Bosnia and Herzogovina started moving towards a market economy at the end of 1995 after the war that followed its declaration of independence from Yugoslavia. Under Bosnia and Herzogovina's constitution, there are two highly autonomous Entities in addition to the national government, and most reforms have been carried out at the Entity level.
The first World Bank report on the observance of standards and codes on accounting and auditing (download A&A ROSC) in Bosnia and Herzogovina was published in October 2004 and made a range of recommendations for improving the frameworks for accounting and auditing. The World Bank started work on updating the 2004 ROSC in 2010, and this updated assessment is currently being finalized
In recent years, Bosnia and Herzegovina has focused on the creation of a single economic space within the country. It has also established a strategic aim of becoming a member of the EU. Bosnia and Herzegovina signed a Stabilization and Association Agreement with the EU in June 2008, which provides the country with a clear EU perspective.
Bosnia and Herzegovina takes part in the following programs at the CFRR:
Economic and Business Background for Bosnia and Herzegovina
"Doing Business" Results for Bosnia and Herzegovina
The World Bank's annual "Doing Business" reports provide objective measures of the impact of business regulations and their enforcement in 183 economies across the world. Please, visit doingbusiness.org for more information.
All the data is taken from World Development Indicators (WDI), which is the primary World Bank collection of development indicators, compiled from officially recognized international sources. It presents the most current and accurate global development data available, and includes national, regional and global estimates.
Executive Summary of the 2004 A&A ROSC Bosnia and Herzegovina
This report provides an assessment of accounting, financial reporting, and auditing requirements and practices within the enterprise and financial sectors in Bosnia and Herzegovina (BiH). It uses International Financial Reporting Standards (IFRS), International Standards on Auditing (ISA), and the relevant portions of European Union (EU) law (also known as the acquis communautaire), as benchmarks.
Following four years of conflict, the Dayton Peace Agreement (December 1995) established Bosnia and Herzegovina with a central government, two first-order administrative divisions (also referred to as the “Entities”), and one internationally-supervised district (Brcko). The two Entities have different accounting and auditing regulatory frameworks, and two different capital markets systems, which is not conducive to a business-enabling environment for the country. Enterprises registered in both Entities are required to maintain two sets of accounting records and are subject to different accounting and financial reporting requirements, which significantly add to the cost of doing business in Bosnia and Herzegovina and impede foreign investment and private sector growth. Accounting and auditing are among the critical areas where further enhancements are needed to create a “single economic space” and improve the competitiveness of the economy.
In order to modernize its legal and regulatory framework, Bosnia and Herzegovina seeks to gradually enact legislation that draws upon internationally accepted practices, including IFRS-inspired accounting standards and ISA-based auditing standards, and the relevant portions of the acquis communautaire. Bosnia and Herzegovina has still a significant way to go before it will have enacted the relevant portions of the acquis communautaire. In addition—like EU Member States— Bosnia and Herzegovina must address significant issues in the design and strengthening of suitable institutions to implement and enforce the acquis communautaire principles.
In practice, compliance with accounting requirements is not effectively and consistently enforced due to deficiencies in the three core pillars of the enforcement regime: management, statutory auditors, and regulators. While the Banking Agencies seek to enforce accounting standards in credit institutions, their mandate implies a focus on prudential requirements rather than compliance with accounting standards in general-purpose financial statements. The securities market and insurance regulators aim to, but do not effectively enforce accounting standards in general-purpose financial statements. Among unregulated enterprises, including government business enterprises and large- and medium-size privately held enterprises, enforcement rests on corporate managers and directors, and statutory auditors.
This report shows that managers and auditors do not consistently comply with accounting and auditing requirements, which has an adverse impact on the economy. Corporate managers have to improve their business culture, from one of concealing their enterprise’s financial condition and performance or massaging earnings to reduce taxation, to letting the unvarnished numbers tell the story. The audit profession has to commit to quality, including through continuous professional education, and independence, and discipline auditors behind failed audits.
Pascal Frèrejacque, is a financial reporting specialist at the CFRR. Pascal has led Accounting and Auditing Report on the Observance of Standards and Codes assessments in a number of countries and advises governments on the design and implementation of corporate financial reporting reforms.
He brings to the Bank 18 years of international experience in accounting and auditing in the banking sector, having worked at the IMF and international accounting firms. As a former audit lead manager for large banking groups and having managed corporate finance assignments at Arthur Andersen and Ernst & Young, Pascal has an in-depth understanding of the financial sector. He started his career working for a private consultancy, conducting valuation and M&A due diligences for large corporations.
Pascal holds a post-Master's degree in accounting, finance and business administration and a Master's degree in economics from the University of Paris II. He speaks French and English.