Union of Accountants, Auditors and Financial Workers of Federation of Bosnia

UAAFWFBH has no direct responsibility for the implementation of the quality assurance (QA) review system for auditors. Nevertheless, prior to the establishment and adoption of QA review procedures by the Chamber of Auditors, UAAFWFBH actively promoted the importance of establishing a QA review system amongst relevant authorities, and the work plans of all UAAFWFBH committees required promoting such a system. UAAFWFBH focuses on providing support to their members on the relevant standards and translating international standards. In October 2022, UAAFWFBH published the Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements, 2020 Edition. Effective dates for standards such as ISQM 1, 2, ISA 220 (revised) are as stated by the IAASB. The union has also translated implementation guidance issued by IAASB and IFAC on the quality management standards.

In addition to contributing to the establishment of the QA review system for auditors, the union cooperates with six other professional organizations in the region to design and introduce a QA review system for accountants. To this effect, a regional working group, Quality Assurance Network, Accountancy Services Providers was established in September 2014 under the mentoring guidance of the Institute of Chartered Accountants in England and Wales (ICAEW). In addition to exchanging best practices between PAOs from the region and learning from ICAEW, the group promotes establishment of QA review system(s) throughout the Western Balkans region. Several meetings, in addition to the Accountancy Profession Strategic Forum (APSF), have been conducted and the basic relevant documentation and supporting materials for the launch of a voluntary scheme have been developed.

In 2021, the FBiH A&A Law was amended and now provides for the legal implementation of a QA review system for Certified Accountants in practice – i.e., UAAFWFBH members – and authorizes the UAAFWFBH to prescribe relevant standards and professional practices and perform the oversight and inspections of firms and individuals. The union has long been promoting the introduction of this legal requirement to the Ministry of Finance and has developing documentation, manuals, and capacity of a QA review team to undertake such reviews. In August 2021, the UAAFWFBH adopted the Rulebook on quality control of the legal entities and sole practitioners providing bookkeeping and accounting services. In 2022, the UAAFWFBH harmonized its procedures to consider ISQM 1, 2, and ISA 220 (revised) and provided additional training, supporting materials to members and made adjustments to its IT system. The first pilot inspection began in 2023 and requests were sent to 240 entities in public practice to submit activity reports related to general operations of the entity, AML and CFT obligations, documentation management, and quality control processes. The UAAFWFBH is analyzing these submissions to provide recommendations for improvement.

UAAFWFBH is encouraged, if deemed necessary and feasible, to work with other stakeholders to fully operationalize the QA review system for auditors. The union is also encouraged to conduct a self-assessment of the QA system for accountants against the requirements of SMO 1 and report on the results.

Current Status: Review & Improve

The requirements for education and certification of the accountancy profession in the country are established at the jurisdictional level by the Accounting and Auditing Commission of Bosnia and Herzegovina (AACBiH), in accordance with the Law on Accounting and Auditing in the Federation of Bosnia and Herzegovina (Federation BH Official Gazette, No. 15/21). UAAFWFBH is responsible for the implementation of the requirements in the Federation of BiH, which by law must be in line with IES. UAAFWFBH translated the IES of 2015 and IES 7 in 2019. The union also provides expert support to the AACBiH.

In compliance with the legal requirements, UAAFWFBH has been working to bring its programs for education, certification, and continuing professional development (CPD) in line with IES. UAAFWFBH reports that although significant progress has been made, there continue to be some gaps against the 2015 IES as the requirements are not fully competence based.

UAAFWFBH has promoted the importance of IES for the accounting and auditing profession through formal communications, outreach activities with relevant stakeholders, and publications. The legal requirement to align educational programming in the jurisdiction with the IES was one of its major achievements.

The union closely collaborates with the AACBiH in the area of education and contributes to the update of the curricula for acquisition of professional qualifications, which incorporates many of the competency areas and professional skills of the 2015 IES. Most recently, the syllabi were amended to address ESG and artificial intellgience topics. The different levels of competence, including learning outcomes, for the three professional qualifiations in BiH are outlined here.

The union has made significant advancements to its CPD program over the years and regularly provides over 100 CPD opportunities to its members each year through in-person, online, and hybrid options. Since April 2013, CPD compliance has been monitored via an electronic register.

In addition, the UAAFWFBH has established a quality control mechanism for the delivery of its CPD programs. UAAFWFBH permits its CPD to be organized and delivered by educational providers who fulfill certain criteria and then submit their planned educational programming. After the UAAFWFBH’s CPD Committee reviews and approves the programs, its members can take their CPD courses at these institutes. The union’s Education Performance Monitoring Committee, comprised of 15 practitioners, conduct monitoring visits and prepare evaluation reports to ensure the program is operating as proposed. Through this mechanism, UAAFWFBH is committed to ensuring high quality educational programs for its members.

The Union also signed an Agreement with the Tax Authority of the Federation of BiH to provide support to its staff through CPD training, to exchange information and best practices, and to promote ethical behavior of the profession. UAAFWFBH is working on developing a new qualification of a Tax Advisor as well as a Certified Forensic Accountant qualification with support from USAID.

The union is active in working with universities in the Federation of BiH to promote and incorporate IES and build capacity in accountancy education. For example, the union reports that the Faculty of Economics Mostar included IESs in syllabi for Principle of Accounting and Advanced Accounting. The UAAFWFBH reports that it provides the Faculties of Economics’ libraries with access to all of its publications and is supporting on an ongoing basis annual meeting of the Accounting and Auditing Departments of the Faculties of Economics from countries in the region (BiH, Croatia, Serbia, Montenegro, Macedonia, and Slovenia). In addition, UAAFWFBH promotes the accountancy profession to university students of economics through participation in student-organized conferences and career days.

UAAFWFBH is encouraged to review national requirements and indicate the extent of their alignment with the revised IES. If gaps exist, a strategy could be considered, possibly in collaboration with other stakeholders in the jurisdiction, to bring national educational programming fully in line with IES.

Current Status: Execute

Given its mandate to translate and publish the IAASB pronouncements for application in the Federation of BiH, UAAFWFBH cooperates with the Croatian Audit Chamber (CAC) in translating the IAASB Handbook in Croatian and also translates the materials into Bosnian. In October 2022, UAAFWFBH published the Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements, 2020 Edition. Effective dates for standards such as ISQM 1, 2, ISA 220 (revised), and ISA 315 (revised 2019) are as stated by the IAASB.

The union has also translated implementation guidance issued by IAASB and IFAC on the quality management standards and ISA 315 (revised 2019). The union has also translated the Guide to Using International Standards on Auditing in the Audits of Small and Medium-Size Entities into Bosnian language and subsequently, worked with the CAC to translate and publish the Guide into Croatian. The UAAFWFBH monitors revisions and developments to ISA and informs its members about the changes through seminars, journals, and publications.

The union collaborates with the universities and academia to ensure awareness about international standards through establishing joint expert and advisory groups; active involvement of academia in strategic planning, IPD curriculum management, among other areas.

UAAFWFBH continues to assist its members with the implementation of ISA through seminars and trainings. It also participates in the activities of the Accountancy Europe Audit and Assurance Policy Group and collaborates with other PAOs in the region to share best practices and experiences in in the implementation of ISA.

If deemed relevant and necessary, the union could consider participating in the international standard-setting process by providing comments on Exposure Drafts and other IAASB pronouncements.

Current Status: Review & Improve

As the entity responsible for the translation and dissemination of the Code of Ethics for professional accountants in the FBiH, the UAAFWFBH works to provide translations of the IESBA Code for application by its members in cooperation with other regional professional accountancy organizations—the Association of Accountants and Auditors of Republic of Srpska (AAARS) and the Croatian Audit Chamber (CAC). In cooperation with the CAC, in March 2023, UAAFWFBH published the Handbook of the International Code of Ethics for Professional Accountants (including International Independence Standards), 2022 Edition.

In 2018, the union translated and published the standard on Responding to Non-compliance with Laws and Regulations (NOCLAR) and introduced a requirement for its members to sign a statement that they have read and understood NOCLAR and that they will abide by it. The standard has also been incorporated into initial and continuing professional development programming.

The Union reports that it works to ensure that the requirements of the IESBA Code are incorporated into education and training programs and supports its members with the implementation of the Code. It has formed a committee dedicated to addressing adherence to the Code of Ethics and provided guidelines regarding the implementation of the Code. These guidelines often inform the topics of workshops that the union organizes for its members. The Committee also works closely with the Quality Assurance Committee on developing materials related to compliance with ethical requirements.

UAAFWFBH reportedly organizes seminars and shares implementation guidance via journals and other publications and works with universities to ensure that students are exposed to ethical matters early on in their careers. For example, the master programs of the Sarajevo University Faculty of Economics include a mandatory course on professional ethics of accountants and auditors (30 hours). The IESBA Code of Ethics published by the Union is used as literature for the course. Ethics-related topics are also now included in the undergraduate courses on financial accounting and audit.

The union also indicates that in 2019 it is working to improve its system for monitoring compliance with the Code and ensure it is linked to its investigative and discipline system.

The UAAFWFBH is also involved in the Accountancy Europe (AE) Professional Ethics and Competences Working Party.

If deemed relevant and necessary, the union could consider participating in the international standard-setting process by providing comments on Exposure Drafts and other IESBA pronouncements.

Current Status: Review & Improve

The Federation of Bosnia and Herzegovina (FBiH) Law on Accounting and Auditing in the Federation of Bosnia and Herzegovina (Federation BH Official Gazette, No. 15/21) transposed the requirement to apply IPSAS, which is the responsibility of the Ministry of Finance. According to the World Bank’s Stocktaking of Public Sector Accounting and Reporting Environment in PULSAR Beneficiary Countries—Bosnia & Herzegovina (2020), national standards based on IFRS are applied on a modified accrual basis. There are stated envisaged reforms to adopt accrual standards using IPSAS as a reference point.

The UAAFWFBH does not have a direct role in the process of adoption of IPSAS but reports that it has been actively involved in the public discussions leading to the formal adoption of IPSAS and sees its role as partner in the future implementation process. The FBiH Public Finance Management Reform Strategy 2021-2025 stipulates that IPSASs will be introduced in phases. The final phase should be completed in 2025. In 2021, an initial analysis of IPSAS implementation was produced.

In July 2024, the Union submitted a request to IFAC for the translation and publication of the Handbook of IPSAS, 2022 edition. It intends to translate and publish standards in a phased approach, e.g.:

Q1 2025

• Glossary of Defined Terms
• The Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities
• IPSAS 1-33

Q3 2025:

• IPSAS 34-40

Q2 2026:

• Volume 3

In anticipation of further reforms, the UAAFWFBH is building its capacity and expertise to be able to support both the Government and its members who provide services in the public sector (about 20% of its membership).

IPSAS and public sector accounting have been included in the initial and continuing professional development programming, and seminars on the subject are being offered.

It also collaborates on an ongoing basis with other professional organizations in the region to exchange experiences related to implementation of IPSASs and participates in the World Bank PULSAR project. The union raises awareness of the Ministry of Finance about the developments in the public sector accounting area and has involved its representatives in the work of Accountancy Europe Public Sector Group.

UAAFWFBH is encouraged to continue to support the Ministry of Finance in the reform of public sector accounting and to prepare its members for the future implementation of the international standards.

Current Status: Sustain

UAAFWFBH has direct responsibility for the investigation and discipline (I&D) of its members (all professional accountants in the jurisdiction must be members of the UAAFWFBH). In 2012, the union adopted the Book of Regulation on Disciplinary Liability and appointed members of its Prosecutorial Council and Discipline Review Body in April 2013. The union reports that, according to the text of the Regulation, it has been developed in accordance with the requirements of SMO 6.

In 2016, the union conducted a self-assessment against the requirements of SMO 6 as part of its SMO Action Plan update and further updated the self-assessment in 2019. The areas identified as those that require attention in 2016 continue to include linking its I&D system with the results of QA reviews, establishing appropriate process for liaison with outside bodies on possible involvement in serious crimes and offences, and establishing processes of reviewing the existing system on an ongoing basis. In 2019, the union reported that the process of coordinating with other authorities has improved.

In 2024, with the new legal requirement of its own QA review system, the union reports that the review of the I&D system continues as one of the union’s strategic objectives. The UAAFWFBH is undertaking the following initiatives:

• Developing and implementing software and change procedures to enable the relevant bodies to increase their efficiency. That would lead to the establishing of a centralized database, as a record of cases and all actions taken in relation to the cases.
• Introducing a new body, such as a Review Committee, to administer the complaints and provide the Prosecutorial Council with all relevant information would also make it possible to immediately tackle any minor breaches of regulations on that level rather than referring the matter to the Prosecutorial Council.
• Although the UAAFWFBH team does include a senior lawyer, the union is still considering the modalities of hiring additional independent legal advisors.

UAAFWFBH reports that it continues collaborating with regional professional accountancy organizations regarding best practices in the field of I&D and indicates that the Regional Working Group of Accountancy Service Providers will hold several workshops next year regarding I&D.

The union appears to be actively cooperating with the Ministry of Finance and Financial-Intelligence Agency (FIA), providing both agencies the information on certified accountants and authorized auditors on a regular basis. This information is also made available to Tax Administration.

IFAC commends the continued improvement of the existing I&D system to align with the SMO 6 benchmark as a matter of both best practice and public interest. Providing a timeline regarding each of its proposed steps to strengthen the I&D system is recommended. In addition, UAAFWFBH is encouraged to raise awareness of other stakeholders involved in the I&D of professional accountants in the Entity about best practices in the I&D of professional accountants with a view to bring the overall I&D system in the jurisdiction in line with the international best practices. During the next round of update, the UAAFWFBH is requested to conduct an assessment of the overall I&D system in the jurisdiction as well as the plan to address the gaps, if any, and share it with the staff.

Current Status: Execute

The Law on Accounting and Auditing in the Federation of Bosnia and Herzegovina (Federation BH Official Gazette, No. 15/21) transposed the requirement of the BiH Law No. 42/04 to apply international standards. The UAAFWFBH reports that since 2020, all amendments to IFRS standards have been regularly translated and published under the copyright agreement with the IFRS Foundation.

However, in collaboration with the FBiH Insurance Supervision Agency and other stakeholders, it has been agreed to postpone the implementation of IFRS 17 Insurance Contracts. The effective date will be extended beyond January 1, 2026, in order to enhance the legislative framework and enable sufficient preparation of the insurance market for a successful implementation. The Union will translate and publish new IFRS 18 and IFRS 19 by the end of 2024.

In addition to translation activities, the union continues to support its members in implementing IFRS and IFRS for SMEs by providing trainings, seminars, and including IFRS into initial and continuing professional development programming. As new IFRS accounting standards or their amendments are published, training sessions related to their practical application are regularly organized.

The UAAFWFBH is also cooperating with the Faculties of Economics to raise awareness about the importance of IFRS amongst students and to include IFRS into the curricula. For example, at the Sarajevo University Faculty of Economics, IFRS are included in courses on Financial Accounting and Financial Accounting and Reporting. At the Mostar University Faculty of Economics, IFRS are taught as part of the courses on Financial Accounting and Advanced Financial Reporting.

The union also collaborates with regional professional accountancy organizations in order to exchange best practices on promoting and improving the application of IFRS and IFRS for SMEs.

If deemed relevant and necessary, the Union could consider participating in the international standard-setting process by providing comments on the IASB Exposure Drafts and other pronouncements.

Current Status: Review & Improve