USAID/IBTCI- PSARP

Accounting Accounting and and

Auditing Auditing in Biin BiHH

Senad PekmezSenad Pekmez – Senior Accounting ConsultantUSAID/IBTCI – Private Sector Accounting Reform Project

Bosnia and Herzegovina

Accounting and Auditing in BiH Prepared by: Senad Pekmez

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USAID/IBTCI- PSARP

BOSNIA AND HERZEGOVINA BOSNIA AND HERZEGOVINA

- UNDER DAYTON AGREEMENT COMPOSED UNDER DAYTON AGREEMENT COMPOSED OF TWO ENTITIES:OF TWO ENTITIES:

1. FEDERATION OF BIH and

2. REPUBLIC OF SRPSKA

STATE STRUCTURESTATE STRUCTURE

Accounting and Auditing in BiH Prepared by: Senad Pekmez

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USAID/IBTCI- PSARP

FEDERATION OF BIHFEDERATION OF BIH Responsible Institutions:Responsible Institutions:

1.1. Institute for Accounting and Auditing of Institute for Accounting and Auditing of FFBiH BiH (Government Institution) (Government Institution)

2. Association of Accountants and Auditors of Association of Accountants and Auditors of FBiH (Private Sector)FBiH (Private Sector)

3. Securit3. Securitiesies Commission of Commission of F FBiHBiH

Accounting and Auditing in BiH Prepared by: Senad Pekmez

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USAID/IBTCI- PSARP

Legal Accounting Framework in FLegal Accounting Framework in FBBiiHH

1. Law on Accounting (from 1995 amended in 1998) - 32 Accounting Standards in a force from 1999 (IAS) - New Chart of Accounts - New Format of Accounts (Set of Financial Statements)

2. Law on Auditing (from 1995 amended 1998) - Auditing Standards - Translation of: IFAC International Standards on Auditing and Related Services (1998 edition)

Accounting and Auditing in BiH Prepared by: Senad Pekmez

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USAID/IBTCI- PSARP

Legal Accounting Framework in FBiHLegal Accounting Framework in FBiH

3. Law on Enterprises:3. Law on Enterprises: - Every shareholding company should have audited financial statements, subject of approval of annual shareholdes assembly

4. 4. Requirements issued by the SEC of FBiHRequirements issued by the SEC of FBiH

- By Law on contents, way and standards of disclosure of financial reports and other information concerning the activities of shareholders company (OECD rules)

Accounting and Auditing in BiH Prepared by: Senad Pekmez

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USAID/IBTCI- PSARP

REPUBLIC OF SRPSKAREPUBLIC OF SRPSKA

Responsible Institutions:Responsible Institutions:

11. Association of Accountants and Auditors of . Association of Accountants and Auditors of RSRS (Private Sector) (Private Sector)

22. Securit. Securitiesies Commission of Commission of RSRS

Accounting and Auditing in BiH Prepared by: Senad Pekmez

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USAID/IBTCI- PSARP

Legal Accounting Framework in Legal Accounting Framework in RSRS

1. Law on Accounting - 33 Accounting Standards published in 2000 (IAS) - New Chart of Accounts - New Format of Accounts (Set of Financial Statements)

2. Auditing Standards - Translation of: IFAC International Standards on Auditing and Related Services (1998 edition)

Accounting and Auditing in BiH Prepared by: Senad Pekmez

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USAID/IBTCI- PSARP

Legal Accounting Framework in Legal Accounting Framework in RSRS

3. Law on Enterprises:3. Law on Enterprises: - Medium and large shareholding companies should have audited financial statements, subject of approval of annual shareholdes assembly

Accounting and Auditing in BiH Prepared by: Senad Pekmez

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USAID/IBTCI- PSARP

Tasks and GoalsTasks and Goalsof Profession and Project in of Profession and Project in Accounting Accounting ReformReform

1.1. Building the Audit ProfessionBuilding the Audit Profession - - To have audit firms To have audit firms in each entity capable of auditing inin each entity capable of auditing in accordance with ISA and reporting on financial statements accordance with ISA and reporting on financial statements in accordance with IAS in accordance with IAS -- Current activities Current activities – organizing Audit Case Study training – organizing Audit Case Study training for 300 auditors. Each participant will be expected to agree tofor 300 auditors. Each participant will be expected to agree to a post-training on-site visit by an experienced “international”a post-training on-site visit by an experienced “international” auditor to review workpapers, discuss audit issues and assist inauditor to review workpapers, discuss audit issues and assist in the application of sound audit practice.the application of sound audit practice.

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2. Modernizing University Curricula Reform2. Modernizing University Curricula Reform

- - To have BiH universitiesTo have BiH universities adopt a modern accounting adopt a modern accounting and auditing curriculum fully in accordance with UNCTAD and auditing curriculum fully in accordance with UNCTAD and IFAC guidelines. and IFAC guidelines.

- - SevenSeven BiH Universities BiH Universities signed MOA for implementing new signed MOA for implementing new curriculacurricula..

-translating, publishing and deliveringtranslating, publishing and delivering new accounting, new accounting, auditing, cost accounting and financial management auditing, cost accounting and financial management textbooks to students and professors.textbooks to students and professors.

-Organizing Summer 2003 trainingOrganizing Summer 2003 training for University professors for University professors

USAID/IBTCI- PSARP

Tasks and GoalsTasks and Goals

Accounting and Auditing in BiH Prepared by: Senad Pekmez

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USAID/IBTCI- PSARP

3.3. Enterprise Assistance in Applying IASEnterprise Assistance in Applying IAS - - private enterprises to improveprivate enterprises to improve their competitiveness, their competitiveness,

profitability, and access to foreign and domestic capital profitability, and access to foreign and domestic capital through modernizing their financial reporting and through modernizing their financial reporting and management accountingmanagement accounting

- - present coursespresent courses on financial reporting (IAS) and on financial reporting (IAS) and managerial accounting to enterprise accountants,managerial accounting to enterprise accountants,

- - implement program of on siteimplement program of on site assistance to enterprises assistance to enterprises

- - train and subcontract local accounting and audit firmstrain and subcontract local accounting and audit firms in in the provision of assistance to individual enterprisesthe provision of assistance to individual enterprises

Tasks and GoalsTasks and Goals

Accounting and Auditing in BiH Prepared by: Senad Pekmez

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4. Support to Professional Associations4. Support to Professional Associations - A- A professional associations professional associations of accountants and auditors, of accountants and auditors, with nationwide representations, made suitable, and becomes with nationwide representations, made suitable, and becomes a member of IFACa member of IFAC

- - The AAA of FBiH and the AAA of RSThe AAA of FBiH and the AAA of RS are in negotiations are in negotiations regarding the Charter for regarding the Charter for State Level Association of State Level Association of Accountants and Auditors. Accountants and Auditors.

Tasks and GoalsTasks and Goals

USAID/IBTCI- PSARP

Accounting and Auditing in BiH Prepared by: Senad Pekmez

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USAID/IBTCI- PSARP

5. Legal & Regulatory Reform 5. Legal & Regulatory Reform

- to have a nationwide law on accounting and auditing that - to have a nationwide law on accounting and auditing that fully embraces International Accounting Standards and fully embraces International Accounting Standards and International Standards on AuditingInternational Standards on Auditing

6. Other Activities6. Other Activities

- work closely with SEC on preparing and issuing the rules - work closely with SEC on preparing and issuing the rules which regulate accounting and auditing for the players in capital which regulate accounting and auditing for the players in capital market (brokers, dealers, PIF’s, MC, listed shareholding companies market (brokers, dealers, PIF’s, MC, listed shareholding companies etc.)etc.)

Tasks and GoalsTasks and Goals

Accounting and Auditing in BiH Prepared by: Senad Pekmez

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USAID/IBTCI- PSARP

Tasks and GoalsTasks and Goals

Build a stronger relation between responsible institution:

MF, IAA, AAA, and SEC MF, IAA, AAA, and SEC in a both entities and nationwidein a both entities and nationwide- To have better control and monitoringbetter control and monitoring of applying IAS and ISAIAS and ISA in financial reporting and auditingfinancial reporting and auditing.- To have accurate, fair and trueaccurate, fair and true financial reporting and disclosure of information for users of financial statements

in capital marketcapital market