Jelena Knežević, Director, LeitnerLeitner

New Laws Increase Sureness

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In order to achieve harmonization with EU regulations (Directives 2013/34/EU, 2014/56/EU and 2014/95/EU and EU Regulation 537/2014), as well as MONEYVAL recommendations, Draft Law on Accounting and Law on Audit have been introduced, suffering significant changes, in compare with current laws.

It is anticipated that new laws will enter into force on January 1, 2020, with the exception of articles which should apply from January 1, 2022 or from the date of accession of the Republic of Serbia to the EU.

The Draft Law on Accounting outlines the following significant changes:

* The criteria for legal entities and entrepreneur’s classification have been completely harmonised with EU Directive (Directives 2013/34/EU);

* Groups of legal entities are defined, which are now classified into small, medium and large groups using the same criteria and thresholds for small, medium and large legal entities, but on a consolidated basis;

* Full IFRS/IAS implementation is allowed for all entities, regardless of its size. However, it is still not specified when the official translations of latest IFRS/IAS will be published;

* Notes to financial statements are now part of annual financial statement set for all entities, except entrepreneurs and other legal entities classified as micro entities;

* Deadline for annual financial statement’s submission is March 31st, while consolidated financial statements should be submitted by April 30th of the following year. As for legal entities whose fiscal year differs from calendar year, the deadline is three months from the balance sheet date;

The ultimate goal of amending the law is to improve the quality of financial reporting and to strengthen confidence in financial and audit reports

* Invoice, as an accounting document, must be in electronic form;

* Register of accounting service providers has been introduced, which is to be kept by the Serbian Business Register Agency (SBRA), while licences for providing accounting services would be issued by the Chamber of Authorized Auditors. The most discussed change is introduction of professional titles, which becomes a condition for issuing a license for the accounting firms. The transitional provisions of the Draft Law on Accounting will prescribe an obligation for entities to provide, within three years from the day this law enters into force, evidence that at least one person with a professional title in the field of accounting or auditing has been employed. The main changes within the Draft Law on Audit are as follows:

* Obligatory audit report content harmonized with EU Directive;

* It is stipulated that audit firms with one full-time licenced auditor are obliged to conclude cooperation agreement with another audit firm;

* The Draft Law defines the possibility of contracting a statutory audit with more than one audit firm for companies of public interest;

* Quality control of audit firms and licensed auditors is under the jurisdiction of the Securities Commission of RS (currently performed by the Chamber). According to the legislature, the ultimate goal is to improve the quality of corporate financial reporting and strengthen confidence in financial and audit reports. It should contribute to better assessment of future business performance, enabling investors to make a perspective investment decision as well as to reduce the risk of financial crises and its negative impact on economy.

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