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Montenegro’s Efforts to Contribute to Global Accounting Standards

In an effort to harmonize accounting standards and minimize time lags, Montenegro is working to adopt international standards and best practices in the field of accountancy. The Institute of Accountants and Auditors of Montenegro (IAAM) has been actively engaged in promoting the adoption of International Public Sector Accounting Standards (IPSAS), International Financial Reporting Standards (IFRS), and other international accounting standards.

Accrual Accounting and IPSAS

The Law on Accounting in Public Sector, adopted in 2022, introduces accrual accounting with national standards that reference IPSAS. While some ministries have begun using accrual accounting, the public sector as a whole needs to build capacity to apply such standards. IAAM has started a training program and plans to translate IPSAS 33, but its role is limited to promoting full adoption of IPSAS to the government and supporting public institutions in educating public sector accounting professionals.

Investigation and Discipline

IAAM has established an investigation and discipline (I&D) system, which includes procedures for investigating complaints and imposing sanctions. However, the system is not yet operational, and IAAM plans to build capacity and prepare to implement it. The public will need to know how to submit complaints and be informed of potential sanctions.

IFRS Adoption

Montenegro has adopted IFRS accounting standards, with some standards delayed in application. IAAM has been cooperating with other professional accountancy organizations (PAOs) in the region for knowledge-sharing purposes and exchanging experiences on IFRS implementation.

Recommendations

To further improve its SMO Action Plan, IFAC recommends that IAAM:

  • Engage with regional PAOs to understand how effective enforcement mechanisms have been implemented.
  • Develop an approach to translating international standards that would minimize the time lag in available translations.
  • Work with other stakeholders in the jurisdiction to develop a translation process for international accounting standards.

By adopting and implementing international accounting standards, Montenegro can enhance transparency, accountability, and efficiency in its national, regional, and global markets.