Montenegro

The financial reporting framework in Montenegro is set out primarily in the Law on Accounting, Official Gazette of Montenegro No. 145/2021, as amended by No. 152/2022; the Law on Auditing, Official Gazette of Montenegro No. 1/2017; and the Law on Business Undertakings, Official Gazette of Montenegro No. 65/2020, as amended by No. 146/2021. The Law on Business Undertakings establishes the legal forms of business entities and includes corporate governance and financial statement approval requirements applicable to companies operating in Montenegro.

The Law on Accounting requires legal persons to prepare financial statements in accordance with International Accounting Standards and International Financial Reporting Standards as published by the International Accounting Standards Board and endorsed for application in Montenegro by the Ministry of Finance, or by a legal person entrusted with those tasks that has obtained the relevant translation and publication rights. Legal entities are classified as micro, small, medium-sized, or large based on employees, annual income, and total assets. Public-interest entities are defined as issuers of securities admitted to trading on a regulated market, banks and other financial institutions, insurance companies, and large legal entities. Montenegro’s IFRS jurisdiction profile further indicates that IFRS are incorporated in law, but that there is a time lag in translation and endorsement of the most recent standards.

Under the Law on Accounting, all legal persons are required to prepare annual financial statements as of 31 December and submit them to the Tax Administration. Micro and small entities submit a balance sheet, statement of profit and loss, simplified notes, and a statistical annex. Medium-sized and large entities, listed entities, and parent entities required to prepare consolidated financial statements must also prepare management reports and submit financial statements in accordance with International Accounting Standards and International Financial Reporting Standards.

The Law on Auditing regulates statutory audits in Montenegro. Audits are mandatory for public-interest entities, medium-sized legal entities, parent undertakings that meet the criteria for medium-sized or large groups, and certain investment entities and pension fund entities. The law requires audits to be performed in accordance with International Standards on Auditing as published by the International Auditing and Assurance Standards Board and endorsed for application in Montenegro. Entities subject to mandatory audit are also required to appoint an audit committee.

In addition, sector-specific requirements apply to entities under financial sector supervision. The legal framework gives the Capital Market Authority, the Central Bank of Montenegro, and the Insurance Supervision Agency authority to determine the content, deadlines, and manner of preparation and submission of financial statements for listed companies, banks, and insurance entities, respectively.

The accountancy profession in Montenegro operates under a mixed regulatory framework. The profession is primarily governed by the Law on Accounting, Official Gazette of Montenegro No. 84/2025, and the Law on Auditing, Official Gazette of Montenegro No. 84/2025. Under this framework, the Ministry of Finance has the central role in regulating the profession, while professional accountancy organizations support professional education, continuing development, and implementation of professional standards. Montenegro’s recent reforms were adopted in July 2025 as part of the country’s continued alignment with the acquis communautaire in the areas of company reporting and statutory audit.

Statutory auditors and certified accountants are the main professional categories regulated in Montenegro. Public oversight of statutory audit is established by law, while initial and continuing professional development requirements for professional accountants are implemented through the national educational framework and relevant professional bodies. Montenegro’s professional framework has historically distinguished between legally regulated categories and other accounting professionals who may join professional accountancy organizations on a voluntary basis. Accountancy Europe’s overview of the profession in Montenegro indicates that the legally regulated categories are authorized auditors and certified accountants, while authorized accountants and bookkeepers are not regulated by law.

The Law on Auditing regulates entry into the audit profession and the performance of statutory audits. The current legal framework establishes statutory audit as a regulated activity and forms part of Montenegro’s system of public oversight over the audit profession. Recent European Commission reporting notes that Montenegro adopted a new Law on Auditing in July 2025 to further align with the European Union Directive on statutory audits and, in part, the Regulation on specific requirements regarding statutory audit of public-interest entities.

Professional education in accounting is delivered in practice through the Institute of Certified Accountants of Montenegro. According to ICAM’s official website, the institute administers professional education in line with the Montenegrin national accounting education standard, CORS-1, and operates programs for bookkeeper, authorized accountant, and certified accountant qualifications. ICAM also states that it maintains registers of professional title holders and implements continuing education requirements for its members.

Other accounting professionals may also become members of voluntary professional accountancy organizations and thereby become subject to those organizations’ membership requirements. The Institute of Accountants and Auditors of Montenegro, established in 2002, continues to operate as a voluntary professional body that supports accountants and auditors through education, publications, and professional services. ICAM’s website explains that it was formed in 2006 following separation from the Institute of Accountants and Auditors of Montenegro, with a primary focus on recertification and the delivery of new professional education programs.

Montenegro has established an independent public oversight framework for statutory audit under the Law on Auditing, Official Gazette of Montenegro No. 84/2025. The law aligns the jurisdiction more closely with the European Union acquis on statutory audits and public-interest entities and provides the legal basis for an independent and adequately funded public oversight body.

Under the new framework, public oversight is carried out through the Division for Audit Oversight, established within the Ministry of Finance as the competent public oversight authority for statutory audit. The Division is responsible for overseeing the statutory audit profession, conducting inspections and quality assurance reviews, monitoring compliance with auditing and ethical requirements, and administering investigations and sanctions where necessary. The system includes specific provisions for public-interest entities and strengthens the quality assurance and enforcement regime compared to the previous framework.

The oversight framework includes responsibility for: (i) approval and registration of statutory auditors and audit firms; (ii) adoption and implementation oversight of auditing and ethical standards; (iii) continuing professional development oversight for statutory auditors; (iv) quality assurance inspections; and (v) investigative and disciplinary procedures. The European Union has noted that the establishment of the public oversight body and quality assurance system fulfills the relevant accession benchmark requirements, while also encouraging continued strengthening of staffing and funding capacity.

Prior to the 2025 reforms, oversight responsibilities were exercised through the Council for Audit established under the 2017 Law on Auditing. The 2025 Law further strengthens this framework by introducing a more formalized and independent public oversight system in line with European requirements and international good practice.

Montenegro’s public audit oversight authority is not currently listed as a member of the International Forum of Independent Audit Regulators (IFIAR).

The Institute of Accountants and Auditors of Montenegro (IAAM)

The Institute of Accountants and Auditors of Montenegro (IAAM) was established in 2002 following the transformation of the former Association of Accountants and Auditors of Montenegro. IAAM is a voluntary professional accountancy organization that promotes and develops the accounting profession in Montenegro through education, training, and continuing professional development activities. IAAM offers professional qualifications, including Accounting Technician and Authorized Accountant, and provides ongoing professional education and workshops for its members. IAAM has been an Associate of IFAC since 2003 and is also a member of regional professional networks.

The Institute of Certified Accountants of Montenegro (ICAM)

The Institute of Certified Accountants of Montenegro (ICAM) was established in 2006 following its separation from IAAM, with a focus on recertification and the implementation of new professional education programs aligned with international standards. ICAM operates as an independent professional accountancy organization and maintains registers of Certified Accountants, Authorized Accountants, Bookkeepers, and legacy professional titles. ICAM administers professional education and continuing education programs in accordance with the Montenegrin national accounting education standard, CORS-1, and plays a central role in the development of the profession in Montenegro.

ICAM’s membership is mandatory for Certified Auditors and Certified Accountants and voluntary for Authorized Accountants and Bookkeepers. In addition to maintaining professional registers, ICAM organizes seminars, publishes professional guidance and technical materials, and supports the implementation of international standards, including International Financial Reporting Standards, International Standards on Auditing, and the International Code of Ethics for Professional Accountants. ICAM became a full member of IFAC in 2017 and a full member of Accountancy Europe in 2021

Both organizations continue to play an important role in professional education and development within Montenegro’s accountancy profession. ICAM primarily serves the legally regulated segments of the profession, while IAAM continues to support the broader accounting profession on a voluntary basis, particularly professionals serving small- and medium-sized entities.

The Law on Auditing, Official Gazette of Montenegro No. 84/2025, establishes the legal foundation for a mandatory quality assurance (QA) review system for all statutory audits in Montenegro. Under the law, quality assurance reviews are conducted under the authority of the public oversight framework led by the Ministry of Finance and apply to statutory auditors and audit firms performing mandatory audits, including audits of public-interest entities. The 2025 law significantly strengthened the supervisory and quality control requirements applicable to audit firms, including internal controls, quality assurance mechanisms, transparency reporting, and file retention obligations.

The quality assurance framework incorporates the current international quality management standards applicable to statutory audits, including International Standard on Quality Management 1 (ISQM 1) and International Standard on Quality Management 2 (ISQM 2). The 2025 World Bank Report on the Observance of Standards and Codes for Montenegro confirms that the current version of the quality management standards is expected to be applied as part of the jurisdiction’s audit quality framework.

The previous QA review system had been operational since 2018 under the Council for Audit established by the 2017 Law on Auditing. With support from the World Bank’s Centre for Financial Reporting Reform, Montenegro developed inspection manuals, methodologies, and risk-based tools for the review of audit firms and statutory auditors. The 2025 reforms build on this framework and further strengthen institutional independence, inspection powers, and supervisory requirements.

However, while the legal and institutional framework is now significantly strengthened, the extent to which the revised QA review system fully incorporates all requirements of SMO 1 and is fully operationalized for all mandatory audits remains to be fully established. In particular, evidence of full implementation in practice under the new 2025 law, including inspection cycles, public reporting, and demonstrated operational maturity, is still developing. Accordingly, Partially Adopted remains the appropriate assessment at this stage.

Current Status: Partially Adopted

Initial and continuing professional development requirements for professional accountants in Montenegro are established through a shared framework involving the Law on Accounting, the Law on Auditing, the Ministry of Finance, the Institute of Certified Accountants of Montenegro (ICAM), and the Institute of Accountants and Auditors of Montenegro (IAAM). Professional education requirements are based on the Montenegrin national accounting education standard, CORS-1, which serves as the primary framework for qualification and continuing education requirements in the jurisdiction.

For the legally regulated segment of the profession, ICAM administers professional education programs for Certified Accountants and other professional titles in accordance with CORS-1. Entry requirements include university education, practical experience, professional examinations, and continuing professional development requirements. Statutory auditors are additionally subject to professional qualification, practical experience, and licensing requirements established under the Law on Auditing and supervised through the public oversight framework.

The World Bank’s Accountancy Education: Benchmarking Study for Montenegro found that the jurisdiction’s education framework compares well with the International Education Standards (IES), particularly in relation to initial professional development and continuing professional development requirements. At the same time, the study identified areas for further strengthening, including greater alignment of learning outcomes, governance and ethics competencies, advanced financial and performance management, and practical experience requirements.

For the voluntary segment of the profession, IAAM maintains a two-tier certification scheme for Accounting Technicians and Authorized Accountants. According to IAAM’s self-assessment completed in 2023, its education and continuing professional development requirements incorporate a number of the current IES requirements to the extent permitted by CORS-1; however, gaps remain in areas related to competencies, learning outcomes, and demonstration of professional competence.

Accordingly, while significant elements of the International Education Standards are incorporated for both the regulated and voluntary segments of the profession, not all current IES requirements are demonstrably adopted in their entirety for all aspiring and professional accountants in Montenegro. Partially Adopted therefore remains the appropriate assessment.

Current Status: Partially Adopted

The Law on Auditing requires all mandatory audits in Montenegro to be conducted in accordance with the International Standards on Auditing (ISA) issued by the International Auditing and Assurance Standards Board (IAASB) and adopted and published by the Ministry of Finance or a legal entity entrusted with those tasks. Mandatory audits apply to public-interest entities, medium-sized entities, and other entities specified in the Law on Auditing.

Publicly available information from the Institute of Certified Accountants of Montenegro (ICAM) confirms that ISA continue to form the applicable auditing framework in the jurisdiction and that ICAM continues to provide technical training and implementation support on ISA and recent audit-related changes.

However, despite reviewing the Ministry of Finance legal framework and ICAM’s public resources, no authoritative public source could be identified confirming that a 2018 or later full ISA handbook has been formally adopted and published for application in Montenegro. In the absence of such evidence, and given indications that the previously applied standards may still be based on the 2016–2017 edition, the appropriate assessment under the current methodology is Not Adopted.

Current Status: Not Adopted

The Law on Accounting No. 052 of 2016 and the Law on Auditing No. 001 of 2017 require professional accountants and statutory auditors in Montenegro to comply with ethical requirements adopted and published by the competent authority.

The Institute of Certified Accountants of Montenegro (ICAM) has a formal agreement with the Serbian Association of Accountants and Auditors (SAAA) to access and use the Serbian translation of the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA) for application in Montenegro.

Based on the most recent information available, the 2018 version of the Code remains the latest translated and formally available version for use in the jurisdiction. While this continues to provide an internationally aligned ethical framework for professional accountants, no authoritative evidence could be identified confirming that the most current version of the Code in effect as of the time of the assessment has been formally translated, adopted, and published for application in Montenegro.

Current Status: Partially Adopted

Public sector accounting standards in Montenegro are established by the Ministry of Finance under the public financial management framework. Public sector financial reporting currently remains based primarily on a cash basis of accounting, with certain accrual elements relating to assets and liabilities.

Montenegro is undertaking an ongoing public sector accounting reform as part of its Public Finance Management Reform Programme 2022–2026, which includes the gradual transition toward an accrual-based accounting system and alignment with international good practices in public sector financial reporting.

Publicly available information from the World Bank, UNDP, and regional public finance reform initiatives indicates that Montenegro’s reform efforts are IPSAS-informed and aim to support eventual transition to accrual-based public sector accounting. However, no authoritative evidence could be identified confirming that the International Public Sector Accounting Standards (IPSAS), whether on a cash basis or accrual basis, have been formally adopted for application by public sector entities in the jurisdiction.

Current Status: Not Adopted

The legal foundation for the investigation and disciplinary system in Montenegro is established through the Law on Auditing No. 001 of 2017 and the Law on Accounting No. 052 of 2016, which provide for disciplinary measures applicable to statutory auditors, certified accountants, and other regulated professional titles.

Under the public oversight framework, the Ministry of Finance, through the audit oversight function established under the Law on Auditing No. 001 of 2017, is responsible for investigation and disciplinary procedures relating to statutory auditors and audit firms, including suspension, revocation of licenses, monetary sanctions, and other corrective measures for non-compliance with professional, legal, and ethical requirements.

The Institute of Certified Accountants of Montenegro (ICAM) is also empowered under the Law on Accounting No. 052 of 2016 to impose sanctions on its members for violations of applicable professional requirements, including breaches of educational, ethical, and membership obligations. Similarly, the Institute of Accountants and Auditors of Montenegro (IAAM) states that it maintains disciplinary procedures applicable to its members.

Accordingly, investigation and disciplinary arrangements are established and operational for regulated segments of the profession and for members of the professional accountancy organizations. However, the extent to which the system fully incorporates all requirements of Statement of Membership Obligations 6 (SMO 6) for all professional accountants in the jurisdiction remains to be fully established.

As the system is operational for some, but not demonstrably all, professional accountants, Partially Adopted remains the appropriate assessment.

Current Status: Partially Adopted

Article 5 of the Law on Accounting, Official Gazette of Montenegro No. 145/21 of 2021 and No. 152/22 of 2022, requires legal entities to prepare financial statements in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS Accounting Standards) as promulgated by the International Accounting Standards Board (IASB) and adopted and published by the competent authority. The IFRS Foundation jurisdiction profile indicates that the authority to adopt, translate, and publish IFRS Accounting Standards has been given to a consortium led by the Institute of Certified Accountants of Montenegro (ICAM).

The IFRS Foundation further reports that IFRS Accounting Standards are required for all domestic companies whose securities trade in a public market and, more broadly, for all legal entities in Montenegro. However, there is a time delay between issuance of new or amended standards by the IASB and their obligatory adoption at the national level due to translation, harmonization with tax laws, and other local processes. The latest officially applied translation in Montenegro is IFRS Accounting Standards as issued in 2020, and application of some standards is delayed, including IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers.

Accordingly, while IFRS Accounting Standards are incorporated into the legal framework and required for application, the standards in effect as of the time of the assessment are not yet fully adopted and effective for all domestic publicly accountable entities.

Current Status: Partially Adopted

Relevant Organizations

Institute of Accountants and Auditors of Montenegro (IAAM)

Institute of Certified Accountants of Montenegro (ICAM)

Central Bank of Montenegro

Directive 2014/56/EU

Insurance Supervision Agency of Montenegro

Ministry of Finance

Montenegro State Audit Institution

Relevant Legislation

Decree on Entrusting of Affairs of Public Administration Bodies Competent for Accounting and Auditing No. 33/10, 2010

Law on Accounting No. 052 of 2016

HYPERLINK "https://www.cbcg.me/slike_i_fajlovi/eng/fajlovi/fajlovi_brzi_linkovi/propisi/laws/law_on_auditing_unoff_consol_01-17.pdf"Law on Auditing No. 001 of 2017

Law on Business Organizations, 2002

Regulation (EU) No 537/2014

Relevant Publications

Accountancy Europe, Definition of Public Interest Entities in Europe, November 2017.

Accountancy Europe, Member States’ Implementation of New EU Audit Rules, January 2017.

Accountancy Europe, Organisation and structure of the profession – key features – 2020 update: Montenegro, 2020.

Centre for Financial Reporting Reform, Accountancy Education: A Collection of Good Practices—Albania, Bosnia and Herzegovina, Kosovo, Macedonia FYR, Montenegro, and Serbia, 2017.

Centre for Financial Reporting Reform, Accountancy Education Benchmarking Study—Albania, Bosnia and Herzegovina, Kosovo, Macedonia FYR, Montenegro and Serbia, 2016.

Deloitte & Touche, IPSAS in Your Pocket, 2019.

European Commission, Montenegro 2019 Report

IAAM, SMO Action Plan, 2023.

ICAM, SMO Action Plan, 2021.

IFRS Foundation, IFRS Application Around the World—Jurisdiction Profile: Montenegro, 21 April 2023.

International Monetary Fund, Montenegro: Financial Sector Assessment Program—Financial Crisis Preparedness and Management, June 2016.

World Bank / CFRR, Stocktaking of Public Sector Accounting and Reporting Environment in PULSAR Countries: Montenegro, 2020

World Bank / CFRR, Public Sector Accounting Reforms Implementation Status in PULSAR Countries, 2022

World Bank, ROSC – Montenegro, May 2007

World Bank, Doing Business 2020 – Montenegro