Slovenia 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 Slovenia was published in October 2004 and made a range of recommendations for improving the Slovenian framework for accounting and auditing and its practical application. An updated A&A ROSC published in May 2014 found that significant reforms had been introduced and that Slovenia met most of its EU membership obligations related to financial reporting and auditing but that the implementation of corporate financial reporting framework and its institutions required further strengthening.
Slovenia has been a member of the European Union since May 2004 and joined the euro zone in January 2007. Its legal and institutional framework for financial reporting is aligned with the EU acquis. However, there is still room for progress in implementing the provisions of the acquis. In particular, there is a need to improve the operation of the system of public oversight and to strengthen the capacity of the auditing profession to implement the provisions of the Statutory Audit Directive. The projects organized under Slovenia's FRTAP program are designed to address these issues.
Slovenia is part of the following programs at the CFRR:
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The World Bank published an updated ROSC Accounting and Auditing report for Slovenia in May 2014. The update found that Slovenia has introduced significant reforms since the first report in 2004 and meets most of its EU membership obligations related to financial reporting and auditing. A reasonably good legislative framework is now in place; provisions to strengthen audit quality have been introduced; and there have been improvements to academic accountancy education. The reform process continues and the update pointed to a need for further attention and capacity strengthening of the regulatory and oversight functions, and for better monitoring and enforcement of legislative provisions and standards. A general lack of confidence in the reliability of financial information was identified, which leads to relatively little demand for high quality general purpose financial statements in Slovenia. The new report recommends simplifying reporting requirements for smaller entities, strengthening governance arrangements, and promoting demand for high quality financial information among the local business community.
This report provides an assessment of accounting, financial reporting, and auditing requirements and practices within the enterprise and financial sectors in Slovenia, using International Financial Reporting Standards (IFRSs); International Standards on Auditing (ISAs); and the relevant portions of European Union (EU) law (also known as the acquis communautaire, as benchmarks. It draws on international experience and good practices in the field of accounting and audit regulation.
In the area of financial reporting and auditing law, Slovenia implemented the Fourth, Seventh, and Eighth EU Company Law Directives, and ISAs. The Company Act requires that all companies, including banks, insurance companies, and listed companies, prepare legal and consolidated financial statements in conformity with Slovenian Accounting Standards. These national standards generally meet the identified needs of users of small- and medium-sized enterprises’ financial statements. However, in order to better meet the expectations and needs of users - especially foreign users - of financial statements prepared by public interest entities (e.g., banks, insurance companies, listed companies), this report recommends that they adopt IFRSs. Clearly, this measure would go a step ahead of the current requirements of the acquis, as this is not yet required by the EU; however, the ROSC team believes that it would be valuable for enhancing the transparency of financial reporting of PIEs.
Slovenian enterprises are subject to statutory audit requirements, which are consistent with the existing acquis requirements. These audit requirements are generally conducive to greater compliance with accounting standards. However, this report strongly recommends that existing arrangements be reassessed in the wake of international corporate accounting scandals and the proposal for a new Eighth EU Company Law Directive, which will require enhanced public oversight of the auditing profession.
As new regulations come into force, priorities are now turning to build the monitoring, supervisory and disciplinary regimes necessary to ensure effective compliance. This assessment demonstrates that the effective enforcement of accounting, auditing and ethical standards is the next challenge that Slovenia has to tackle. This report draws upon recent international experience in developed economies and accession countries, as well as expected amendments to the acquis communautaire and recommends that Slovenia strengthen the enforcement of accounting and auditing standards.
Andrei Busuioc has over 15 years of experience in the accounting and auditing area in both, the private and public sectors, as well as in lecturing accounting and auditing in university. He joined the the World Bank Centre for Financial Reporting Reform (CFRR) in Vienna, Austria, in 2008 and was responsible for various countries’ financial reporting reforms agenda, was part of Accounting and auditing ROSCs teams, and thematic area of audit regulation in Western Balkan countries.
Prior to joining the CFRR, Andrei worked in the World Bank Country Office in Moldova as a Financial Management Specialist, covering fiduciary activities, public finance management development, and corporate financial reporting development. He is an accountant by training, and a member of the UK Association of Chartered Certified Accountants. Andrei holds a university degree in economics from the Moldova State Agricultural University, and a Ph.D. in economics from the Academy of Economic Studies of Moldova. He also holds a postgraduate diploma in public financial management from the Centre for Financial and Management Studies, University of London. He speaks Russian, Romanian, English and basic Bulgarian.