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Accounting and Audit

Article 13 of the Law on Foreign Direct Investment Policy of BiH sets forth: ‘Foreign investors shall keep business records and prepare financial statements in accordance with the internationally accepted accounting and auditing standards and principles and the laws of the Entities.’

The field of accounting and auditing in the Republic of Srpska is governed by the Law on Accounting and Auditing (Official Gazette of the Republic of Srpska, 94/15) and subordinate legislation.

 

Subjects of the Law

The Law applies to all companies, including insurance companies, microcredit companies, leasing companies, investment funds, investment fund management companies, broker and dealer companies, stock exchanges and banks, other financial organizations, cooperatives, other profit and nonprofit legal entities with seats in the RS, as well as entrepreneurs keeping their business records under the double-entry accounting system and on accrual basis.

The provisions of this Law apply also to the legal entities and other organizational forms established abroad by a legal entity with a seat in the RS, if governing regulations of those foreign countries do not provide for an obligation to keep business records and prepare financial statements.

The provisions of this Law apply to the organizational parts of a legal entity with a seat outside the RS, if those organizational units are generating income within the RS.

The provisions of this Law apply also to the users of revenues of the budget of the RS, budgets of municipalities and cities, and budget funds.

 

Bookkeeping and Accounting System Organization

Legal entities pass general acts by which the management of a legal entity regulates the issues relevant for the establishment and operation of their bookkeeping and accounting system, in accordance with legal provisions and rules of profession. When preparing and presenting financial statements, the subjects must apply the International Accounting Standards (IAS), i.e. the International Financial Reporting Standards (IFRS). Conditions were created in the Republic of Srpska for the implementation of the International Financial Reporting Standards for the Small- and Medium-Sized Entities (IFRS for SMEs) for the accounting period starting on 1 January 2011. The implementation of the IFRS for SMEs provides for the fulfilment of several vital principles, primarily the principles of economy, continuity, comparability, and balance. According to the existing legal solution in the Republic of Srpska, entrepreneurs have an option to keep their business records under the principle of single-entry bookkeeping, in compliance with the Law on Income Tax, or under the principle of double-entry bookkeeping, in compliance with the Law on Accounting and Auditing of the Republic of Srpska.

All subjects must prepare and present their annual financial statements, which are submitted for the Single Register of Financial Statements (Register), kept at the APIF.

Individual annual financial statements are submitted for the Register at the latest by the last day of February of the current year for the past year. Legal entities which must prepare and present their consolidated financial statements must submit those statements for the Register at the latest by the end of April of the current year for the past year.

General information from the received financial statements are available to the public free of charge, at the official web page of the APIF, including a translation into English, within 60 days following the expiration of deadlines for submitting.

Pursuant to the Law on Accounting and Auditing of the Republic of Srpska, keeping business records and preparing financial statement may be entrusted to another legal entity or entrepreneur registered for providing bookkeeping and accounting services, employing qualified persons to be entrusted with keeping business records and preparing financial statements. The above legal provision does not apply to banks, insurance companies, financial leasing providers, microcredit companies or other financial organizations for which the regulations governing their operation prohibit entrusting the keeping of their business records and preparation of financial statements to other persons.

 

 

Audit

Subjects to Mandatory Audit

Subjects to mandatory audit are financial statements of the entities of public interest defined by the Law on Accounting and Auditing of the Republic of Srpska and financial statements of large legal entities as classified in compliance with this Law.

Parent legal entities obliged to prepare and present consolidated financial statements must have those statements audited.

Pursuant to the Law, the auditing of the financial statements of the above entities is performed on the basis of a contract concluded between the legal entity whose financial statements are being audited and the auditing company, at the latest by 30 September of the business year for which the financial statements subject to audit are being prepared.

Audit is also mandatory for financial statements of legal entities if provided by special regulations governing their operation.

In addition to the above entities, any other legal entity may decide to have their financial statements audited in accordance with the provisions of this Law.

 

Audit Providers

Financial statements are audited by companies licensed in accordance with the provisions of this Law.

Financial statements are audited by persons holding the professional title of a certified auditor, issued a license to work on financial statements auditing, and employed or recruited by an audit company.

Registers of companies and entrepreneurs providing accounting services, audit companies and certified auditors are available at the following links:

Registers

Register of auditing companies

Register of certified auditors