The FYR Macedonia started moving towards a market economy after it declared independence from Yugoslavia in 1991. A wide range of reforms were implemented, including steps towards setting up a national system for corporate financial reporting. The first World Bank report on the observance of standards and codes in accounting and auditing (A&A ROSC) in Macedonia was published in June 2003 and made several suggestions for improving the frameworks for accounting and auditing in Macedonia.
Following this report, Macedonia adopted a Country Action Plan to strengthen corporate financial reporting in 2006 and a project financed by a multi-donor trust-fund to implement the CAP ran from 2007 to the end of 2009. The framework for accounting in Macedonia is set out in the Trade Company Law of 2004, while new a law on auditing was adopted in 2005 (download in English) and then amended in 2008 (download in Macedonian).
Macedonia signed a Stabilization and Association Agreement (SAA) with the EU in 2001 and it came into force on 1 April 2004. The country submitted its application to join the EU in March 2004 and the European Council granted Macedonia the status of candidate to join the EU in December 2005, though the continuing dispute over the country's name has meant that accession negotiations have not yet begun. As a candidate for EU membership, Macedonia is required to align its legal and institutional framework with the EU acquis.
This report on institutional arrangements for the observance of the International Accounting Standards (IAS) and International Standards on Auditing (ISA) in the Former Yugoslav Republic of Macedonia (FYR Macedonia) is based on a review conducted by the World Bank in cooperation with the Ministry of Finance and in-country stakeholders.
The current Trade Company Law requires all entities to comply with a translated 1999 volume of IAS. The Government is currently preparing a new Trade Company Law and has taken proactive steps to update the translation of IAS, which is expected to resolve existing deficiencies.
In practice, compliance with IAS is not effectively enforced. Most of the financial statements reviewed by the ROSC team were of such poor quality as to preclude investors and other users from judging whether a company‚Äôs securities were a sound investment; nor could the documents be relied on for other decisionmaking purposes.
This report recommends that public interest entities be required to use IAS. It also recommends that small- and medium-size enterprises be allowed to use a reporting framework more adapted to their size. This report also recommends strengthening accounting standards enforcement mechanisms in order to enhance compliance with the law and provide investors and other users of financial statements with reliable financial reporting.
In law, FYR Macedonia requires audits to be conducted in accordance with a translated version of the 1999 ISA. This translation has not been updated to reflect the current ISA. In addition, there are serious audit quality issues. These are exacerbated by the absence of an adequate professional organization. Drawing on recent international experience in developed economies and accession countries, this report recommends the establishment of a regime of delegated regulation of the auditing profession, subject to adequate oversight. The Government is currently preparing a new Audit Law that is expected to resolve existing deficiencies and be in conformity with the acquis communautaire (European Union law).
Jan Tyl is a Senior Financial Management Specialist with nearly 20 years of experience in accounting, auditing, consulting and standard-setting. Jan is the technical leader for the Road to Europe Programme of Accounting Reform and Institutional Strengthening, takes a key role inthe Financial Reporting Technical Assistance Program for new EU member countries and works on Reports on the Observance of Standards and Codes.
His specializations include the introduction and implementation of International Financial Reporting Standards, International Standards on Auditing, strengthening of the professional accountancy bodies, and development of professional accounting education. Jan worked on accounting and auditing reform programs in the Czech Republic, Russia, Ukraine, Poland, Slovakia and Kosovo. Jan is a Chartered Accountant (Canada), retired Czech statutory auditor and co-founding member of Society of Certified Accountants and Auditors of Kosovo. Jan holds economics and accounting degrees from the University of Alberta and also studied at the Prague School of Economics. He speaks Czech, English, and intermediate German, Russian, Polish and Slovak.