Bosnia and Herzegovina Falls Short on International Financial Reporting Standards

Gaps in Accounting and Financial Reporting Pose Risks to Economic Stability

A recent report has highlighted significant gaps in accounting, financial reporting, and auditing requirements within the enterprise and financial sectors of Bosnia and Herzegovina. The country’s statutory framework is not aligned with internationally accepted practices, posing a risk to economic stability.

Key Findings

• Managers and auditors often fail to comply with established standards, resulting in an adverse impact on the economy.
• Lack of transparency and accountability hinders foreign investment and domestic savings mobilization.
• Statutory framework is not aligned with International Financial Reporting Standards (IFRS) and European Union laws.

Urgent Changes Needed

The report calls for urgent changes to Bosnia and Herzegovina’s law and regulations to align them with IFRS and EU laws. This would:

• Strengthen the country’s financial architecture
• Reduce the risk of market crises
• Facilitate integration into the EU

Recommendations

• Adopt best practices in financial reporting and auditing to ensure economic stability and growth.
• Improve corporate governance to enable investors to make informed decisions and allow shareholders to assess management performance.
• Enhance tax collection and assessment to mobilize domestic savings and encourage foreign investment.

Benefits of Alignment with IFRS

By aligning its law and regulations with IFRS, Bosnia and Herzegovina can:

• Improve its business environment
• Attract more investment
• Support its EU integration efforts