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1 M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Working Group for Chapter 9 – Financial Services Bilateral.

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Presentation on theme: "1 M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Working Group for Chapter 9 – Financial Services Bilateral."— Presentation transcript:

1 1 M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Working Group for Chapter 9 – Financial Services Bilateral screening: Chapter 9 PRESENTATION OF MONTENEGRO Brussels, 10-11 June 2013

2 2 Financial services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Chapter 17: Economic and Monetary Policy INSURANCE ACCOUNTING DIRECTIVE Directive 91/674/EEC on annual accounts and consolidated accounts of insurance undertakings Ivana Vuletic Insurance Supervision Agency ivana.vuletic@ano.co.me

3 3 M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial services Accounting regulation of insurance undertakings in MNE Law on Accounting and Auditing (Official Gazzette of MNE No 32/11)  Legal entites shall compile financial statements in compliance with International accounting standards (IAS) or International Financial Reporting Standards (IFRS) os promulgated by the IASB (Art 3)  Legal entities that have control (parent legal entities) over one or more legal entities (subsidary entities) shall be obliged to compile, submit and disclose consolidated financial statements in line with the IAS Rulebook on the chart of accounts for insurance companies (Official Gazette of Montenegro, No 63/10); Decision on the method of valuation of assets for insurance underakings (Official Gazette of Montenegro, 77/10); Financial statements prescribed by Institute of Certified Accountants of Montenegro (ICAM):  Balance sheet  Profit and loss account / Income statement  Cash flow statement  Statement of changes in equity Financial services I Requlatory framework

4 4 Financial services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial services Other regulation which enable concordance Insurance law (Official Gazette of the Republic of Montenegro, No78/06, 19/07, Official Gazette of Montenegro, No.45/12); Law on business organizations (Official Gazette of the Republic of Montenegro 06/02, Official Gazette of Montenegro 17/07, 80/08, 40/10, 73/10, 36/11, 40/11); Rulebook on characteristics of subordinated debt instruments that can be included in the additional capital of the insurance company (Official Gazette of Montenegro, No 01/13); Rulebook on detailed criteria and manner of calculating risk equalization reserves ("Official Gazette of Montenegro 70/08, 01/13); Rulebook on detailed criteria and manner of calculating mathematical provisions and special provisions for the life insurance where the investment risk is borne by the insured person (Official Gazette of Montenegro, No 01/13) Rulebook on detailed criteria and manner of calculating unearned premiums (Official Gazette of the Republic of Montenegro, No 70/08) Rulebook on detailed criteria and manner of calculating technical reserves for outstanding claims (Official Gazette of Montenegro, 41/11) I Requlatory framework

5 5 Economic and Monetary Policy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 17: Chapter 9: Financial services Current balance sheet layout issued by ICAM in 2010 in compliance with IAS/IFRS Partially compliant with requirements of this Directive The main items of incompliance: Different structure of investments ; No separate presentation of investments for the benefit of life assurance policyholders who bear investment risk; No separate presentation of debtors amounts owned by affiliated undertakings and undertakings with which an insurance undertaking is linked by virtue of participating interest; Gross technical provisions are shown in liabilities; Subordinated liabilities not separately presented; No separate presentation of creditors for amounts owned by affiliated undertakings and undertakings with which an insurance undertaking is linked by virtue of participating interest; No separate presentation of deposits received from reinsurers II Layout of the balance sheet

6 6 Financial services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial services Current profit and loss layout issued by ICAM in 2010 in compliance with IAS/IFRS Partially comliant with requirements if this Directive The main items of incompliance: no separation of technical and non-technical account (therefore no tranffered return from non technical to technical account) no separate accounts for life and non life bussiness in technical account; investment income not shown separately from participating interests and other investments; no disclosure of unrealised gains and losses on investments III Layout of the profit and loss account

7 7 Financial services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial services  Investments are valued and shown at their fair value in accordance with IAS/IFRS  Financial investments are valued at their market value (IAS 39)  Property investments are valued according to IAS 40  Initially valued at their purchise price  On the date of valuation at their fair value – market value  Valuation of technical reserves – rules are prescribed by bylaws Valuation methods are in accordance with the requirement of this Directive IV IV Valuation rules

8 8 Financial services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial services Legal entities are obliged to prepare annual financial statements and consolidated statements as of 31 st December of the bussiness year or as the day of registration of status changes (merger, aquisition, divison) or as the day of the adoption of the decision on voluntary liquidation of the legal entity Legal entities are obliged to submit financial statements in paper and electronic form to the Tax Administration at least by 31st March of the current year for the previous year The Tax Administration shall publish on its website the report on the audit with an opinion on the financial statements. Insurance undertaking is obliged to subbmit annual and quarterly financial statements to Insurance supervision agency for publication on its web site Insurance undertakings disclose the summary of the audited financial report at least in one printed media outlet distributed in the entire territory of Montenegro, within 30 days as of the day of adoption. V Publication

9 9 Financial services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial services Adoption of a new bylaw on annual accounts which will prescribe: New layouts for balance sheet and profit and loss account for supervisory purposes in accorance with requirements of this Directive; Special provisions related to certain balance sheet and profit and loss account items Contents of the obligatory notes on the accounts; Additional provisions regarding consolidated accounts. Change of Rulebook on the chart of accounts for insurance companies; Change of Decision on the method of valuation of assets for insurance companies Changes of Insurance Law Activities shall be finalized by the end of 2015. VI Future activities in achieving full concordance with Directive 91/674/EC – ROAD MAP

10 10 Thank you for your attention! QUESTIONS


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