USAID/IBTCI- PSARP AccountingandAuditing in BiH Senad Pekmez Senad Pekmez – Senior Accounting Consultant USAID/IBTCI – Private Sector Accounting Reform Project Bosnia and Herzegovina

Accounting and Auditing in BiH Prepared by: Senad Pekmez2 USAID/IBTCI- PSARP BOSNIA AND HERZEGOVINA -UNDER DAYTON AGREEMENT COMPOSED OF TWO ENTITIES: OF TWO ENTITIES: 1.FEDERATION OF BIH and 2.REPUBLIC OF SRPSKA STATE STRUCTURE

Accounting and Auditing in BiH Prepared by: Senad Pekmez3 USAID/IBTCI- PSARP FEDERATION OF BIH FEDERATION OF BIH Responsible Institutions: Responsible Institutions: 1.Institute for Accounting and Auditing of FBiH (Government Institution) Association of Accountants and Auditors of FBiH (Private Sector) 2. Association of Accountants and Auditors of FBiH (Private Sector) 3. Securities Commission of FBiH

Accounting and Auditing in BiH Prepared by: Senad Pekmez4 USAID/IBTCI- PSARP Legal Accounting Framework in FBiH 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 Pekmez5 USAID/IBTCI- PSARP Legal Accounting Framework in FBiH 3. Law on Enterprises: - Every shareholding company should have audited financial statements, subject of approval of annual shareholdes assembly 4. Requirements 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 Pekmez6 USAID/IBTCI- PSARP REPUBLIC OF SRPSKA REPUBLIC OF SRPSKA Responsible Institutions: Responsible Institutions: 1. Association of Accountants and Auditors of RS (Private Sector) 2. Securities Commission of RS

Accounting and Auditing in BiH Prepared by: Senad Pekmez7 USAID/IBTCI- PSARP Legal Accounting Framework in RS 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 Pekmez8 USAID/IBTCI- PSARP Legal Accounting Framework in RS 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 Pekmez9 USAID/IBTCI- PSARP Tasks and Goals of Profession and Project in Accounting Reform 1.Building the Audit Profession - To have audit firms in each entity capable of auditing in - To have audit firms in 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 – organizing Audit Case Study training - Current activities – organizing Audit Case Study training for 300 auditors. Each participant will be expected to agree to for 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 in auditor to review workpapers, discuss audit issues and assist in the application of sound audit practice. the application of sound audit practice.

Accounting and Auditing in BiH Prepared by: Senad Pekmez10 2. Modernizing University Curricula Reform - To have BiH universities adopt a modern accounting and auditing curriculum fully in accordance with UNCTAD and IFAC guidelines. - To have BiH universities adopt a modern accounting and auditing curriculum fully in accordance with UNCTAD and IFAC guidelines. - Seven BiH Universities signed MOA for implementing new curricula. -translating, publishing and delivering new accounting, auditing, cost accounting and financial management textbooks to students and professors. -Organizing Summer 2003 training for University professors USAID/IBTCI- PSARP Tasks and Goals

Accounting and Auditing in BiH Prepared by: Senad Pekmez11 USAID/IBTCI- PSARP 3.Enterprise Assistance in Applying IAS - private enterprises to improve their competitiveness, profitability, and access to foreign and domestic capital through modernizing their financial reporting and management accounting - private enterprises to improve their competitiveness, profitability, and access to foreign and domestic capital through modernizing their financial reporting and management accounting - present courses on financial reporting (IAS) and managerial accounting to enterprise accountants, - present courses on financial reporting (IAS) and managerial accounting to enterprise accountants, - implement program of on site assistance to enterprises - implement program of on site assistance to enterprises - train and subcontract local accounting and audit firms in the provision of assistance to individual enterprises - train and subcontract local accounting and audit firms in the provision of assistance to individual enterprises Tasks and Goals

Accounting and Auditing in BiH Prepared by: Senad Pekmez12 4. Support to Professional Associations - A professional associations of accountants and auditors, with nationwide representations, made suitable, and becomes a member of IFAC - The AAA of FBiH and the AAA of RS are in negotiations regarding the Charter for State Level Association of Accountants and Auditors. Tasks and Goals USAID/IBTCI- PSARP

Accounting and Auditing in BiH Prepared by: Senad Pekmez13 USAID/IBTCI- PSARP 5. Legal & Regulatory Reform - to have a nationwide law on accounting and auditing that fully embraces International Accounting Standards and International Standards on Auditing - to have a nationwide law on accounting and auditing that fully embraces International Accounting Standards and International Standards on Auditing 6. Other Activities - work closely with SEC on preparing and issuing the rules which regulate accounting and auditing for the players in capital market (brokers, dealers, PIF’s, MC, listed shareholding companies etc.) - work closely with SEC on preparing and issuing the rules which regulate accounting and auditing for the players in capital market (brokers, dealers, PIF’s, MC, listed shareholding companies etc.) Tasks and Goals

Accounting and Auditing in BiH Prepared by: Senad Pekmez14 USAID/IBTCI- PSARP Tasks and Goals Build a stronger relation between responsible institution: MF, IAA, AAA, and SEC in a both entities and nationwide better control and monitoring - To have better control and monitoring of applying IAS and ISAfinancial reporting and auditing IAS and ISA in financial reporting and auditing. accurate, fair and true - To have accurate, fair and true financial reporting and capital market disclosure of information for users of financial statements in capital market