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Kosovo

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Flag of Kosovo

Republic of Kosovo
Republika e Kosovës
Република Косово
Republika Kosovo

Kosovo

Capital (and largest city):
Pristina

Official languages:
Albanian, Serbian

Contact at the CFRR:
Kalina Sukarova
Tel: +43 (0)1 2170-732
ksukarova@worldbank.org

Kosovo

Following the end of the conflict in Kosovo, efforts to develop its economic system started in 1999, when the governance of Kosovo was organized in accordance with United Nations Security Council Resolution 1244.

A law establishing requirements for financial reporting and the licensing of auditors requirements and creating a regulatory/standard setting board in Kosovo (UNMIK 2001/30) was adopted by the provisional institutions of self Government and promulgated by the Special Representative of the Secretary General of the United Nations in 2001.

In 2006 the World Bank conducted a Report on the Observance of Standards and Codes in Accounting and Auditing (A&A ROSC) in Kosovo. This Report contained recommendations on how Kosovo could improve both its framework for financial reporting and auditing and the mechanisms for implementing this framework. In 2007 the European Agency for Reconstruction designed a two year technical assistance project to address a number of the recommendations of the ROSC, mostly aimed at capacity building within the KBSFR and SCAAK (see institutions).

In 2008 Kosovo declared independence and adopted a new constitution and governance structures. It set itself the strategic goal of joining the European Union, and is gradually implementing the EU acquis communautaire. In 2009 Kosovo became a member of the World Bank. A new financial reporting law was passed in July 2011. The new law brings the legal framework in Kosovo closer to that of the acquis but some inconsistencies with the acquis remain. An updated A&A ROSC for Kosovo was published in May 2013 (see ROSC tab below).

Kosovo is part of the following programs at the CFRR:


Background


Economic and Business Background for Kosovo


Doing Business 2013

"Doing Business" Results for Kosovo

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.




Background Economic Indicators

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.











ROSC


Executive Summary of the 2013 A&A ROSC for Kosovo

This report is an update of the 2006 Report on the Observance of Standards and Codes (ROSC) on Accounting and Auditing (A&A) in the Republic of Kosovo (Kosovo). The main objective of the 2006 ROSC was to assist the then-existing Kosovo Provisional Institutions of Self-Government in strengthening A&A practices, in order to support sustained economic growth and improve the competitiveness of local enterprises. For this update, a particular focus was placed on analyzing significant changes in (a) the statutory framework for A&A standards and practices; (b) the A&A profession; (c) the quality of accounting education at the tertiary level; (d) the enforcement of A&A requirements both within the profession and by financial sector regulators; and (e) financial reporting standards in the banking sector. The report also focuses on assessing the degree of alignment of Kosovo's institutional framework for corporate financial reporting with the EU
acquis communautaire. This ROSC A&A Update will also provide inputs to the Financial Sector Assessment Program (FSAP) Update.

The landscape for corporate financial reporting has not changed dramatically since the last ROSC. The most significant change was the passing of a new financial reporting law in July 2011 and an increase in the threshold for statutory audits. Although the new law brings the legal framework closer to the acquis, further changes will be required to achieve full alignment with the acquis. In the financial sector, prudential regulations and supervision have been substantially strengthened. A new Law on Banks, Microfinance Institutions and Non-Bank Financial Institutions (the new Law on Banks) was approved in April 2012. There is still no securities market in Kosovo.Kosovo's accounting and audit profession has developed rapidly over the last few years and the national professional body, SCAAK, became a member body of the International Federation of Accountants (IFAC) in 2010. SCAAK faces significant challenges in meeting its obligations as a member of IFAC, especially in the areas of ethics, quality assurance and discipline. There has been some progress in integrating accounting education in the universities with professional qualifications; however, more effort is needed in this area. On the compliance side, the most significant change since 2006 is the improvement within the banking supervisor. Enforcement of accounting requirements among non-banking entities remains a challenge and there has been little improvement since 2006. The financial reporting regulator, the Kosovo Board for Standards on Financial Reporting (KBSFR), which was never fully functional, was replaced by the Kosovo Financial Reporting Council (KFRC) in 2011. No significant change, however, was made to the operating model of the regulator and, unless this is addressed, there is a distinct possibility that KFRC will follow in the footsteps of KBSFR. Steps have yet to be taken toward establishing a quality assurance system consistent with the EU Statutory Audit Directive.

While all the policy recommendations set out in Section VI of this report are important, there are several overriding themes, which the ROSC team considers to be "critical success factors" for the development of reliable and efficient financial reporting infrastructure, economic growth (including the mobilization of investment capital) and the fight against corruption. These critical success factors are based on four underpinning principles as follows:

  • Clarity of reform objectives – for the alignment with the acquis effort to succeed, it is critical that the gaps are identified and appropriately addressed by amending relevant legislation. The ROSC team has prepared preliminary draft concordance tables to be discussed with the Ministry of Economy and Finance (MEF);
  • Effective implementation – amending the legislation will not resolve the challenges in itself. The legislation needs to be implemented and enforced and an official should be designated to oversee and coordinate the reform process;
  • Institutional capacity – institutions designed to supervise and enforce compliance with the law need to be adequately staffed and technically competent. "Competence" in this context includes the ability to understand and interpret the relevant international standards and regulations applicable in Kosovo.
  • Alliances – where capacity needs to be strengthened, stakeholders need to work together in order to achieve the desired results.

Based on these principles, the team has identified a set of short- and medium-term priority actions. In order to successfully address them, an action plan containing the next steps would be very helpful. Regional REPARIS provides one platform, where such a plan could be formulated and discussed, drawing on the experiences of other countries in the region, including Croatia (which has achieved alignment with the acquis in this area).

A key long-term goal for Kosovo is to have a robust and effective audit quality assurance and disciplinary and sanctions systems in place. As an IFAC member, SCAAK should play a leading role in this, in collaboration with the KFRC.

Institutions


Institutions of Interest in Kosovo

Society of Certified Accountants and Auditors in Kosovo (SCAAK)

The Society of Certified Accountants and Auditors in Kosovo (SCAAK) was formed in 2001 with the aim of capacity building and developing the profession of accountants and auditors in Kosovo. SCAAK became an Associate Member of the International Federation of Accountants (IFAC) in 2003, and, with the support of the donor community including the World Bank, has developed a professional education program for accountants and auditors. SCAAK has received delegated authority from the KBSFR to set and implement the education standards for licensed auditor candidates. Between 2007 and 2009, SCAAK adopted a new strategic plan which aimed at upgrading its professional education program to meet the professional education requirements for statutory auditors under the EU's Statutory Audit Directive, and to implement the IFAC Statements of Membership Obligations. SCAAK became a full member of the International Federation of Accountants in 2009.


Kosovo Financial Reporting Council (KFRC)

The KFRC replaced the Kosovo Board for Standards for Financial Reporting (KBSFR) in 2011. Under the 2011 law on financial reporting, the KFRC is a super-regulator responsible for setting standards and enforcing compliance in accounting, auditing, ethics and professional audit education.

Contact


Kalina Sukarova

Kalina SukarovaKalina Sukarova is a Senior Financial Management Specialist with 15 years of experience in accounting and auditing. Kalina is responsible for assisting governments of several Western Balkan countries’ with their financial reporting reform trough the Road to Europe Programme of Accounting Reform and Institutional Strengthening and works on Reports on the Observance of Standards and Codes.

Prior to joining the CFRR, Kalina was an Executive Director with International Consulting Firm. She is a Fellow member of the Association of Chartered Certified Accountants (ACCA), Member of the Kosovo Society of Accountants and Auditors and holds a university degree in economics from the Macedonia State University. She also holds a postgraduate diploma in Economics from the Macedonian State University. She speaks Macedonian, Serbian, Croatian and English.



Kosovo Country Office

For information on other World Bank activities in Kosovo contact the World Bank Country office:




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