the IESBA’s activities. Although in its 2015 Action Plan the IAAM indicated that it plans to provide comments on IESBA’s Exposure Drafts, these efforts do not seem to have materialized. Efforts to review and consider implementation of the “Ethics Education Toolkit” have been delayed in part due to delays in translation.
The IAAM is encouraged to review its existing SMO Action Plan and indicate the specific activities it undertakes to support its members with the application of the IESBA Code of Ethics.
SMO 5: International Public Sector Accounting Standards
The IAAM sees that it has a role in raising awareness of IPSAS and promoting the adoption of full-accrual IPSAS for application in Montenegro. The IAAM has planned to establish contact with the Montenegro State Audit Institution and analyze the experience of other jurisdictions in Southeastern Europe that have adopted IPSAS. It is not clear, however, whether these plans have been implemented.
The IAAM is encouraged to review its existing SMO Action Plan to indicate specific planned activities aimed at achieving compliance with the requirements of SMO 5.
SMO 6: Investigation and Discipline
With no investigative and disciplinary (I&D) system at the jurisdiction level, the IAAM maintains a complaint-based I&D system for its members. The system does not allow for appeals. The implementation of developments in the area of I&D are also delayed due to expected changes in the Law on Accounting and Auditing. The IAAM calls for the collaboration of PAOs in the country on I&D and reports that it promotes SMO 6 requirements at the jurisdictional level. It also has plans to review its I&D system against the requirements of SMO 6 (revised 2012).
The IAAM is encouraged to continue promoting to the authorities the establishment of an I&D system for all professional accountants in the jurisdiction and to promote the requirements of SMO 6 as the basis for establishing such a system. The IAAM is also encouraged to review its existing SMO Action Plan once the pending legislation has been finalized and share with IFAC’s Q&M staff its role and specific activities aimed at achieving compliance with the requirements of SMO 6.
SMO 7: International Financial Reporting Standards
The IAAM undertakes awareness building activities and training and education on the subject of IFRS, which have been adopted in Montenegro by law. In 2011, the IAAM considered the possibility of obtaining a license from the IASB to translate IFRS into Montenegrin. It was later decided, however, that the translation of IFRS into Serbian will suffice. The IAAM supports its members with the implementation of IFRS, providing information on the latest IFRS developments through the magazine Racunovodstvo, revizija i finansije and other publications, and conducts seminars, presentations, and workshops on new or amended IFRS and IFRIC Interpretations. The IAAM also promotes the need for adoption of IFRS for SMEs in Montenegro.
The IAAM is encouraged to continue assisting its members with the implementation of IFRS and to promote the adoption of IFRS for SMEs in the jurisdiction. It is also encouraged to review its existing SMO Action Plan to include an update on the specific activities aimed at achieving compliance with the requirements of SMO 7.
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