Financial Crime World

Accounting and Auditing Reform in Bosnia and Herzegovina

Country Context

Bosnia and Herzegovina (BiH) is a small country with a complex governance structure. The population consists mainly of three ethnic groups: Bosniaks, Serbs, and Croats. Despite making progress in post-conflict reconstruction, the country still faces challenges.

Key Facts

  • Bosnia and Herzegovina has a complex governance structure.
  • The population is composed of three main ethnic groups: Bosniaks, Serbs, and Croats.
  • The country has made progress in post-conflict reconstruction but still faces difficulties.

Accounting and Auditing Framework

There are three official languages (Bosnian, Croatian, and Serbian) which poses a challenge for accounting and auditing standards. BiH cooperates with neighboring countries to access translated IFRS and ISAs. The country aims to adopt international accounting and auditing standards.

Challenges in Accounting and Auditing

  • Three official languages: Bosnian, Croatian, and Serbian
  • Need for cooperation with neighboring countries to access translated IFRS and ISAS
  • Aim to adopt international accounting and auditing standards

Government Structure

BiH has two entities: the Federation of Bosnia and Herzegovina (FBH) and Republika Srpska (RS). FBH is subdivided into 10 cantons, each with its own executive, legislative, and judicial branches. RS is more centralized with a conventional municipality structure.

Government Structure Overview

  • Two entities: Federation of Bosnia and Herzegovina and Republika Srpska
  • Federation of Bosnia and Herzegovina subdivided into 10 cantons
  • Republika Srpska has a conventional municipality structure

Economic Development

BiH has experienced robust economic growth, averaging 6% in real terms between 2004-2008. The economy was driven by private sector investment after the war. GDP growth peaked at 7% in 2007 but weakened due to the global financial crisis. The current account deficit was financed by foreign direct investment (FDI), grants, and foreign borrowing.

Economic Development Overview

  • Experienced robust economic growth between 2004-2008
  • Economy driven by private sector investment after the war
  • GDP growth peaked at 7% in 2007 but weakened due to the global financial crisis

Global Economic Crisis

BiH’s economy fell into recession, with GDP dropping 3% in 2009. Exports and imports decreased significantly in the first half of 2009. Foreign reserves started to drop, but the decline was not alarming.

Impact of the Global Financial Crisis

  • Economy fell into recession in 2009
  • Exports and imports decreased significantly in the first half of 2009
  • Foreign reserves started to drop but not alarmingly