2016年-世界发展银行全球_Financial_Sector_Assessment_Program___Montenegro_Corporate_Sector_Financial_Reporting_27页_488kb

Summary of Corporate Sector Financial Reporting in Montenegro

Core Content

This document outlines the status and recent developments in corporate financial reporting in Montenegro, focusing on the progress made since the 2007 Accounting and Auditing Reports on the Observance of Standards and Codes (A&A ROSC). It highlights the challenges and recommendations for improving the financial reporting and audit frameworks in line with international standards and the European Union (EU) acquis communautaire.

Key Findings

• Progress and Challenges: Montenegro has made notable efforts to improve its corporate financial reporting framework, particularly in aligning it with the EU acquis. However, implementation and enforcement of financial reporting and auditing requirements remain constrained by limited capacity and resources.

• Quality of Financial Information: Reliable financial information is generally limited to banks and insurance companies, while other corporate entities lack sufficient quality and transparency in their financial reporting.

• Legal and Institutional Gaps: There is no formal legal definition of public interest entities (PIEs), and the institutions responsible for regulating accounting and auditing are still in the early stages of development.

• IFRS Application: All legal entities in Montenegro are required to prepare annual financial statements in accordance with IFRS. However, this requirement is not proportionate to the economic significance or size of entities, especially SMEs, which face high compliance costs and limited capacity.

• Audit Requirements: The statutory audit requirement applies to public interest entities, but there is no system of public oversight or mandatory quality assurance review over the audit function, which is inconsistent with EU standards.

• Regulatory Capacity: Financial regulators have sufficient powers to enforce standards, but their capacity to monitor and inspect audit quality is still developing, especially for the Insurance Supervision Agency.

• Professional Development: The accounting and auditing profession in Montenegro needs further development in terms of skills and capacity to implement international standards.

• Supporting Programs: The World Bank's Centre for Financial Reporting Reform (CFRR) and the International Development Fund (IDF) Grant support ongoing reforms in Montenegro's financial reporting and audit systems.

Main Recommendations

Key Issues and Developments

Statutory Framework

• The legal framework for corporate financial reporting is primarily based on the 2005 Law on Accounting and Auditing, which has been amended in 2008 and 2011.
• Amendments introduced include criteria for classifying entities into small, medium, and large categories, the introduction of consolidated financial statements, the formation of the Council for Accounting and Auditing (CAA), and expanded sanctions for noncompliance.
• The new Draft Law on Accounting and Auditing is being developed to harmonize with the EU 2013 Accounting Directive and the Audit Directives.

Financial Reporting

• All legal entities in Montenegro are required to use IFRS for their annual financial statements, which is a complex and costly requirement for SMEs.
• SMEs are exempt from statutory audits and certain financial reporting requirements, but the current framework does not fully utilize these exemptions.
• The adoption of IFRS for SMEs for medium-sized entities and the development of more simplified reporting guidelines for small entities are recommended.

Audit

• Statutory audit requirements apply to public interest entities, which include listed companies, banks, and insurance companies.
• The statutory audit must be conducted in accordance with International Standards on Auditing (ISA) and the IESBA Code of Ethics.
• There is no public oversight system or mandatory quality assurance review over the audit function, which is a gap compared to EU standards.

Professional Development

• The Institute of Certified Accountants and Auditors of Montenegro (ICAM) is responsible for translating and publishing IFRS, ISA, and IESBA standards.
• Efforts are underway to introduce a public oversight system and enhance the translation and dissemination of standards.
• The profession needs to be upgraded to better implement international standards, and the CPD system should be enhanced.

Institutional Capacity

• The CAA has been dormant since 2011 and needs to be reformed to include a broader scope of activities.
• The Central Bank and Insurance Supervision Agency have the authority to impose additional reporting requirements, but their capacity to monitor and enforce audit quality is still developing.

Conclusion

Montenegro has made significant progress in aligning its corporate financial reporting and audit frameworks with international standards and the EU acquis. However, further improvements are needed in the legal framework, institutional capacity, and professional development to ensure the quality and reliability of financial information. The implementation of the Draft Law on Accounting and Auditing and the ongoing support from the World Bank and IDF Grant are critical to achieving these improvements.