Bosnia and Herzegovina

The accounting, auditing, and financial reporting framework for Entities within Bosnia and Herzegovina (BiH)—the Federation of BiH (FBiH) and the Republika Srpska—is defined by the Law on Accounting and Auditing of BiH No. 42/04 of 2004, with the Federation of BiH and the Republika Srpska each having adopted its parallel law on accounting and auditing that transposes the requirements of the framework.

The BiH Law requires application of IFRS or IFRS for SMEs as issued by the IASB and translated into national languages, based on entity size, for the preparation of financial statements.

The law also defines the types of companies that are subject to mandatory audit, which include large and medium-sized entities, publicly traded entities, and entities subject to obligatory auditing if it has been prescribed by the regulations defining their business operations. Small entities may choose to have their financial statements audited. All audits must be conducted in accordance with ISA and related pronouncements as issued by the IAASB and translated into national languages.

Federation of BiH

Accounting Framework

In the Federation of BiH, the Law on Accounting and Auditing in the Federation of Bosnia and Herzegovina (Federation BH Official Gazette, No. 15/21) establishes the requirements for accounting and auditing. Provisions of the FBiH A&A Law 2021 related to accounting apply to all business companies, including insurance, microcredit, leasing, investment funds, companies managing investment funds, broker-dealers, stock exchanges and banks, other financial organizations, cooperatives, among others. All enterprises must to prepare and file their financial statements.

The Ministry of Finance is responsible for supervising bookkeeping and accounting systems and ensuring that legal entities comply with the provisions of the FBiH A&A Law 2021.

National legislation (Articles 1 and 2 of the BiH Law on Accounting and Auditing and Article 2 (1) (s) of the FBiH Law on Accounting and Auditing) requires the application of the IFRSs as issued by the IASB for all legal entities and translated into national languages.

There are differentiated reporting requirements based on the size of entities (micro, small, medium, and large) that are detailed in relevant legislations. Pursuant to the FBiH A&A Law 2021, large companies, entities subject to mandatory preparation of consolidated financial statements (parent companies), public interest entities and entities preparing to become public interest entities, regardless of size, apply IFRS.

As per Law in FBiH, Public Interest Entities (PIE) are:

(i)legal entities whose securities are traded on organized securities market,

(ii)banks, microcredit companies, insurance and reinsurance companies, factoring companies, leasing companies, investment fund management companies, voluntary pension fund management companies, brokerage-dealership companies, and other financial organizations,

(iii)public companies, as defined in accordance with the regulations governing the operation and management of public enterprises in Federation of Bosnia and Hercegovina, and

(iv)all legal entities of special significance for the Federation, regardless of their legal form and structure.

Companies not listed above (non-PIEs and SMEs) have the option to apply either the IFRS for SMEs Accounting Standard or IFRS.

Auditing Framework

The BiH Law No. 42/04 and Article 2 (1) (s) and Article 57 of FBiH A&A Law of 2021 requires application of the IAASB standards and related pronouncements in all mandatory audits as issued by the IAASB and translated into local languages. In the Federation of BiH, the responsibility for translation and publication of the IAASB pronouncements is delegated to the UAAFWFBH. The Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements, 2020 Edition is applicable.

Republika Srpska

Accounting Framework

In line with the requirements of the BiH Law No. 42/04, the Law on Accounting and Auditing of the Republika Srpska No. 94/15 and 78/20 requires all entities, including those in the financial sector and publicly traded companies, to prepare financial statements in accordance with either IFRS or IFRS for SMEs as issued by the IASB and translated into Serbian. The latest translated version of IFRS is that of 2019.

The Accounting and Auditing Council of the Republika Srpska, established under the Law No. 94/15 and 78/20, is charged with monitoring application of accounting and auditing standards in the Entity.

There are differentiated reporting requirements based on the size of entities (micro, small, medium, and large) that are detailed in the above Law. Micro and small entities are required to prepare only balance sheet and income statement, whereas medium-sized and large companies are required to prepare a full set of financial statements in accordance with the applicable standards. Banks and non-bank financial institutions are classified as large regardless of size.

Medium and large entities are required to apply IFRS. Micro and small companies can use IFRS for SME.

Auditing Framework

In line with the requirements of the BiH Law No. 42/04, all large, entities that prepare consolidated financial statements, and publicly traded entities are required to have mandatory audits of their financial statements performed in accordance with the BiH Law No. 42/04 and the Law No. 94/15 and 78/20. Small and medium entities may decide to have their financial statement audited. Audits must be conducted in accordance with ISA issued by the IAASB and translated into Serbian. To date, the 2016-2017 IAASB Handbook has been translated for application.

At the jurisdictional level, the Law on Accounting and Auditing of Bosnia and Herzegovina No. 42/04 (BiH Law No. 42/04) lays down the foundations for the regulation of the accountancy profession that are to be transposed, and elaborated on, in the legislation of the two decentralized Entities (i.e., the Federation of Bosnia and Herzegovina—FBiH and the Republic of Srpska—RS).

In particular, the Law stipulates that the requirements for entry into the profession such as educational qualifications, practical experience, continuing education, and final assessment must be established by the Accounting and Auditing Commission of Bosnia and Herzegovina (AACBiH) and should consider the requirements of the Statutory Audit Directive and be in line with the IES. The AACBiH has delegated the implementation of the above requirements to the professional accountancy organizations in the two Entities: The Association of Accountants and Auditors of Republic of Srpska (AAARS) and the Union of Accountants, Auditors and Financial Workers of Federation of Bosnia and Herzegovina (UAAFWFBH).

The Law recognizes three categories of accountancy professionals in the jurisdiction: Authorized Auditors (AAs), Certified Accountants (CAs), and Certified Accounting Technicians (CATs). All three designations are protected under the same law and reflect progressive education and work requirements. Entities cannot impose additional requirements in terms of education, examination, and professional training.

CAs must hold a university diploma, have three years of working experience in accounting and finance, and pass the exams. AAs must hold a university diploma, have three years of working experience in an audit firm after obtaining the title of CA, and pass the exams. CATs must have secondary education, three years of practical experience in bookkeeping, and pass the exams.

Standards to be applied by the profession as well as the general requirement for monitoring performance of the professionals and applying sanctions are also established at the jurisdictional level. These requirements are further detailed and implemented at the Entity level by the above-mentioned professional associations and other government agencies and regulators. IFRS, ISA, and the IESBA Code of Ethics are adopted as issued by the respective international standard-setting boards and translated into national languages.

Federation of BiH

The regulation of the accountancy profession in Federation of BiH is established under the Law on Accounting and Auditing in the Federation of Bosnia and Herzegovina (Federation BH Official Gazette, No. 15/21). The Ministry of Finance of the Federation of BiH, the Chamber of Auditors, the Public Oversight Board (POB), and the authorized accountancy professional organization, the UAAFWFBH, share the responsibility for the regulation of the profession.

The Ministry of Finance is responsible for licensing statutory auditors and audit firms and keeping the registers of legal entities, sole practitioners, and qualified persons-certified accountants in public practice who provide professional accounting and bookkeeping services to third parties.

The Chamber of Auditors of the Federation of BiH, established the FBiH A&A Law 2009 and as amened in 2021, regulates auditors. Its functions include to: develop methodology for quality assurance reviews of audit firms and statutory auditors; supervise the quality of audit firms and statutory auditors, conduct proceedings as required, and take necessary measures to eliminate and sanction identified irregularities; develop a continuing professional development (CPD) plan for Authorized Auditors; monitor the application of ISA; adopt the Code of Professional Ethics for Auditors; and provide professional assistance to its members, and perform other tasks in accordance with the 2021 FBiH A&A Law and the acts of the Chamber. All auditors in public practice must be members of the Chamber.

The activities of the Chamber of Auditors are overseen by the POB, which was established under Article 66 of the FBiH A&A Law 2009 and became operational in 2014.

The UAAFWFBH was granted the status of an authorized professional accountancy body in 2005 by the AACBiH. Its functions include to: (i) license CAs, CATs; (ii) administer initial professional development programs and exams and conduct and authorize providers of continuous professional education for AAs, CAs and CATs; (iii) ensure compliance with the Code of Ethics, auditing, and accounting standards; (iv) develop and improve education in the field of accounting in accordance with international standards; (v) contribute to alignment of the accounting and auditing curriculum at all universities in the Federation of BiH with the internationally recognized standards; (vi) cooperate with other associations and other organizations in the field; and (vii) monitor, translate and publish standards and all supporting guidance. CAs, CATs, and AAs are required to be members of the union.

Republika Srpska

The Law on Accounting and Auditing of the Republika Srpska No. 94/15 and 78/20 establishes requirements for the regulation of the accountancy professionals that are in line with those established by the BiH Law No. 42/04. The Ministry of Finance (MoF) of Republika Srpska and the authorized accounting professional organization, the AAARS, share the responsibility for the regulation of the profession.

The Ministry of Finance (i) licenses audit firms and AAs; (ii) maintains registers of licensed audit firms and Authorized Auditors; (iii) monitors the performance of auditors, audit firms, and accounting professionals. The Ministry can impose fines and revoke licenses for non-compliance with the requirements of the Law, including conducting audits without proper certification and licenses.

The AAARS has the authority to implement programs for acquiring professional titles and issuing the relevant certificates to all members of the profession in Republika Srpska upon completion of the required education, examination, and practical experience requirements. It is also responsible for licensing CAs and CATs and establishing CPD requirements for its members (CPD requirement for auditors is established by law), implementing investigation and disciplinary procedures for its members, and translation of standards. As mentioned, professional standards and the Code of Ethics are first adopted through law. Authorized Auditors must be members in good standing with the AAARS to receive or renew their audit license with the Ministry of Finance. CA and CAT join AAARS on a voluntary basis.

Federation of BiH

The Public Oversight Board (POB) was established in 2009 per the Law on Accounting and Auditing of the FBiH as amended in 2021. The POB oversees activities of the Chamber of Auditors of the Federation of BiH, which regulates the auditors, including: (i) registration of audit firms; (ii) the adoption of standards of professional ethics, internal quality control of audit firms and auditing; and (iii) implementation of continuing professional development requirements for auditors, quality assurance, investigative and disciplinary systems. The POB is not a member of the International Forum of Independent Audit Regulators.

Republika Srpska

There is no independent audit oversight arrangement in Republika Srpska. In accordance with the Law on Accounting and Auditing of the Republika Srpska No. 94/15 and 78/20, the Ministry of Finance is responsible for licensing audit firms and Authorized Auditors who wish to conduct audits, maintaining registers of licensed audit firms and Authorized Auditors, and monitoring the performance of auditors and audit firms. With the amendments to the Law on Accounting and Auditing of the Republika Srpska from 2020 now effective, the Ministry of Finance of the Republika Srpska is responsible for conducting QA reviews for statutory audits of financial statements. The Ministry can impose fines and revoke licenses for non-compliance with the requirements of the Law, including conducting audits without proper certification and licenses. Authorized Auditors are also required to be members in good standing with the Association of Accountants and Auditors of Republic of Srpska and adhere to its rules and requirements, including ethical requirements and disciplinary measures.

The Law on Accounting and Auditing of BiH No. 42/04 of 2004 prescribes the requirements for “authorized professional accountancy bodies,” including the need for their recognition by the Accounting and Auditing Commission of the BiH (AACBiH).

Through the Law, in the Federation of BiH, AACBiH issued “authorized professional body” status to the Union of Accountants, Auditors and Financial Workers of Federation of Bosnia and Herzegovina (UAAFWFBH), while in the Republika Srpska the authorized professional body is the Association of Accountants and Auditors of Republic Srpska (AAARS).

Federation of BiH

The Chamber of Auditors of the of Federation of Bosnia and Herzegovina

The Chamber is a professional organization with mandatory membership of all auditors in public practice licensed by the Ministry of Finance. The Chamber of Auditors of the Federation of BiH, established the FBiH A&A Law 2009 and as amended in 2021, is to regulate auditors and subject to the oversight of the Public Oversight Board. Its functions include to: develop methodology for quality assurance reviews of audit firms and statutory auditors; supervise the quality of audit firms and statutory auditors, conduct proceedings as required, and take necessary measures to eliminate and sanction identified irregularities; develop a continuing professional development (CPD) plan for Authorized Auditors; monitor the application of ISA; adopt the Code of Professional Ethics for Auditors; and provide professional assistance to its members, and perform other tasks in accordance with the 2021 FBiH A&A Law and the acts of the Chamber.

The Union of Accountants, Auditors and Financial Workers of Federation of Bosnia and Herzegovina (UAAFWFBH)

The UAAFWFBH is a non-governmental, non-profit, professional association that was established by three professional associations in 2003. Membership in the union is mandatory for Authorized Auditors (AAs), Certified Accountants (CAs), and Certified Accounting Technicians (CATs). UAAFWFBH members provide a variety of services in the fields of accounting, finance, audit, tax advising, and appraisal of economic value of property.

The UAAFWFBH was granted the status of an authorized professional accountancy body in 2005 by the AACBiH. Its functions include to: (i) license CAs, CATs; (ii) administer initial professional development programs and exams and conduct and authorize providers of continuous professional education for Authorized Auditors, CAs and CATs; (iii) ensure compliance with the Code of Ethics, auditing, and accounting standards; (iv) develop and improve education in the field of accounting in accordance with international standards; (v) contribute to alignment of the accounting and auditing curriculum at all universities in the Federation of BiH with the internationally recognized standards; (vi) cooperate with other associations and other organizations in the field; and (vii) monitor, translate and publish standards and all supporting guidance. In addition to being a member of IFAC, the UAAFWFBH is a member of Accountancy Europe and International Valuation Standards Council (IVSC).

Republika Srpska

Association of Accountants and Auditors Republika Srpska (AAARS)

The AAARS was established in 1996 and its membership is comprised of Authorized Auditors (AAs), Certified Accountants (CAs), and Certified Accounting Technicians (CATs). The activities of the association are overseen by the Ministry of Finance.

The AAARS has the authority to implement programs for acquiring professional titles and issuing the relevant certificates to all members of the profession in Republika Srpska upon completion of the required education, examination, and practical experience requirements. It is also responsible for licensing CAs and CATs and establishing CPD requirements for its members (CPD requirement for auditors is established by law) and implementing investigation and disciplinary procedures for its members.

The association collaborates with other regional professional accountancy organizations on the advancement of the profession and to translate IFRS, IFRS for SMEs, IPSAS, ISA, and the IESBA Code of Ethics. In addition to being a member of IFAC, the AAARS is a founding member of the Southeastern European Partnership on Accountancy Development and is also a member of Accountancy Europe.

Federation of BiH: Partially Adopted

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) outlines the framework for establishing a quality assurance (QA) review system for all mandatory audits. Under Articles 89 and 104 of the Law, the Chamber of Auditors of the Federation of BiH is responsible for the design and the implementation of QA reviews for auditors and audit firms under the oversight of the Public Oversight Board.

The Chamber of Auditors has adopted the Rulebook on Oversight and Quality Control for Audit Firms and Authorized Auditors to align with the FBiH A&A Law of 2021. However, a QA review system for auditors is not yet operational.

In October 2022, Union of Accountants, Auditors and Financial Workers of Federation of Bosnia and Herzegovina published the Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements, 2020 Edition. Effective dates for relevant standards such as ISQM 1, 2, and ISA 220 (revised) are as stated by the IAASB.

Republika Srpska: Partially Adopted

The Standards Act on Quality Control in Accounting and Auditing Profession in Republic of Srpska of 2015 provides the legal foundation for the establishment of a mandatory QA review system. Certified auditors, certified accountants, certified accounting technicians, audit firms and firms performing accounting services are subject to QA reviews. The 2016-2017 version of ISQC 1 and ISA 220 have been adopted.

With the amendments to the Law on Accounting and Auditing of the Republika Srpska from 2020 now effective, the Ministry of Finance of the Republika Srpska is responsible for carrying out QA reviews for statutory audits of financial statements. The AAARS reports that the main requirements of SMO 1 will be fulfilled by the MoF’s system when it begins carrying out reviews.

Current Status: Partially Adopted

The Accounting and Auditing Commission of Bosnia and Herzegovina (AACBiH) is responsible for education and certification of the accountancy profession in the country in accordance with the Law on Accounting and Auditing of Bosnia and Herzegovina No. 42/04. The Law states that education and certification of professionals in the jurisdiction should be carried out in accordance with the international education standards. In line with this requirement, through a Decision to adopt IESs issued in 2006, AACBiH has required that IES be incorporated in the educational requirements in both Entities.

The AACBiH has delegated the implementation of the education curriculum, examination, training and CPD programs to the professional accountancy organizations in the Republika Srpska and the Federation of Bosnia and Herzegovina (AAARS and UAAFWFBH), respectively. The AACBiH has provided a mechanism for co-operation among the entities’ professional bodies, leading to a unified framework for the education, training and CPD requirements for accountants and auditors.

The Law recognizes three categories of accountancy professionals in the jurisdiction: Authorized Auditors (AAs), Certified Accountants (CAs), and Certified Accounting Technicians (CATs). All three designations are protected under the same law and reflect progressive education and work requirements. Entities cannot impose additional requirements in terms of education, examination, and professional training.

CAs must hold a university diploma, have three years of working experience in accounting and finance, and pass the exams. AAs must hold a university diploma, have three years of working experience in an audit firm after obtaining the title of CA, and pass the exams. CATs must have secondary education, three years of practical experience in bookkeeping, and pass the exams.

FBiH: Partially Adopted

The UAAFWFBH, the Chamber of Auditors, the Public Oversight Board (POB), and universities are involved in the education of professional accountants as stipulated in 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).

According to the World Bank’s 2016 Accountancy Education Benchmarking Study, the curricula benchmarking for undergraduate and graduate programs scores well when compared to the 2015 IES benchmark. The programs would benefit from the introduction of more learning outcomes aligned with IES, especially concerning Ethical Principles, Commitment to the Public Interest, Governance, Risk Management, and Internal Control.

UAAFWFBH reports that although significant progress has been made in the Federation of BiH in bringing the IPD requirements in line with the IES as required by law, there continue to be some gaps against the latest IES (i.e., 2019 Handbook plus revisions to IES 2, 3, 4, and 8 effective in January 2021) as the national requirements are not fully utilizing a competency-based approach.

The Chamber of Auditors is responsible for developing an annual CPD plan for the specialized training of auditors, which must meet the criteria stipulated by the AACBiH. The Chamber of Auditors must submit the CPD plan to the UAAFWFBH to be evaluated by the union’s CPD Committee. The POB oversees the implementation of the Chamber’s CPD program.

The UAAFWFBH (i) licenses CAs and CATs; (ii) administers initial professional development programs and exams for all designations; and (iii) conducts continuous professional education and authorizes CPD providers for all designations. The UAAAFWFBH requires all its members to fulfill 120 hours of CPD over a three-year period, meeting the input-based approach of IES 7. UAAFWFBH translated and made publicly available the IES of 2015 and IES 7 as of 2019.

Republika Srpska: Partially Adopted

According to the World Bank’s 2016 Accountancy Education Benchmarking Study, the RS accounting program scores relatively well at the undergraduate and master’s level against the 2015 IES benchmarks. However, the program could benefit from a greater focus on ethics and commitment to public interest as well as improvements in Performance Management, Business and Organizational Environment, and Economics courses that would improve comparability with the IES.

The AAARS has the implementation support for acquiring professional titles and certificates to all members of the profession in Republika Srpska (RS) (i.e., Authorized Auditors, Certified Accountants (CA), and Certified Accounting Technicians (CAT)) upon completion of the required education, examination, and practical experience requirements established at the jurisdictional level by the Accounting and Auditing Commission of Bosnia and Herzegovina (AACBiH).

Again, according to the World Bank’s 2016 Accountancy Education Benchmarking Study, the RS qualification program could benefit from improvements to several areas, including Governance, Risk Management and Internal Control, Economics, Business and Organizational Environment, Commitment to Public Interest and Ethics, to better align with the 2015 IES. Additionally, practical experience requirements are measured using an input-based approach. Learning outcomes for professional skills and professional values, ethics and attitudes are not formally prescribed by the AAARS nor are they formulated in a narrative style and documented.

The AAARS also has the authority to establish specific CPD requirements for its members (AAs must be members in good standing with the AAARS to receive or renew their audit license with the Ministry of Finance, while CA and CAT join AAARS on a voluntary basis). The CPD requirement is prescribed by law for auditors, and through the association’s regulations for all AAARS members. All AAARS members must fulfill 120 hours of CPD over a three-year period, which meets the input-based approach under IES 7.

Current Status: Partially Adopted

The Law on Accounting and Auditing of Bosnia and Herzegovina No. 42/04 of 2004 (BiH Law No. 42/04) defines the types of companies that are subject to mandatory audit and requires mandatory application of the IAASB standards and related pronouncements as translated into the national languages.

The Accounting and Auditing Commission of Bosnia and Herzegovina (AACBiH), a non-governmental independent professional body, was established under the BiH Law No. 42/04 with the responsibility of implementing the standards, as well as translating and publishing, among other functions. The AACBiH has delegated the implementation aspects of its mandate in the Federation of BiH to the Union of Accountants, Auditors and Financial Workers of Federation of Bosnia and Herzegovina (UAAFWFBH), and in the Republika Srpska to Association of Accountants and Auditors of Republic of Srpska (AAARS) through its Decision on Translation and Publication Authorizations published in the Official Gazette of BiH No. 81/06.

Federation of BiH: Partially Adopted

The BiH Law No. 42/04, Article 2 (1) (s) and Article 57 of 2021 FBiH A&A Law Article requires application of the IAASB standards and related pronouncements in all mandatory audits as issued by the IAASB and translated into local languages. In the Federation of BiH, the responsibility for translation and publication of the IAASB pronouncements is delegated to the UAAFWFBH.

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.

Republika Srpska: Partially Adopted

In line with the requirements of the BiH Law No. 42/04, the Law on Accounting and Auditing of the Republika Srpska No. 94/15 and 78/20 requires application of the IAASB standards and related pronouncements in all mandatory audits as issued by the IAASB and translated into local languages.

To date, the 2016-2017 IAASB Handbook has been translated into Serbian and applicable in RS. Translation is carried out by the SAAA, the professional accountancy organization in Serbia, which has stated plans to translate the 2020 IAASB Handbook.

Current Status: Partially Adopted

The Law on Accounting and Auditing of Bosnia and Herzegovina No. 42/04 of 2004 (BiH Law No. 42/04) requires mandatory application of the IESBA Code of Ethics for all professional accountants as issued by the IESBA and translated into the national languages.

The Accounting and Auditing Commission of Bosnia and Herzegovina (AACBiH), a non-governmental independent professional body, under the BiH Law No. 42/04, is responsible for the translation and publication of the IESBA Code of Ethics and has delegated the implementation aspects of its mandate in the Federation of BiH (FBiH) to the Union of Accountants, Auditors and Financial Workers of Federation of Bosnia and Herzegovina (UAAFWFBH), and in the Republika Srpska to the Association of Accountants and Auditors of Republic of Srpska (AAARS) through its Decision on Translation and Publication Authorizations published in the Official Gazette of BiH No. 81/06.

Federation of BiH: Adopted

The BiH Law No. 42/04 and Article 2 (1) (s) of the 2021 FBiH A&A Law requires application of the IESBA Code by all professional accountants in the FBiH. In cooperation with the Croatian Audit Chamber, in March 2023, UAAFWFBH published the Handbook of the International Code of Ethics for Professional Accountants (including International Independence Standards), 2022 Edition.

Republika Srpska: Partially Adopted

The Law on Accounting and Auditing of the Republika Srpska No. 94/15 and 78/20 requires application of the IESBA Code of Ethics. The AAARS entered into a cooperation agreement for a common translation of the IESBA Code of Ethics with the professional accountancy organizations in Serbia and Montenegro. The 2018 International Code of Ethics has been translated into Serbian.

Current Status: Partially Adopted

The Law on Accounting and Auditing of Bosnia and Herzegovina No. 42/04 of 2004 (BiH Law No. 42/04) requires application of IPSAS. The Accounting and Auditing Commission of Bosnia and Herzegovina (AACBiH), a non-governmental independent professional body, was established under the BiH Law No. 42/04 with the responsibility for implementing public sector accounting standards, as well as translating and publishing the standards into the national languages, among other functions.

Federation of BiH: Partially Adopted

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 FBiH Public Finance Management Reform Strategy 2021-2025 stipulates that IPSASs will be introduced in phases. The final phase should be completed in 2025.

Republika Srpska: Partially Adopted

The Law on Accounting and Auditing of the Republika Srpska No. 94/15 and 78/20 adopted IPSAS for in the Republic by all levels of government. Under the Law, the Ministry of Finance of Republika Srpska is responsible for overseeing the implementation of this requirement. According to the World Bank’s Stocktaking of Public Sector Accounting and Reporting Environment in PULSAR Beneficiary Countries—Bosnia & Herzegovina (2020), and the World Bank/CFRR’s Book on Public Sector Accounting Reforms Implementation Status in PULSAR Countries (2022), IPSAS are adopted and applied directly on an accrual basis for financial statements and modified accrual basis for budget and budget execution (revenue on cash basis and expenditure on modified accrual basis). The 2013 version of the Handbook of International Public Sector Accounting Pronouncements is the most recent version of IPSAS translated into Serbian.

Current Status: Partially Adopted

Federation of BiH: Partially Adopted

All professional accountants in the Federation of BiH (FBiH) are subject to investigative and disciplinary (I&D) procedures established by several regulatory bodies. The Chamber of Auditors, under the oversight of the Public Oversight Board, operates an I&D system for auditors, while the the Union of Accountants, Auditors and Financial Workers of Federation of Bosnia and Herzegovina (UAAFWFBH) is responsible for establishing an I&D system for all other professional accountants (in addition to auditors) in the jurisdiction.

In accordance with the FBiH Law on Accounting and Auditing of the FBiH of 2009 (FBiH A&A Law 2009) and the Statute of the Union of Accountants, Auditors and Financial Workers of Federation of Bosnia and Herzegovina (UAAFWFBH), the Union operates an I&D system for breaches of ethical requirements and professional standards by its members.

In 2012, the union adopted the Book of Regulation on Disciplinary Liability, which established the Prosecutorial Council and Discipline Review Body. The requirements of the Book are mostly in-line with those of SMO 6; however, the UAAFWFBH intends to improve the I&D system to be more compliant with the SMO 6 requirements as one of its strategic objectives moving forward.

Under Article 96 of the FBiH A&A Law of 2021, the Chamber of Auditors is responsible for establishing an I&D system for Authorized Auditors (AAs), which also covers UAAFWFBH members. It has adopted a Rulebook on Disciplinary Procedure. The Public Oversight Board is responsible for overseeing the Chamber in implementing its I&D system with respect to auditors.

The Union reports that the Chamber established its I&D system in 2015 and the design of the system is mostly in line with SMO 6 requirements.

Republika Srpska: Partially Adopted

The Law on Accounting and Auditing of the Republika Srpska No. 94/15 grants authority to the Ministry of Finance of Republika Srpska to monitor and discipline audit firms and members of the audit profession for failure to comply with accounting and auditing requirements as stipulated by law.

In addition, the Association of Accountants and Auditors of Republic of Srpska (AAARS) implemented an investigative and disciplinary system for its members in 2002 (auditors are required to be members of AAARS; other categories may join on a voluntary basis). It published its Rules on Disciplinary Procedures, which were amended in 2005. The AAARS is legally required to report to the Ministry of Finance on its I&D activities.

AAARS has reviewed its I&D system against SMO 6 and identified the following areas for improvement: separate committees for performing investigations and disciplinary decisions; and a process for independent reviews of complaints where no follow-up was established. Presently, the AAARS has an Honor Court which will receive the complaint or information, investigate, and impose a disciplinary action if necessary.

Current Status: Partially Adopted

The Law on Accounting and Auditing of Bosnia and Herzegovina (BiH No. 42/04 of 2004 requires mandatory application of IFRS and IFRS for SMEs as issued by the IASB and translated into national languages for all legal entities, depending on their size. The Accounting and Auditing Commission of Bosnia and Herzegovina (AACBiH), a non-governmental independent professional body, under the BiH Law No. 42/04 is responsible for the translation and publication of the standards into the national languages.

The AACBiH has delegated the implementation aspects of its mandate in the Federation of BiH (FBiH) to the Union of Accountants, Auditors and Financial Workers of Federation of Bosnia and Herzegovina (UAAFWFBH), and to the Association of Accountants and Auditors of Republic of Srpska (AAARS) in Republika Srpska through its Decision on Translation and Publication Authorizations published in the Official Gazette of BiH No. 81/06.

Federation of BiH: Partially Adopted

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, the implementation of IFRS 17 Insurance Contracts has been postponed. 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.

Republika Srpska: Partially Adopted

In line with the requirements of the BiH Law No. 42/04, the Law on Accounting and Auditing of the Republika Srpska No. 94/15 and 78/20 requires all entities, including those in the financial sector and publicly traded companies, to prepare financial statements in accordance with either IFRS or IFRS for SMEs as issued by the IASB and translated into Serbian. The Ministry of Finance issued a regulation that allows the use of IFRS for SMEs by non-listed entities and small companies that are required to prepare only balance sheets and income statements. The latest translated version of IFRS is that of 2019 (which is translated by the Ministry of Finance of Serbia) and that of 2015 for IFRS for SMEs.

Current Status: Partially Adopted

Relevant Organizations

• Accounting and Auditing Commission of Bosnia and Herzegovina (AACBiH)
• Federal Ministry of Finance
• Association of Accountants and Auditors of Republic of Srpska (AAARS)
• Union of Accountants, Auditors and Financial Workers of Federation of Bosnia and Herzegovina (UAAFWFBH)
• Chamber of Auditors FBiH

Relevant Legislation

• Law on Accounting and Auditing of the Federation of Bosnia and Herzegovina, 2009
• Law on Accounting and Auditing of the Republic of Srpska, 2010
• Standards Act on Quality Control in Accounting and Auditing Profession in Republic of Srpska, 2012
• AAARS Rules and Regulations (in Serbian only)

Relevant Publications

• AAARS, SMO Action Plan, 2022.
• Accountancy Europe, Structure and organisation of the profession - key features – Bosnia & Herzegovina, 2020
• --, Organisation of the Public Oversight of the Audit Profession in 30 European countries, Nov 2021
• --, Definition of Public Interest Entities in Europe, March 2019
• IFRS Foundation, “IFRS Application Around the World, Jurisdictional Profile: Bosnia & Herzegovina,” June 2016.
• International Monetary Fund (IMF), Financial Sector Assessment Program, Bosnia and Herzegovina: Accounting and Auditing, Technical Note, June 2015.
• UAAFWFBH, SMO Action Plan, 2019.
• World Bank, Accountancy Education: Benchmarking Study, 2016.
• World Bank, Accountancy Education: A Collection of Good Practices, 2016.
• World Bank, Report on the Observance of Standards and Codes (ROSC), Accounting and Auditing: Bosnia and Herzegovina, December 2010
• World Bank, Stocktaking of Public Sector Accounting and Reporting Environment in PULSAR Beneficiary Countries—Bosnia & Herzegovina, 2020.
• World Bank, Book on Public Sector Accounting Reforms Implementation Status in PULSAR Countries, 2022.