Slovenia

As a member of the European Union (EU), Slovenia is subject to the accounting, auditing and financial reporting requirements established in EU Regulations and Directives as transposed into national laws and regulations.

The Companies Act (ZGD-1) sets the requirements for the preparation of corporate financial statements in Slovenia and transposes the EC Accounting Directive (2013/34/EU). The Act outlines the accounting standards to be applied by different types of entities based on their size and public accountability. Public interest entities, defined as listed companies, credit institutions, insurance undertakings, pension funds, and companies with direct or indirect state or municipal ownership, are required to apply EU-endorsed IFRS in their consolidated and separate financial statements. Companies that apply IFRS must do so for a period of at least five years.

All other companies have the option to apply either IFRS or Slovenian Accounting Standards (SAS) which are developed by the Slovenian Institute of Auditors (SIA). SAS are approved by the Minister of Finance and Minister of Economic Development and Technology. Upon approval of both ministries, the standards are published in the Official Gazette.

Certain exemptions apply regarding micro, small and medium sized-enterprises (MSMEs).They are allowed to: (i) submit abridged balance sheets; (ii) draw up abridged profit and loss accounts, subject to prescribed limits; and (iii) companies whose securities are not traded on a regulated market are exempted from preparation of business report. However, certain types of companies are never considered to be an MSME regardless of size (i.e., banks, insurance companies, listed companies, and any company required to prepare consolidated financial statements in accordance with IFRS). IFRS for SMEs is not required in Slovenia.

In addition to stipulations in the Companies Act (ZGD-1), banks must submit individual and consolidated financial statements to the Bank of Slovenia. All listed companies are also governed by the Financial Instruments Market Act (ZTFI), listing rules of the Ljubljana Stock Exchange, and regulations of the Securities Market Agency (ATVP). Insurance companies must also comply with the reporting requirements in the Insurance Act (ZZavar-UPB7).

The Companies Act (ZGD-1) also defines the companies that are subject to mandatory audits. The audit thresholds are based on the EU Audit Directive. A statutory audit is required for the individual and consolidated financial statements of medium and large-sized entities and groups, as well as of all companies in the regulated sectors (i.e. listed entities, banks and insurance companies).

The standards for audit reporting are enshrined in the law. The Auditing Act (ZRev-2) adopts ISA and other IAASB pronouncements as mandatory. All pronouncements are to be applied as issued by the IAASB, without modifications. All statutory audits must be conducted by auditors and audit firms that are licensed by SIA.

The Auditing Act (ZRev-2) regulates the auditing profession, the supervision of auditing and valuations, and the operations of the Slovenian Institute of Auditors (SIA) as well as the Agency for the Public Oversight of Auditing (APOA).

The Act establishes the initial professional development (IPD) requirements for certified auditors and certified appraisers. Aspiring certified auditors must meet the following requirements: hold a university degree; complete five years of practical experience, three of which must be in auditing; pass a final examination; have no record of a withdrawal of the license in the past; no convictions of commercial or property crime; and be fluent in Slovenian. The requirements for certified appraisers (business, real estate, machines and equipment) are similar to those of auditors with the exception that they must complete five years of practical experience in their respective field.

The Auditing Act requires certified auditors to register at APOA and certified appraisers to register for membership with the SIA. SIA was established by the Act and its responsibilities include: implementation of IPD and continuing professional development (CPD) requirements for its members; education and organization of professional examinations; licensing and registration of certified appraisers; and establishment of a quality assurance (QA) review system and an investigative and discipline (I&D) system for its members.

Other categories of professionals (internal auditors, accountants, business finance experts, information systems auditors and tax experts) may join SIA on a voluntary basis and be subject to their regulations. Membership requirements are established by the institute which include a university degree, two years practical experience, fluency in Slovenian and passing the examination organized by the institute. All SIA members are required to fulfill CPD requirements.

The APOA is responsible for the public oversight of the audit profession. The agency oversees the activities of SIA with respect to the following activities: adoption of ethical, quality control and auditing standards; CPD, training and licensing of certified auditors; establishment of QA and I&D systems; and monitoring the activities of audit firms, certified auditors, and certified appraisers. The APOA has the authority to withdraw the licenses of certified auditors and audit firms under specific conditions.

Other accountancy professionals are not regulated by law and are not required to become members of any professional accountancy organization and/or be registered with SIA. They may, however, voluntarily join the membership of the SIA and be subject to their regulation.

The Agency for Public Oversight of Auditing (APOA) is an independent body established in 2008 under the Auditing Act (ZRev-2). The APOA is responsible for the public oversight of the audit profession and defining audit regulation. The agency oversees the activities of the Slovenia Institute of Auditors with respect to the following: adoption of ethical, quality control and auditing standards; continuing professional development, training and licensing of certified auditors; establishment of the quality assurance and investigation and disciplinary review systems; and monitoring the activities of audit firms, certified auditors, and certified appraisers. The APOA has the authority to withdraw the licenses of certified auditors and audit firms under specific conditions.

APOA is a member of the International Forum of Independent Audit Regulators.

The Slovenian Institute of Auditors (SIA)

The SIA is a mandatory membership organization for certified appraisers with a mandate based on the Auditing Act. Aspiring professionals planning to hold the title of certified appraiser are required to register with SIA. The institute is responsible for a large range of activities including education and organization of professional education and examinations; development and monitoring of initial and continuing professional development requirements; licensing and registration of certified appraisers; and establishment of a quality assurance review system and an investigative and discipline system for its members.

Apart from IFAC membership, SIA is also a member of Accountancy Europe and the International Valuation Standards Council.

In accordance with the Auditing Act (ZRev-1), a mandatory quality assurance (QA) review system has been established and been operational in Slovenia since 2001.

In 2008, Auditing Act (ZRev-2) created an oversight authority, the Agency for the Public Oversight of Auditing (APOA) and QA reviews were transferred from the Slovenian Institute of Auditors (SIA) to the APOA.

The system uses a cycle approach and is based on peer reviews, with APOA reviewing audits of public interest entities (PIEs) every three years and audits of non-PIEs every six years. The Auditing Act (ZRev-2) also adopts ISA and other IAASB pronouncements as issued by the IAASB, including the effective dates; the SIA reports that quality management standards and ISA 220 (revised) are adopted.

SIA reports that the QA system is aligned with the SMO 1 requirements.

Current Status: Adopted

The Auditing Act (ZRev-2) sets the main initial and continuing professional development requirements (IPD and CPD, respectively) and licensing requirements for certified auditors and certified appraisers. Certified appraisers are required to become members of the Slovenia Institute of Auditors (SIA). The law also authorizes SIA to implement the IPD and CPD requirements under the oversight of the Agency for Public Oversight of Auditing.

Aspiring certified auditors must meet the following requirements: hold a university degree; complete five years of practical experience, three of which must be in auditing; pass a final examination; have no record of a withdrawal of the license in the past; no convictions of commercial or property crime; and be fluent in Slovenian. The requirements for certified appraisers (business, real estate, machines, and equipment) are like those of auditors with the exception that they must complete five years of practical experience in their respective field.

Other professionals (internal auditors, accountants, business finance experts, information systems auditors and tax experts) may join SIA on a voluntary basis and become subject to the institute’s regulations. Their membership requirements are established by SIA. Membership requirements include a university degree, two years practical experience, fluency in Slovenian and passing the examination organized by the SIA.

Certified auditors and appraisers must complete 120 hours over 3 years as stipulated by the APOA. Other SIA members must also fulfill the same CPD requirements.

SIA reports that the national standards and requirements set by APOA and SIA follow the IES. However, it is not clear if national standards have taken into consideration revisions to the IES requirements, including those from 2015 and revisions to IES 2, 3, 4, and 8 which became effective as of January 2021. The revisions to these standards reflect the need for competency-based approaches as well as the increasing demand for accountants skilled in information and communications technologies and place further emphasis on professional skepticism skills and behaviors.

Additionally, the extent of IES alignment needs to be established for the educational requirements of the other categories of professional accountants (internal auditors, accountants, business finance experts, information systems auditors and tax experts) set by SIA.

Current Status: Partially Adopted

The Auditing Act (ZRev-2) adopts ISA and other IAASB pronouncements as issued by the IAASB, including the effective dates, for application in all mandatory audits in Slovenia. The Agency for Public Oversight of Auditing will adopt any other auditing rules as necessary.

Current Status: Adopted

In accordance with the Auditing Act (ZRev-2), all certified auditors must comply with the International Code of Ethics as issued by the IESBA.

The Slovenian Institute of Auditors (SIA) has also required its members (certified appraisers & any other categories of professionals ((e.g., qualified internal auditors, qualified accountants, or qualified tax experts)) that may join voluntarily) to refer to the International Code of Ethics. The institute has translated the 2022 International Code for adoption and implementation.

Current Status: Adopted

The Ministry of Finance is responsible for the adoption of public sector accounting standards in Slovenia. IPSAS have not been adopted in the jurisdiction and there are no current plans for adoption.

According to the CIPFA/IFAC 2020 International Public Sector Financial Accountability Index, the current framework for public sector accounting uses national standards on a partial-accrual basis.

Current Status: Not Adopted

In 2008, an updated Auditing Act (ZRev-2) created an oversight authority, the Agency for the Public Oversight of Auditing (APOA) and the overall responsibility for implementing the I&D system for certified auditors and appraisers was transferred from SIA to APOA.

The APOA is responsible for investigations conducted on statutory auditors and audit firms. The APOA may adopt sanctions against audit firms, statutory auditors and members of management, supervisory body, or audit committee of PIEs. The SIA continues to be responsible for performing the investigations of certified appraisers under the oversight of APOA. SIA will conduct investigations and the APOA would handle any disciplinary matters. For other professional accountants within SIA’s membership, SIA will resolve any complaints received.

SIA reports that the I&D system in Slovenia is compliant with the SMO 6 requirements.

Current Status: Adopted

The Companies Act (ZGD-1) sets the requirements for the preparation of corporate financial statements in Slovenia and transposes the EC Accounting Directive (2013/34/EU). The Act outlines the accounting standards to be applied by different types of entities based on their size and public accountability. Public interest entities, defined as listed companies, credit institutions, insurance undertakings, pension funds, and companies with direct or indirect state or municipal ownership, are required to apply EU-endorsed IFRS in their consolidated and separate financial statements.

EU-endorsed IFRS have slight modifications from IFRS (e.g., temporary 'carve-out' from IAS 39 Financial Instrument: Recognition and Measurement and a temporary extension of the scope of applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts) but according to the IFRS Foundation, the modifications apply to a limited number of companies. The majority of companies that do not use the modifications can state full compliance with the IFRS.

All other companies have the option to apply either IFRS or Slovenian Accounting Standards (SAS) which are converged with the latest IFRS and developed by the Slovenian Institute of Auditors in the preparation of their individual and consolidated financial statements. Companies that apply IFRS must do so for a period of at least five years. SAS are approved by the Minister of Finance and Minister of Economic Development and Technology. Upon approval of both ministries, the standards are published in the Official Gazette.

IFRS for SMEs have not been adopted in Slovenia and there is no known timetable for adoption.

Current Status: Adopted

Relevant Organizations

• Agency for the Public Oversight of Auditing (APOA)
• Bank of Slovenia (BS)
• Chamber of Accounting Services (CAS)
• Securities Market Agency (ATVP)
• Slovenian Institute of Auditors (SIA)

Relevant Legislation

• Auditing Act of 2008
• Banking Act
• Companies Act
• Financial Instruments Markets Act
• Insurance Act
• Investment Funds and Management Companies Act

Relevant Publications

• Accountancy Europe, Structure and Organisation of the Accountancy Profession. Key feature: Slovenia, 2011.
• --, Structure and Organisation of the Accountancy Profession. Key feature: Slovenia, 2020.
• --, Member State Implementation of Directive 2014/95/EU, 2017.
• --, Organization of the Public Oversight of the Audit Profession in Europe, a Survey, March 2018.
• --, Definition of Public Interest Entities in Europe, March 2019.
• --, Overview of the ISA adoption in the EU, 2015.
• Deloitte, IAS Plus, Slovenia Jurisdictional Profile, 2009.
• IFAC / CIPFA, International Public Sector Financial Accountability Index, 2020.
• IFRS Foundation, IFRS Application Around the World, Jurisdictional Profile: Slovenia, 2016.
• IFIAR, IFIAR Member Profile: Slovenia, 2022.
• SIA, Organizational Profile and SMO Action Plan, 2021.
• World Bank, Report on Observance of Standards and Codes–Accounting and Auditing, Slovenia, 2014.