LAWON AUDITING("Off. Herald of the RS", No. 73/2019) |
Article 1
This Law shall regulate the conditions for and method of performing audits of financial statements, mandatory character of the audits, professional qualifications of persons and licences for performing audits, control of the quality of work of the audit firms, independent auditors and licensed certified auditors, granting and revocation of work permits to audit firms and independent auditors, audit supervision, the Chamber of Certified Auditors (hereinafter: the Chamber) and supervision of its work, international cooperation with competent bodies in the field of supervision, as well as other issues related to auditing.
Article 2
Individual notions, within the meaning of this Law, shall have the following meanings:
1) Audit of financial statements (hereinafter referred to as: audit) shall be the procedure of review and assessment of financial statements, as well as data and methods applied in the preparation of financial statements on the basis of which an independent expert opinion is provided on whether the financial statements in all materially significant respects give a true and fair account of the financial position and results of operations of a legal person in accordance with the appropriate regulations for the preparation of financial statements;
2) An auditee shall be a legal person and/or a sole trader, within the meaning of the law regulating accounting, whose financial statements are subject to statutory audit, in compliance with this Law;
3) A statutory audit shall refer to an audit of the regular annual and consolidated financial statements, prepared in accordance with the law regulating accounting and which is mandatory under this Law, as well as of the auditees for which the audit is not mandatory in compliance with this Law, but is performed on a voluntary basis;
4) An audit firm shall be a company having its seat in the Republic of Serbia, which is established in accordance with the law regulating companies and which holds a valid permit to carry out audits in accordance with this Law;
5) An audit firm from a Member State shall be a legal person, irrespective of the legal form thereof, which holds a permit of the competent authority from the Member State of the European Union (hereinafter referred to as: the Member State) to carry out statutory audits;
6) A third-country audit firm shall be a legal person, irrespective of the legal form thereof, which holds the permit of the competent third-country authority to carry out statutory audits, other than a legal person registered as audit firm in any Member State on the basis of a valid permit to carry out statutory audits issued in a Member State;
7) A certified auditor shall be a natural person that has passed the examination for acquiring the title of certified auditor in accordance with this Law, but that does not hold a valid license to carry out audits;
8) A licensed certified auditor shall be a natural person that has passed the examination for acquiring the title of certified auditor in accordance with this Law and that holds a valid license to carry out audits;
9) An independent auditor shall be a licensed certified auditor that, in compliance with this Law, holds a valid permit to carry out audits as a sole trader;
10) An auditor from a Member State shall be a natural person that holds a valid document of the competent authority from a Member State to carry out statutory audits;
11) A third-country auditor shall be a natural person that holds a valid document of the competent third-country authority for carrying out of statutory audits, excluding the nationals of the Republic of Serbia who acquired the said document in the former members of the SFRY that are not members of the European Union, other than a natural person registered for carrying out of statutory audits in any Member State on the basis of a valid document for carrying out audits;
12) A group auditor shall be an audit firm that carries out statutory audits of consolidated financial statements;
13) Network refers to an organization that:
(1) Aims to facilitate mutual cooperation and incorporates audit firms, i.e. independent auditors, and
(2) Aims to distribute profit or costs, or has common ownership, control or management, common policy and auditing quality control procedures, common business strategy, uses a common name or a significant part of professional resources;
14) An audit firm connected to an audit firm from a Member State shall be an audit firm that is connected to an audit firm from a Member State by means of common ownership, control or management;
15) An audit report shall be a report on performed audit that is issued by an audit firm i.e. an independent auditor in compliance with this Law and International Standards on Auditing;
16) Competent authorities shall be the authorized authorities or bodies of the Member States and of the third countries that are in charge of the regulation and/or oversight of audit and/or of the oversight of auditors and audit firms, as well as of cooperation with the competent authorities of other countries in the field of auditing;
17) International Standards on Auditing and International Standard on Quality Control (hereinafter referred to as: ISA) are the International Standards on Auditing (ISA) and the International Standard on Quality Control (ISQC) and related opinions and standards that are published by the International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC), amendments to these standards, as well as future standards issued or accepted by this body, the translation of which was determined and published by the ministry in charge of finance (hereinafter referred to as: the Ministry);
18) International Financial Reporting Standards (hereinafter referred to as: IFRS) are the International Financial Reporting Standards (IFRS) and the International Financial Reporting Standard for Small and Medium-Sized Entities (IFRS for SMEs) that are defined in more detail by the law regulating accounting;
19) Code of Professional Ethics of Auditors is the act that the Chamber passes on the basis of the Code of Ethics for Professional Accountants of the International Federation of Accountants (IFAC Code of Ethics for Professional Accountants), while the Chamber may also pass a decision on direct application of the Code of Ethics for Professional Accountants of the International Federation of Accountants;
20) International Education Standards are the International Education Standards for Professional Accountants (International Education Standards - IES) adopted by the International Federation of Accountants;
21) Professional scepticism is an attitude that includes critical thinking, the capacity to recognize circumstances that may indicate possible misstatement of facts due to error or fraud and a critical assessment of audit evidence;
22) Public-interest companies shall be considered to be:
(1) Large legal persons classified in compliance with the law regulating accounting;
(2) Legal persons that are considered to be public companies in compliance with the law regulating the capital market;
(3) All legal persons, irrespective of their size, which are declared to be the legal persons of public interest for the Republic of Serbia by the Government, at the proposal of the competent Ministry;
23) A non-practitioner shall be a natural person, who during the membership in the body performing public oversight tasks of auditing and at least three year prior to membership in such body, has not carried out audits, has not held voting rights in an audit firm, has not served as a director i.e. a member of a management or supervisory body of an audit firm and has not been employed by an audit firm or has not been otherwise associated with an audit firm;
24) A key audit partner shall be:
(1) A licensed certified auditor that an audit firm, i.e. an independent auditor designates for a particular audit engagement as the primary and responsible person for carrying out the statutory audit on behalf of the audit firm, i.e. on behalf of an independent auditor;
(2) In the case of a group audit - a licensed certified auditor designated by an audit firm as the primary and responsible person for carrying out the statutory audit at the level of the group and who signs the group audit report,
(3) A licensed certified auditor who signs the audit report;
25) A third country shall mean a state that is not a Member State of the European Union;
26) Related persons shall mean the related persons within the meaning of the law regulating companies;
27) A branch of an audit firm shall be an organizational unit of an audit firm without the capacity of a legal person;
28) A certified internal auditor shall be a natural person with an adequate professional title acquired in compliance with this Law;
29) Securities Commission (hereinafter referred to as: the Commission) shall be an authority that is carrying out public oversight over auditing and quality control of the work of audit firms, independent auditors and licensed certified auditors in compliance with this Law;
30) A medium-sized legal person shall be a legal person that is classified as a medium-sized legal person in compliance with the law regulating accounting;
31) A small legal person shall be the legal person that has been classified as a small legal person in compliance with the law regulating accounting;
32) A home Member State shall be the Member State that has issued the permit for carrying out audits to the audit firm or auditor in question;
33) A host Member State shall be a Member State in which the auditor that holds a valid document of the competent authority of his home Member State for carrying out statutory audits applies to be issued a document for carrying out statutory audits, or a Member State in which the audit firm holding a permit for carrying out statutory audits of its home Member State applies for registration or has already been registered for carrying out statutory audits.
Determining and Publication of ISA Translations
Article 3
The translations of the ISA shall be determined by means of a decision by the Ministry.
The decision referred to in paragraph 1 of this Article, determining also the initial date of ISA application, in conjunction with the translation of ISA text, shall be published by the Ministry in the "Official Herald of the Republic of Serbia" and on the web site of the Ministry.
Persons that Can Perform Audits
Article 4
Audits can be performed by:
1) The audit firm referred to in Article 2, item 4) of this Law that employs at least one licensed certified auditor with full working hours and that meets other conditions determined by this Law;
2) An audit firm from a Member State that has been issued a permit to carry out audits in compliance with this Law i.e. that has been registered for carrying out audits within the meaning of this Law;
3) A third-country audit firm that has been issued a permit for carrying out audits in compliance with this Law;
4) An independent auditor referred to in Article 2, item 9) of this Law;
5) An auditor from a Member State who holds a valid license and a permit for carrying out audits, which were issued by the competent authority in the Republic of Serbia, and who has been registered as an independent auditor in compliance with this Law;
6) A third-country auditor who holds a valid licence and a permit for carrying out audits, which are issued by the competent authority in the Republic of Serbia, and who is registered as an independent auditor in compliance with this Law;
The audit firms referred to in paragraph 1 of this Article shall carry out audits through the licensed certified auditors.
Unfitness to Carry out Audits, Acquire Licences and perform other Tasks in the Field of Auditing
Article 5
A person that has been finally convicted to imprisonment sentence for criminal offences in the Republic of Serbia or a foreign state may not perform audits, acquire licences and titles in compliance with this Law or carry out other tasks in the field of auditing, determined by this Law.
Conditions for Issuing an Auditing Licence
Article 6
The licence for carrying out audits (hereinafter referred to as: licence) shall be a public document which shall be, in compliance with this Law, issued by the Ministry.
The licence shall be issued to a person that fulfils the following conditions:
1) Passed examination for the title of certified auditor;
2) Acquired higher education degree after completing the second degree studies in compliance with the law regulating higher education, i.e. after completing the undergraduate studies of the duration of four years at the minimum;
3) Has at least three years of practical professional experience in carrying out statutory audits, of which two years at the minimum under the supervision of a licensed certified auditor. The practical professional experience in statutory audits shall be considered to be professional experience, for an unspecified or for a specified period of time, acquired through employment with an audit firm i.e. with an independent auditor on statutory audit tasks;
4) No ban on issuing of a new licence has been imposed, in compliance with this Law, in the case that his licence has been previously revoked - until the expiry of the period for which the ban on the issuance of a new licence has been imposed;
5) Has not been finally convicted of criminal offences, within the meaning of Article 5 of this Law.
The licence referred to in paragraph 1 of this Article can be issued to an auditor from a Member State who holds a valid document of the competent authority from a Member State to carry out statutory audits, which corresponds in terms of its contents to the licence (a licence, certificate, etc.) and complies with the conditions referred to in paragraph 2, items 2) trough 5) of this Article.
The licence referred to in paragraph 1 of this Article can be issued, under conditions of reciprocity, to a third-country auditor who holds a valid document of the competent third-country authority for carrying out of statutory audits, which corresponds in terms of its contents to the licence (a licence, certificate, etc.) and complies with the conditions referred to in paragraph 2, items 2) through 5) of this Article.
To obtain the licence, an auditor from a Member State i.e. a third-country auditor shall pass a supplementary examination in the knowledge of regulations of the Republic of Serbia in the fields referred to in Article 9, paragraph 4, item 1) of this Law, and which are covered by the Chamber programme referred to in paragraph 5 of that Article.
Issuance, Renewal and Revocation of Licence
Article 7
An application for licence issuing shall be submitted to the Ministry.
The following shall be enclosed with the application for licence issuing:
1) A certificate of the passed examination for the title of certified auditor;
2) Proof of educational attainment referred to in Article 6, paragraph 2, item 2) of this Law;
3) Proof of professional experience referred to in Article 6, paragraph 2, item 3) of this Law;
4) A certificate of the competent authority of non-conviction referred to in Article 6, paragraph 2, item 5) of this Law.
The Ministry shall pass a decision on the application for licence issuing, whereby the licence shall be issued or the application for licence issuing shall be denied.
The decision referred to in paragraph 3 of this Article shall be final. An administrative dispute can be initiated against the decision.
A licence shall be issued for a period of three years and shall be renewed at the request of the licensed certified auditor, with proof of having completed continuous professional development, in compliance with this Law.
The application for licence renewal can be submitted three months prior to the expiry of the validity term of the licence at the earliest.
If the application for licence renewal is submitted after the expiry of the validity term of the license, it shall be considered that an application for issuing of a new licence has been submitted.
If a licensed certified auditor does not complete continuous professional development in compliance with Article 11 of this Law, i.e. does not submit an application for licence renewal, the licence shall cease to be valid upon the expiry of three years from the date of issuance.
When submitting an application for license renewal, the candidate must fulfil the conditions referred to in Article 6, paragraph 2, items 4) and 5) of this Law and submit proof of having completed continuous professional development in compliance with this Law.
The Ministry shall decide on the application for licence renewal, by means of mutatis mutandis application of paragraphs 3 and 4 of this Article.
The licence may be revoked or repealed in the cases, in the manner and by following the procedure determined by this Law.
The decision on revocation of licence shall additionally set forth the period of time during which the person whose licence has been revoked may not be issued with a new licence, which may not be longer than five years from the date of passing of such decision.
The Ministry shall, ex officio, without delay, deliver to the Chamber a copy of the decision on issuing i.e. renewal of the licence for the purpose of entering thereof into the relevant Register.
The Commission shall, ex officio, without delay deliver to the Chamber a copy of the decision on revocation of a licence for carrying out audits for the purpose of entering thereof into the relevant Register.
The Chamber shall, ex officio, without delay, enter the decision on revocation of a licence into the relevant Register.
In the case of revocation of licence from the certified auditors of the Member States, the Commission shall, ex officio, deliver the information on the licence revocation procedure conducted to the relevant competent authorities of the Member States.
By way of exception from paragraph 2 of this Article, a certified auditor who has failed to submit an application for licence renewal in a timely manner i.e. whose licence has been revoked or repealed by means of a decision, shall, on the occasion of submitting an application for licence issuing, additionally enclose proof of completed continuous professional development, in compliance with this Law.
In the decision making procedure, provisions of the law regulating the general administrative proceeding shall be applied, except where regulated otherwise by this Law.
The Ministry shall ex officio acquire proofs referred to in paragraph 2, items 1) and 4) of this Article, in compliance with the law, except where the applicant has explicitly stated that he shall submit such proof himself.
Article 8
The Ministry shall repeal a decision on licence issuance:
1) Upon a personal request of the licensed certified auditor;
2) In the case of a loss of legal capacity.
The decision on licence issuance may not be repealed at the personal request of a licensed certified auditor where the procedure of control over such licensed certified auditor has been initiated, until its completion.
The decision referred to in paragraph 1 of this Article shall be final. An administrative dispute can be initiated against the decision.
When the decision on licence repealing becomes enforceable, the Ministry shall deliver a copy of the decision to the Commission and to the Chamber as well, for the purpose of recording thereof in the Register of licensed certified auditors.
In the decision making procedure, provisions of the law regulating the general administrative proceeding shall be applied, except where regulated otherwise by this Law.
Examination for Acquiring the Title of Certified Auditor
Article 9
The examination for acquiring the title of certified auditor shall be taken in the Chamber, in compliance with this Law.
The examination for acquiring the title of certified auditor shall include the required level of theoretical knowledge of the subjects of relevance for the statutory audit and the capacity to apply such knowledge in practice.
The examination for acquiring the title of certified auditor referred to in paragraph 2 of this Article shall cover the following areas in their entirety:
1) General theory and principles of accounting;
2) The legal framework concerning the preparation of annual and consolidated financial statements;
3) IFRS;
4) Financial analysis;
5) Managerial accounting;
6) Risk management and internal control;
7) Auditing and professional skills;
8) ISA;
9) Professional ethics and independence.
The examination for acquiring the title of certified auditor referred to in paragraph 2 of this Article shall additionally cover the following areas in the part thereof of relevance for the statutory audit:
1) Knowledge of regulations of the Republic of Serbia, and specifically:
(1) The company law and corporate governance,
(2) The law of contract and torts,
(3) The regulations governing domestic and international payment operations and transfers of capital,
(4) The regulations governing the capital and securities’ market,
(5) Bankruptcy and liquidation,
(6) The tax system,
(7) The civil and commercial law, as well as regulations governing the operation of banks, insurance companies and other financial institutions,
(8) The labour law;
2) Information technology and computer systems;
3) Microeconomics, general and financial economics;
4) Financial mathematics and statistics;
5) Basic principles of financial management of companies.
The examination for acquiring the title of certified auditor shall be taken according to the programme passed by the Chamber in compliance with this Law, and which shall cover the areas referred to in paragraphs 3 and 4 of this Article, with the acquired prior opinion of the Commission and the Ministry.
Exemption from the Theoretical Part of Examination - Exceptions
Article 10
A person that holds a university degree in compliance with Article 6, paragraph 2, item 2) of this Law i.e. a certificate from a professional body that is a member of the International Federation of Accountants, whereby proving that he has passed one or more subjects determined in the program referred to in Article 9, paragraph 5 of this Law, may be exempted from taking the theoretical examination i.e. a part of the examination.
The more detailed conditions and the procedure for exemption from examination taking i.e. taking a part of examination referred to in paragraph 1 of this Article shall be prescribed by the Chamber, with the priorly acquired opinion of the Commission and the consent from the Ministry.
Continuous Professional Development
Article 11
A licensed certified auditor shall continuously pursue professional development in order to maintain and improve the theoretical knowledge, professional skills and professional values in accordance with the requirements of the International Education Standards.
The programme of continuous professional development referred to in paragraph 1 of this Article shall be passed by the Chamber, in compliance with this Law.
In addition to the Chamber, the training aimed at providing continuous professional development may, upon prior acquiring consent from the Commission, be organized by:
1) The institutions of higher education;
2) The professional bodies i.e. organizations, as well as other legal persons with adequate technical, organizational and administrative capacities so as to ensure the quality of training that is in line with the programme of continuous professional development referred to in paragraph 2 of this Article;
3) The audit firms with the adequate technical, organizational and administrative capacities to organize the training.
Upon completion of each of the individual trainings, related to continuous professional development, a certificate shall be issued to the licensed certified auditor. The licensed certified auditor shall keep the certificates for three years at the minimum.
The certificate referred to in paragraph 4 of this Article shall include the name of the areas that have been the subject matters of the training, as well as number of hours of training duration.
II AUDIT FIRM AND INDEPENDENT AUDITOR
Conditions in Respect Of Participation in Capital and the Composition of Management Bodies
Article 12
Auditing may be performed by audit firms in which:
1) The majority of voting rights is held by the audit firms i.e. by the licensed certified auditors or audit firms from the Member States, i.e. the auditors from the Member States;
2) The majority, but no more than three quarters of members of the management body must comprise of the licensed certified auditors or audit firms, i.e. of the auditors or audit firms from the Member States.
If the management body referred to in paragraph 1, item 2) of this Article is comprised of two members, one of them must be a licensed certified auditor or an audit firm, i.e. a Member State auditor or a Member State audit firm.
If the management body referred to in paragraph 1, item 2) of this Article is comprised of one member, he must be a licensed certified auditor or an audit firm, i.e. a Member State auditor or a Member State audit firm.
Incorporation and Management Body of the Firm
Article 13
An audit firm shall be incorporated in compliance with the law regulating companies, except where regulated otherwise by this Law.
The founder, i.e. the beneficial owner of the audit firm may not be a legal person that has been convicted by means of a final judgement of the criminal offences within the meaning of the law regulating liability of the legal persons for criminal offences, or a natural person that has been finally convicted within the meaning of Article 5 of this Law.
The management body of an audit firm may have one or more members.
At least one member of the management body of an audit firm must speak the Serbian language actively.
A person finally convicted of the criminal offences within the meaning of Article 5 of this Law may not be appointed member of the management body of an audit firm.
The licensed certified auditors who are members of the management body of an audit firm must be employed with the audit firm with full working hours and represent the audit firm without limitations.
The persons who are not members of the management body of an audit firm and who are authorized to represent the audit firm must be licensed certified auditors.
Article 14
The permit to carry out audits, on the basis of which an audit firm i.e. an independent auditor is registered for carrying out audits, shall be issued by the Ministry by means of a decision.
The Ministry shall, ex officio, without delay deliver to the Chamber a copy of the decision referred to in paragraph 1 of this Article for the purpose of entry into the relevant Register.
A legal person that does not hold a permit to carry out the audit tasks in compliance with this Law may not use the name "revizija" or "Audit" or any derivative of these words in carrying out of the business activity.
The permit for carrying out audits can be revoked, in compliance with this Law.
The decision on revocation of permit shall also set forth the period of time during which the audit firm whose permit has been revoked may not be issued a new permit, and which may not be longer than five years from the date of passing of such decision.
In the case of revocation of a Member State audit firm’s permit for work, the Commission shall ex officio and without delay communicate such fact and the reasons for revocation of the permit to the relevant competent authorities of the home Member State in which such audit firm is registered.
Application for Issuance of Permit to Carry Out Audits
Article 15
An application for issuance of a permit to carry out audits shall be submitted by the founder of the audit firm, i.e. by the independent auditor to the Ministry, following the incorporation and entry in the relevant Register which is maintained with the Business Registers Agency.
Enclosed with the application referred to in paragraph 1 of this Article, the following shall be submitted:
1) The Articles of Association or the Memorandum of Association of the audit firm i.e. of the independent auditor in compliance with the law regulating companies;
2) Proof of compliance with the conditions referred to in Articles 6, 12 and 13 of this Law, as well as in paragraph 6 of this Article;
3) A copy of the identity card, i.e. of the passport, if the founder is a natural person, i.e. an excerpt from the relevant register, if the founder is a legal person;
4) For founders that are audit firms from the Member States, i.e. for third countries’ audit firms, an opinion of a competent authority (an institute, chamber, association, etc.), which shall include:
(1) The contents of the regulations of the Member State, i.e. of the third country which are regulating the conditions for carrying out audits and the quality assurance of auditing,
(2) The statement of the competent authority confirming that the Member State audit firm or the third-country audit firm has the right to carry out audits or that there are possible limitations in carrying out of audits,
(3) The statement of the competent authority confirming that the Ministry shall notify of all quality assurance measures imposed on the Member State audit firm, i.e. on the third-country audit firm;
5) The list of persons that are connected with the founders with the description of the manner of connection;
6) Data on licensed certified auditors that will carry out audits with proof of employment for an indefinite period of time with full working hours;
7) Proof of insurance from liability and of payment of insurance premium;
8) A bylaw regulating the methodology of carrying out audits, upon prior acquiring of an opinion from the Chamber;
9) A bylaw on the preservation of audit documentation;
10) A bylaw on business confidentiality.
The permit to carry out audits may not be issued to a company whose permit has been revoked unconditionally, during the term of the prohibition referred to in Article 14, paragraph 5 of this Law.
During the validity term of the prohibition referred to in paragraph 3 of this Article, no permit to carry out audits shall be issued to an audit firm whose founder was also the founder of the audit firm whose permit has been revoked within the meaning of Article 14, paragraph 5 of this Law.
The permit to carry out audits shall neither be issued to an audit firm whose founder or the person connected with the founder was the founder or the person connected with the founder of the audit firm whose permit has been revoked, during the validity term of the prohibition referred to in paragraph 3 of this Article.
The Ministry may refuse the application referred to in paragraph 1 of this Article if it determines that the associates of the applicant referred to in this Article, i.e. of the beneficial owner or a member of the management body of the entity referred to in Article 4 of this Law were finally convicted of the criminal offences within the meaning of Article 5 of this Law.
The associate referred to in paragraph 6 of this Article shall be considered to be:
1) Each natural person that holds a managerial position with the company in which the founder, the owner or a member of the management body in the entity referred to in Article 4 of this Law holds a managerial position or is the beneficial owner of such entity;
2) Each natural person that is the beneficial owner of the company in which the founder, the owner or a member of the management body in the entity referred to in Article 4 of this Law holds a managerial position;
3) Each natural person that with the founder, owner and the member of the management body of the entity referred to in Article 4 of this Law has beneficial ownership over the same legal person.
A natural person cannot be a founder, i.e. the beneficial owner or a member of the management body of an audit firm if such natural person has seriously breached or repeated a breach of a regulation governing the prevention of money laundering and financing of terrorism during the period of validity of the imposed preventive measure of prohibition of carrying out certain activities that represent the predominant activity of the audit firm or during validity period of the preventive measure of prohibition for the responsible person to carry out certain tasks that constitute the predominant activity of the audit firm, i.e. during the period of validity of the imposed preventive measure of prohibition for the responsible person to carry out certain duties that represent the predominant duties of the audit firm.
The member of the management body referred to in Article 13, paragraph 3 of this Law shall denote the general manager, executive manager i.e. the member of the management or supervisory board within the meaning of the law regulating companies.
A legal person that is submitting an application for permit issuance must prove the identity of the beneficial owner of such legal person, in the manner and within the meaning of the law regulating the central records of beneficial owners.
If due to some duly justified reasons proof of non-conviction referred to in paragraph 6 of this Article cannot be acquired, the persons referred to in paragraphs 1 and 7 of this Article may deliver a statement made under penalty of perjury that they have not been convicted. The Ministry may at any moment request that the persons referred to in paragraphs 1 and 7 of this Article provide proof of non-conviction or may request such proof directly from the competent authority.
The Ministry may, for the purpose of reviewing compliance with the prescribed conditions for issuing of a permit to carry out audit, at any moment acquire data on conviction, i.e. non-conviction of the persons referred to in paragraphs 1 and 7 of this Article and their associates in relation to whom the compliance with such conditions is to be reviewed from the criminal records maintained in compliance with the law.
The Ministry shall ex officio, in compliance with the law, acquire proofs referred to in paragraph 2, items 1) through 3) if the founder is a legal person that is registered in compliance with the law regulating companies and referred to in item 6) of this Article, except where the applicant has explicitly stated that he shall submit such proof himself.
Reaching Decision on Application
Article 16
The Ministry shall pass a decision on the application for permit issuance referred to in Article 15 of this Law, whereby the permit shall be issued or the application for issuance thereof shall be refused.
The decision referred to in paragraph 1 of this Article shall be final. An administrative dispute can be initiated against the decision.
In the decision making procedure, provisions of the law regulating the general administrative procedure shall be applied, unless where regulated otherwise by this Law.
Article 17
An independent auditor as a sole trader may simultaneously hold only one permit for carrying out audits.
An independent auditor referred to in paragraph 1 of this Article cannot perform activities other than auditing and the tasks referred to in Article 43 of this Law; he can neither be a founder of an audit firm or another company.
An independent auditor may not be employed by another employer, may not have other registered independent activities or the status of a legal representative, general manager, member or chairman of a supervisory board and executive board of a legal person i.e. a legal person connected with a legal person which is being audited, a member or chairman of the management board and executive board of a bank, representative of state capital, bankruptcy receiver, procurator and person whose employment contract includes a non-competition clause.
An independent auditor may not carry out statutory audits of public-interest companies.
An independent auditor may not carry out audits of consolidated financial statements.
Mutatis Mutandis Application of the Law to Independent Auditors
Article 18
Provisions of this Law relating to audit firms shall additionally apply to an independent auditor, unless where regulated otherwise by this Law.
Article 19
The Ministry shall repeal a decision on permit issuance where the founder has passed a decision on termination of financial statements’ auditing activity, as well as in cases of termination of a company, i.e. sole trader in compliance with the law regulating companies.
The decision on permit issuance may not be repealed within the meaning of paragraph 1 of this Article if a control procedure of such auditing firm i.e. independent auditor has been initiated, until its completion.
The decision referred to in paragraph 1 of this Article shall be final. An administrative dispute can be initiated against the decision.
When the decision on repealing of a permit has become enforceable, the Ministry shall deliver a copy of the decision to the audit firm, i.e. to the independent auditor, to the Commission, to the Chamber and to the Business Registers Agency.
In the decision making procedure, provisions of the law regulating general administrative procedure shall be applied, unless where regulated otherwise by this Law.
Internal Organisation of Audit Firms
Article 20
An audit firm shall comply with the following requirements in respect of organisation:
1) It must determine adequate policies and procedures in order to ensure that the owners or shareholders of the audit firm, as well as the general manager, i.e. the management and supervisory bodies of such firm, are not involved in carrying out of statutory audits in any manner whatsoever that is jeopardizing independence and objectivity of the licensed certified auditor who is carrying out statutory audit on behalf of the audit firm;
2) It must have reliable administrative and accounting procedures, mechanisms of internal quality control, efficient risk assessment procedures and efficient control and protection mechanisms relating to the information processing systems. The internal quality control mechanisms must be designed in such a manner as to ensure compliance with the decisions and procedures on all the levels in such audit firm;
3) It must establish adequate policies and procedures which shall ensure that its employees and all other natural persons whose services are placed at its disposal or under its control and who are directly involved in statutory audit activities, possess adequate knowledge and experience for carrying out duties entrusted to them;
4) It must establish adequate policies and procedures ensuring that hiring of experts in specific fields within the meaning of Article 35 of this Law is not carried out in a manner that will impair the quality of internal quality control with the audit firm and the ability of competent bodies to perform supervision of operation of the audit firm in respect of compliance with the obligations prescribed by this Law;
5) It must establish adequate and efficient organisational and business procedures with the aim of preventing, determining, removing or managing and disclosing of any threats to its independence as stated in Articles 44 through 48 and Articles 50 through 52 of this Law;
6) It must establish adequate policies and procedures for carrying out statutory audits, employee training, supervision and control of their activities and organisation of structure of working documentation as stated in Article 37 of this Law;
7) It must establish an internal quality control system in order to ensure quality of statutory audits. The quality control system must cover, at the minimum, the policies and procedures described in item 6) of this Article. In the case of an audit firm, the responsibility for the internal system of quality control shall lie with the person possessing qualifications of a licensed certified auditor;
8) It must use adequate systems, resources and procedures in order to ensure continuity and regularity in carrying out of its activities in statutory auditing;
9) It must establish adequate and efficient organisational procedures for resolution and recording of incidents that have or may have serious consequences for the integrity of the firm’s activities in carrying out statutory audits;
10) It must adopt adequate policies relating to remunerations for work, including policies for distribution of profit, which envisage sufficient incentives for work for the employees to ensure quality of audits. The amount of income that the audit firm earns from provision on non-audit services to an auditee shall not be an integral part of the review of work and remuneration for work of the person participating therein or having potential to impact carrying out of the audit;
11) It must monitor and review adequacy and effectiveness of its internal quality control systems and arrangements established in compliance with this Law and it take adequate measures with the aim of removing any deficiencies. In addition to that, it shall carry out annual review of internal quality control systems referred to in item 7) of this Article and maintain records on the results of such reviews and on measures proposed to modify the internal quality control system;
12) It must establish adequate and efficient organisational and business procedures for reporting any breaches of the provisions of this Law and ISA, by the employees with the audit firm;
13) It must establish the policies, controls and procedures for prevention of money laundering and financing of terrorism.
Engagement of external associates for the audit functions referred to in paragraph 1, item 4) of this Article shall be without prejudice to the accountability of the audit firm towards the auditee.
The audit firm shall take into consideration the scope and the complexity of its own activities in fulfilment of requests prescribed in paragraph 1 of this Article.
The audit firm must be able to prove to the competent body that the policies and procedures established with the aim of complying with the requests are appropriate for the scope and complexity of the activity of such firm.
Organisation of Work on Statutory Audits
Article 21
Statutory audits shall be carried out by an audit firm.
An audit firm shall appoint at least one key audit partner.
The audit firm shall provide for the key audit partner sufficient resources and personnel possessing the necessary competences and capacities for adequate carrying out of their duties.
When an audit firm selects a key audit partner or partners for the purpose of appointment, the main selection criteria must be the need to ensure quality of audit, independence and competency.
The key audit partner shall actively participate in carrying out of statutory audits.
When carrying out of a statutory audit, the key audit partner shall dedicate sufficient time to the statutory audit and allocate sufficient resources that will enable him to carry out his tasks in compliance with this Law.
The audit firm shall maintain records on each breach of the provisions of this Law, on the occurrence of any consequences of such behaviour and on the measures taken with the aim of removing such consequences and repairing the internal quality control system.
The audit firm shall prepare an annual report which includes an overview of the measures taken and to forward such report to the employees.
When an audit firm requests advice from external experts, it shall document the requests addressed and advice provided.
The audit firm shall maintain records on each client that include the following data:
1) Name, address and place of business;
2) Names of key audit partners;
3) Remunerations collected for statutory audit;
4) Fees collected for other services in each financial year.
The audit firm shall open an audit file for each statutory audit, which covers the working documentation within the meaning of Article 37 of this Law and at the minimum provide data in compliance with Article 52 of this Law.
The audit file shall be closed within 60 days from the date of signing of the audit report referred to in Article 39 of this Law.
The audit firm shall maintain records on any written complaints on carrying out of statutory audits.
Article 22
The audit firm shall conclude an insurance contract against liability for damage caused to the users of audit reports due to errors or omissions in carrying out of the auditor’s professional activity.
The obligation to conclude an insurance contract against liability referred to in paragraph 1 of this Article must be fulfilled a day before the commencement of audit of financial statements, at the latest.
The amount of the lowest insurance sum based on which the insurance premium is paid for individual insured case for each financial year shall be determined as the higher amount than the following amounts:
1) Then the highest price of audit services under a single audit contract concluded in the previous year multiplied by 15;
2) Then the sum of prices of audit services based on all audit contracts concluded in the previous year, multiplied by 2.5.
The individual insurance case referred to in paragraph 3 of this Article shall be understood to mean the damage caused in relation to a particular audit report issued.
Article 23
An audit firm that employs only one licensed certified auditor, i.e. an independent auditor, shall conclude a cooperation agreement with another audit firm or an independent auditor in which they shall stipulate that in the event that the licensed certified auditor employed by the audit firm, i.e. the independent auditor are not able to fulfil obligations arising from an audit contract due to inability for work, such tasks shall be fulfilled by the contracted audit firm, i.e. independent auditor, in accordance with this Law.
The audit firm shall deliver to a copy of the cooperation agreement to the Commission.
An audit firm i.e. an independent auditor shall provide and specify in detail, in the audit contract that is concluded with the auditee where audit will take place, for the possibility of fulfilling the contractual obligation from the audit contract in accordance with paragraph 1 of this Article.
Article 24
The audit firm carrying out audits of public-interest companies within the meaning of this Law shall, within four months from the expiry of the calendar year, publish on its web site and on the web site of the Chamber the annual transparency report, which must be available on the web site for five years from the publication date thereof at the minimum.
The audit firm may amend the annual transparency report and publish it enclosed with the report that is amended, with an indication that it is an amendment to such report and shall notify the Commission and the Chamber thereof.
The annual transparency report shall at least include the following:
1) A description of the legal form and ownership structure of the audit firm;
2) If the audit firm is a member of a network:
(1) A description of the network, as well as its legal and structural arrangement,
(2) The name of each audit firm that is a member of the network,
(3) The names of the countries in which the audit firm that is a member of the network has licence or is registered for carrying out audits or has its registered seat, central administration or principal place of business,
(4) The total revenue achieved by the audit firms that are members of the network, earned through the statutory audit of annual and consolidated financial statements;
3) A description of the management structure of the audit firm;
4) A description of the internal quality control system of the audit firm, as well as a statement by the management of its efficacy;
5) The date on which the last quality control review of the audit firm’s work was carried out;
6) A list of public-interest companies in which such audit firm has carried out statutory audits during the preceding financial year;
7) A statement relating to the audit firm's procedures and independence of work, which confirms that an internal review of independence compliance has been conducted;
8) A statement on the audit firm’s policy concerning the continuous professional development of licensed certified auditors;
9) Information concerning the parameters for determining salaries of the key audit partners;
10) A description of the audit firm's policy concerning the rotation of key audit partners;
11) Financial information and data on the total revenue from carrying out of:
(1) Statutory audit of public-interest companies and companies belonging to a group of undertakings whose parent undertaking is a public-interest company,
(2) Statutory audit of auditees that are not public-interest companies,
(3) Additional services referred to in Article 43 of this Law at auditees that have been subject of audit that is mandatory in compliance with this Law,
(4) Additional services referred to in Article 43 of this Law at other auditees.
The person authorized to represent the audit firm shall sign the transparency report.
Data referred to in paragraph 3, item 2) of this Article shall pertain to the members of a network from the Member States.
Contents of a Report to Be Delivered to the Chamber and Commission
Article 25
Audit firms i.e. independent auditors shall deliver to the Chamber and Commission, at least once a year, by the end of November of the current year for the previous reporting period, a report with data on:
1) The holders of shares and stakes in the audit firm, as well as on the acquisition and change of owners of the shares, i.e. stakes;
2) Investments based on which the audit firms, i.e. independent auditors have directly or indirectly acquired ownership in another legal person;
3) Changes of the Articles of Association or Memorandum of Association;
4) Calculation method for the insurance referred to in Article 22 of this Law and on the insurance policy;
5) Employees;
6) The list of all the contracts on audits of financial statements, as per the types of audits, which the audit firms, i.e. the independent auditors have concluded with the reporting entities in the reporting period, as well as the list of all the contracts on auditing of financial statements which have been terminated, inclusive of an adequate explanation, irrespective of which party has terminated the contract;
7) The number of audit reports that each licensed certified auditor has signed;
8) Other information required for planning and implementation of quality control and other activities of the Chamber and the Commission.
Complete data for the period from November 1 of the previous year until October 31 of the current year shall be included in the annual report referred to in paragraph 1 of this Article.
Mandatory Nature of Statutory Audits
Article 26
Statutory audit shall be mandatory for the regular annual financial statements of the following entities: large and medium-sized legal persons classified in compliance with the law regulating accounting, public companies in compliance with the law regulating capital market irrespective of their size, as well as all the legal persons, i.e. sole traders whose total revenue achieved in the previous financial year exceeds EUR 4,400,000 in Dinar counter value.
Statutory audit of consolidated financial statements shall be mandatory for parent legal persons which prepare consolidated financial statements in compliance with the law regulating accounting.
For calculation of the foreign currency amount referred to in paragraph 1 of this Article into Dinar counter value, the official middle exchange rate for the Dinar shall be used, which is determined by the National Bank of Serbia, and which is applicable on the last day of the financial year for which the financial report is prepared.
Audit of financial statements of legal persons and other entities not mentioned in paragraphs 1 and 2 of this Article is voluntary audit.
Method of Carrying Out Audit and Scope of Statutory Audit
Article 27
Statutory audit shall be carried out in compliance with this Law, other laws regulating mandatory audit of financial statements of individual legal persons, the ISA and the Code of Professional Ethics of Auditors.
The statutory audit within the meaning of this Law shall not include detailed assurances in respect of future viability of the auditee or in respect of efficacy or effectiveness with which the management bodies manage or will manage the auditee’s operations.
Professional Ethics and Professional Scepticism
Article 28
The audit firms and licensed certified auditors shall act in compliance with the principles of professional ethics, which shall, at the minimum, encompass the role they serve in interest of the public, their integrity and objectivity, professional expertise and due care.
When carrying out statutory audit, the audit firms and licensed certified auditors should ensure that they maintain professional scepticism during audit, while analysing the possibilities for erroneous presentation of materially significant items due to the facts or behaviours that are indicative of irregularities, including fraud or error, irrespective of the previous experience of the licensed certified auditor or audit firm in respect of the sincerity and integrity of the auditee’s management and persons tasked with governance of such person.
Audit firms and licensed certified auditors should maintain professional scepticism in particular when testing the management’s assessment of the fair value, impairment of assets, provisioning and future money flow that is of relevance for the assessment of auditee’s ability to continue its regular operations.
Article 29
On the occasion of carrying out statutory audit, an audit firm, the licensed certified auditors and each natural person that is in the position to directly or indirectly influence the result of the statutory audit, must be independent from the auditee and must not take part in decision making with the auditee.
The independence of the persons referred to in paragraph 1 of this Article shall be necessary to ensure in the period covered by the financial statements that are subjected to audit and in the period during which the statutory audit is carried out, until issuance of the audit report.
The audit firms and the licensed certified auditors shall take all the reasonable steps in order to ensure that, on the occasion of carrying out statutory audits, their independence is not impacted by any existing or possible conflict of interest, business or other direct or indirect relation. That shall additionally pertain to their network, managers, auditors, and employees, other natural persons whose services are placed at the disposal of or under control of the audit firm or the licensed certified auditor or another person that is based on control, directly or indirectly associated with the licensed certified auditor or the audit firm.
The audit firms and the licensed certified auditors shall not carry out statutory audits where there is a threat of: reviewing their own work, personal interest, advocacy, proximity or intimidation caused by the financial, personal, business relations, relations based on employment or other relations between the audit firm, licensed certified auditor, his network and any natural person that is in a position to influence the result of the statutory audit and auditee.
The audit firm, the licensed certified auditor, their key audit partners, their employees and any other natural person whose services are placed at the disposal of or are under control of such audit firm and licensed certified auditor, and which is directly involved in the activities of the statutory audit, and the persons that are closely associated with them shall not have a stake or have any material interest or direct benefit in any auditee within their activities in the statutory audit, or participate in any transactions in any financial instrument that has been issued, guaranteed or in any other manner supported by such auditee, except for the stakes that are indirectly owned through the institutions of collective diversified investments, including the funds that are managed, such as the pension funds and life insurance.
The audit firms and the licensed certified auditors shall document in the audit working documentation all material threats to independence, as well as the applied protection measures aimed at mitigating these threats.
If the auditee is acquired or merged or acquires another entity during the period covered by the financial statements, the audit firm should determine the identity and review any existing interests or relationships from the recent past, including any non-audit services provided to such person that could, bearing in mind the available safeguard mechanisms, call into question the independence of the audit firm and of the licensed certified auditor and their ability to continue with the statutory audit following the date of entry into force of the merger or acquisition concerning the auditee.
The audit firms and the licensed certified auditors shall, within three months from the date of occurrence of the circumstances referred to in paragraph 7 of this Article at the latest, carry out all the necessary activities in order to break up any interests or relations that would call into question their independence and, where necessary, determine the safeguard mechanisms with the aim of reducing any threat to their independence which arises from the previous and existing interests or relations.
Preparation for Statutory Audit and Assessment of Threats to Independence
Article 30
Prior to accepting or continuing engagement on a statutory audit, the audit firms and the licensed certified auditors should assess and document the following:
1) Whether such person complies with the requirements referred to in Article 29 of this Law;
2) Whether there are any threats to independence of such person in compliance with Article 29 of this Law and safeguard mechanisms used with the aim of reducing such threats;
3) Whether such person has competent employees, time and resources required for carrying out of a statutory audit in an adequate manner;
4) Whether, in the case of an audit firm, the key audit partner holds the licence for carrying out of the tasks of statutory audit.
Persons who are directly Auditing
Article 31
Audits shall be performed by licensed certified auditors, employees of an audit firm, i.e. an independent auditor, provided that they are members of the Chamber.
Additionally, an audit firm i.e. an independent auditor may entrust individual tasks in an audit procedure to other persons employed with the audit firm i.e. with a sole trader - independent auditor, that do not hold a licence for work in audit tasks, provided that their work has been planned and supervised by a licensed certified auditor.
An audit of regular annual financial statements of public-interest companies and audit of consolidated annual financial statements of large groups of legal persons within the meaning of the law regulating accounting, may be carried out by an audit firm that employs at least four licensed certified auditors with full working hours, unless where regulated otherwise by a special law.
Article 32
An auditee which is subject to an audit shall conclude a contract on carrying out of statutory audit with an audit firm by 30 September of the financial year that is subject of the audit at the latest, based on the decision of the general meeting or another competent body determined by a bylaw of such auditee on the selection of an audit firm.
The time limit referred to in paragraph 1 of this Article can be extended by 30 November of the financial year at the latest, in the case of an audit of consolidated financial statements.
By way of exception from paragraph 1 of this Article, the general meeting i.e. a body determined by a bylaw of the auditee subjected to audit, which prepares the financial statements with the balance as of the last day of the financial year that differs from the calendar year, shall select an audit firm and conclude a contract on carrying out of the statutory audit with the audit firm at least three months prior to the expiry of the financial year so determined to which the audit relates to.
Any contractual provision whereby the choice of the auditee’s shareholders general meeting or stakeholder meeting referred to in paragraph 1 of this Article is limited to certain categories or lists of licensed certified auditors or audit firms in respect to the appointment of a certain licensed auditor or audit firm for the purpose of carrying out of the statutory audit of such auditee shall be prohibited.
Article 33
Mutual rights and obligations of the audit firm and the auditee that is subject to audit shall be regulated by an audit contract.
An audit contract must be concluded in writing.
An audit contract must be separately concluded for each engagement of an audit firm.
In addition to the elements prescribed by the law regulating contracts and torts, an audit contract must also include:
1) The structure of the audit team;
2) The data on the planned number of hours for carrying out the audit, per audit team members;
3) A provision stipulating that upon completion of audit, the audit firm shall prepare a calculation of hours spent per member of the audit team and deliver the final invoice;
4) The total price of audit service.
Audit firms cannot assign the contracted tasks to other audit firms, unless where prescribed otherwise by this Law.
An audit contract cannot be terminated during the audit process, unless justifiable reasons for such action exist.
Differences of opinions concerning the field of accounting and audit between the auditee and the audit firm may not be considered as justifiable reason for termination of the contract within the meaning of paragraph 6 of this Article.
The auditee and the audit firm shall notify the Commission about the termination of contract referred to in paragraph 6 of this Article and of the suspension of audit, along with a detailed explanation of reasons that led to termination.
The audit firm shall, prior to concluding the contract on carrying out of statutory audit, i.e. on the occasion of resumption of a statutory audit, act in compliance with the requirements referred to in Article 29 of this Law.
In the case of statutory audit of public-interest companies, termination of audit contracts, in cases where justified reasons for such termination exist, can be initiated before a court of relevant jurisdiction by:
1) At least 5% of the shareholders or owners of stakes in such company;
2) Bodies competent for supervision of the operations of such company;
3) The Commission.
Contracting of Statutory Audit with Multiple Audit Firms by a Public-Interest Company
Article 34
A supervisory body authorized to oversee the operations of a public-interest company, whose operations are prescribed by a special law, may prescribe to a public-interest company within the meaning of Article 2, item 22) of this Law the possibility of contracting the statutory audit with a number of mutually independent audit firms, and determine conditions that the audit firms should fulfil, as well as the conditions for regulation of relations among the audit firms selected to carry out the joint audit.
Article 35
For the purposes of carrying out audits in specific areas, an audit firm may hire qualified persons that are not licensed certified auditors.
In the cases where expert opinion and assessment of qualified persons is required for the performance of audits in certain specific areas, the mutual rights and obligations shall be regulated by a contract.
Hiring of qualified persons shall not restrict the liability of the audit firm towards the auditee.
Obligations of a Legal Person subjected to Audit
Article 36
The auditee shall provide the audit firm all needed documentation, legal instruments and reports; enable access to all programmes and electronic records, including the printed material and copies thereof on digital media; as well as provide information on the programmes and all information required for carrying out of the audit.
The auditee referred to in paragraph 1 of this Article shall provide the audit firm with access and use of the business premises for carrying out of audit during business hours, as well as provide it with adequate equipment and employees at its disposal.
Article 37
A licensed certified auditor shall be responsible for completion of the entire working documentation, based on which the audit report is issued.
The working documentation that is compiled and prepared by the licensed certified auditor shall be kept by the audit firm for six years at the minimum, starting from the financial year to which the audit pertains.
The working documentation i.e. the copies of documents collected during an audit shall be a property of the audit firm, shall be considered confidential, and may only be used for the purposes of the audit, in compliance with this Law, unless where regulated otherwise by special regulations.
By way of exception from paragraph 3 of this Article, the working documentation i.e. documents shall be used for the needs of quality review of the operation of audit firms, independent auditors and licensed certified auditors, as well as for the purposes of supervision, in compliance with this Law.
The working documentation on the basis of which an audit report is prepared shall be composed in Serbian language.
If the audit software is not in Serbian language, documenting of audit activities must be in Serbian language.
If a licensed certified auditor i.e. an audit firm carrying out an audit is replaced by another licensed certified auditor i.e. audit firm, the previous licensed certified auditor i.e. audit firm shall provide the new licensed certified auditor i.e. audit firm with access to the relevant documentation relating to the auditee that is being audited, including the relevant documentation that concerns the last performed audit.
If an audit firm goes out of business, the shareholders i.e. members of an audit firm shall safe-keep the working documentation, and if an independent auditor goes out of business, he shall deliver the working documentation to the Chamber for safekeeping.
Protection of Confidential Information
Article 38
Audit firms and licensed certified auditors shall keep all information, documents, data, facts and documents to which they have access when carrying out a statutory audit as confidential.
Other persons that are working or that were working in the audit firm and to which the confidential data referred to in paragraph 1 of this Article have been made available in any manner whatsoever shall also keep business secrets and information as confidential.
The persons referred to in paragraphs 1 and 2 of this Article may not use the data referred to in paragraph 1 of this Article or enable any third persons to use them.
Business secrets shall be kept in compliance with this Law, unless were regulated otherwise by special regulations.
Notwithstanding the paragraph 1 of this Article:
1) Where an audit firm is replaced by another audit firm, the previous audit firm shall provide to the new audit firm access to all information necessary for audit of the auditee;
2) Where an audit firm carries out an audit of a subsidiary legal person whose parent company is established in a third country, the audit firm may hand over the relevant documentation relating to the audit to a group auditor from the third country, at their request, if such documentation is necessary for carrying out of an audit of consolidated financial statements of the parent company. Delivery of the documentation must be in compliance with Article 37 of this Law;
3) In the case of quality control, the audit firm i.e. the licensed certified auditor shall, within the meaning of Article 79 of this Law, enable access to data necessary for carrying out of quality control and control of legal persons associated with the audit firm.
An audit firm shall enable inspection of data in case of application of regulations governing the prevention of money laundering and financing of terrorism, in preliminary criminal or criminal investigations, as well as when a court requests in writing that they be submitted in a criminal or a preliminary criminal proceeding, as well as in other cases prescribed by law.
Article 39
The audit firm shall draw up the audit report on the completed statutory audit in compliance with the ISA and the provisions of this Law.
The audit report shall, as a minimum, comprise the following:
1) Identification data on the auditee whose regular annual financial statements or consolidated annual financial statements are subject to statutory audit;
2) The title of the regular annual financial statement or consolidated annual financial statement with an indication of the date or the period covered by the financial statement or consolidated financial statement;
3) A description of the relevant legal framework applied when preparing the regular annual financial statements or the consolidated annual financial statements;
4) A description of the scope of statutory audit and the ISA in compliance with which the statutory audit has been carried out;
5) The opinion of the licensed certified auditor can be positive, qualified or negative and it must clearly state whether the regular annual financial statements or the consolidated annual financial statements give a true and fair view of the financial position of the legal person in compliance with the relevant legal framework, as well as whether the annual financial statements are in compliance with the special regulations governing the business operations of the legal person, if provided so by those regulations;
6) Special warnings and issues that a licensed certified auditor wishes to draw attention to, without expressing a qualified opinion;
7) The opinion and statement of the management on the consistency of the annual business report with the regular annual financial statements for the same financial year, whether the regular annual financial statements have been prepared in compliance with the law regulating accounting and whether the licensed auditor based on the knowledge and evidence acquired while carrying out statutory audit with the auditee has determined materially significant erroneous facts comprised in the presentation of the financial statements, with a description of the nature of such facts;
8) A statement on potential materially significant doubts concerning the events or circumstances that may call in question the ability of the auditee to continue operations;
9) Information on the seat of the audit firm.
By way of exception from paragraph 2, item 5) of this Article, the licensed certified auditor may refrain from expressing an opinion about the regular annual financial statements or the consolidated annual financial statements, if he does not have adequate and sufficiently collected audit evidence and has not been provided with access to information demanded from the audit client.
In case that the statutory audit of a public-interest company has been carried out by a number of audit firms in compliance with Article 34 of this Law, they shall reach a consensus on the results of the statutory audit and, following that, issue an agreed upon audit report with an opinion. In case of a disagreement, each audit firm shall issue their own opinion, and they shall state the reason for such disagreement in a separate supplement to the audit report. The indicated reasons for disagreement shall be additionally explained to the Audit Commission of such company.
The audit report must be signed by the key audit partner that is carrying out the statutory audit. In case that the statutory audit with the auditee was carried out by a number of audit firms at the same time in compliance with Article 34 of this Law, the agreed audit report must be signed by all the licensed certified auditors that have, on behalf of their respective audit firms, carried out the statutory audit.
By way of exception from paragraph 5 of this Article, the signature of the licensed certified auditor does not have to be publicly available, where the disclosure of such piece of information may cause clear and present danger to personal safety of such licensed certified auditor.
In the case referred to in paragraph 6 of this Article, prior to issuing the audit report, the audit firm shall notify the Commission of the name of the licensed certified auditor and of the concrete reasons for not publicly disclosing such information, and to at the same time deliver the audit report in question bearing the signature of the licensed certified auditor.
The audit report on the statutory audit carried out must be in compliance with the provisions of paragraph 2, items 1) through 7) of this Article. On the occasion of reporting on the consistency of the annual business report with the regular annual financial statements for the same financial year within the meaning of paragraph 2, item 7) of this Article, the audit firm shall take into account the auditee’s consolidated annual financial statements and the consolidated annual business reports. If the regular annual financial statements of the parent company are enclosed with the consolidated annual financial statements, the audit reports can be aggregated.
The opinion of the licensed certified auditor referred to in paragraph 2, item 5) of this Article shall pertain to the financial statements in their entirety.
The key audit issues within the meaning of ISA shall apply to the statutory audit of public companies within the meaning of the law regulating the capital market.
The audit report shall be drawn up and published in Serbian language.
The regular annual financial statements or consolidated annual financial statements that have been subject to statutory audit shall be enclosed with the audit report.
Additional Report to the Audit Commission
Article 40
Audit firms that carry out an audit of a public-interest company shall submit an additional report to the auditee’s Audit Commission, within the time limit for the delivery of audit report within the meaning of the law regulating accounting. In case that the auditee does not have an Audit Commission, the additional report shall be handed over to the body with an equivalent function in the same company.
The additional report for the Audit Commission should be made in writing, explain the result of the statutory audit and comprise at the minimum the following:
1) A statement of independence in compliance with Article 29 of this Law;
2) The name of the key audit partner;
3) In the case where the audit firm hires a licensed certified auditor or an audit firm, which are not part of the network or an external qualified person for carrying out of specific activities during the audit, such fact must be disclosed in the additional report, along with the certificate of their independence;
4) The nature, frequency and scope of communication with the Audit Commission or with the body carrying out an equivalent function with the auditee, with the management or supervisory board of the auditee, including the dates of meetings with the stated bodies;
5) A description of the scope and period during which the audit has been carried out;
6) Where several audit firms have been hired - a description of the division of tasks among these audit firms;
7) A description of methodology used, including descriptions of the items of balance sheet that were confirmed through the selected sample, including the explanations of identified significant differences in the methodology applied, compared against the methodology used in the previous year. This shall additionally pertain to the cases where the audit from the previous year was carried out by another audit firm;
8) The disclosure of:
(1) Quantitative amounts of materiality applied in the procedure of audit of regular annual financial statements,
(2) Amount of materiality for individual classes of transactions, accounts or disclosures,
(3) Qualitative factors considered when defining the level of materiality;
9) An explanation of the assessments concerning the events or conditions identified in the course of the audit, which may provoke a significant doubt concerning the auditee’s ability to carry on its business operations. Such explanation should include a summary of all the guarantees, letters of assurances, state interventions and other measures of support that were taken in consideration when performing the assessment of the ability to carry on the business operations;
10) Significant deficiencies of the auditee, or in the case of consolidated annual financial statements, significant deficiencies of the system of internal controls and/or accounting system of the parent company. It should be stated for each significant deficiency whether the deficiency has been removed by the management of the auditee;
11) Significant items concerning the inconsistency with the law and internal regulations of the auditee, identified when carrying out the audit, which may be information of significance for the Audit Commission to perform its tasks;
12) An assessment of the methods used for assessment of individual items within individual or consolidated annual financial statements;
13) In case of the statutory audit of consolidated annual financial statements, a disclosure of the scope of consolidation and selected criteria used for defining the indicated consolidation scope, as well as whether the criteria indicated are in compliance with the framework for financial reporting;
14) A note on whether all the explanations and documentations have been supplied by the auditee;
15) Whether there have been any significant problems when carrying out the audit and the facts that would be additionally useful for the Audit Commission.
Audit of Consolidated Financial Statements
Article 41
The key audit partner, as a group’s auditor, shall be responsible for carrying out of audits of consolidated annual financial statements.
The licensed certified auditor, as a group’s auditor, shall prepare the report on audit of consolidated annual financial statements in compliance with Article 39 of this Law.
The opinion on consistency of the business report with the financial statements for the same financial year within the meaning of this Article shall be issued on the basis of the consolidated annual business report and consolidated annual financial statements.
The licensed certified auditor as a group’s auditor shall document the results of his work performed in the course of audit of consolidated annual financial statements, as well as prepare the working documentation in compliance with Article 37 of this Law.
For the needs of audit of the consolidated annual financial statements, the group’s auditor may use the results of work connected to the audit of annual financial statements or consolidated reporting packages of the group’s subsidiaries, provided by:
1) Other audit firms hired;
2) Audit firms that are associated in the network with the group’s auditor;
3) Audit firms from a Member State;
4) A licensed certified auditor from a Member State;
5) An audit firm from a third country;
6) A licensed certified auditor from a third country.
The audit reports of the regular annual financial statements of the parent legal person may be aggregated with the audit report of the consolidated annual financial statements of the group. With the audit report, regular annual financial statements of the parent legal person and consolidated annual financial statements that have been subject to the audit shall be enclosed.
The group’s auditor shall, together with the persons referred to in paragraph 5 of this Article, by means of a contract, i.e. a statement or certificate define the obligation to deliver the working documentation concerning the audit of the group’s subsidiary legal persons, with the aim of reviewing and quality assurance of the working documentation and relying on their work, unless where the above mentioned audit is carried out by the auditors from the network to which the group’s auditor belongs as well.
The group’s auditor shall carry out the following activities related to the operations of the subsidiary legal persons referred to in paragraph 5 of this Article, concerning the audit of the consolidated annual financial statements of the group:
1) Assesses their work;
2) Documents the nature, time and scope of their completed tasks;
3) Documents the overview of working documentation collected by these persons for the needs of audit of the consolidated annual financial statements.
In case that the group’s auditor cannot carry out the review referred to in paragraphs 4 and 5 of this Article for the needs of a quality audit of the consolidated financial statements, he shall carry out additional activities related to the audit of the financial statements or reporting packages of subsidiary legal persons, either directly or by hiring the persons referred to in paragraph 5 of this Article. The group’s auditor shall notify the Commission of the implementation of additional procedures.
Where the audit of financial statements of a subsidiary legal person within an economic whole made up of the parent and subsidiary legal persons is carried out by a licensed auditor or audit firm from a Member State, i.e. third-country, the key audit partner as the group’s auditor shall be responsible for the delivery of documentation about the work of the licensed auditor or audit firm of a third-country, for the needs of quality control and oversight in compliance with this Law.
With the aim of ensuring the delivery of documentation referred to in paragraph 4 of this Article, the group’s auditor should request copies of such documentation or arrange with the third-country licensed auditors or audit firms the access to such documentation, i.e. take some other adequate measures.
Where there are legal or other restrictions arising from the national legislation of a Member State, i.e. a third country for the delivery of working documentation on the completed audit by the auditor of that country, the key audit partner as the group’s auditor shall, in his working documentation on the completed audit of consolidated annual financial statements, state the evidence of all the necessary measures taken in order that it is delivered, as well as evidence of existence of stated legal and other restrictions.
Remuneration for Completed Audit
Article 42
Remuneration for completed audit shall be paid.
The remuneration amount shall be determined by means of a contract.
The audit firm or the independent licensed auditor should determine remunerations for audit in compliance with the required work, time, required resources for carrying out of the audit and other foreseeable costs of carrying out of the audit.
The remuneration amount for an audit referred to in paragraph 1 of this Article:
1) May not depend and may not be related to the provision of additional services to the auditee;
2) May not be conditional upon the realisation of any potential event related to the audit, which may require a remuneration that would be tied to the outcome or result of a transaction or the result of the work performed.
Article 43
In addition to auditing, an audit firm may also perform, within its registered business activity, the services in the field of finance and accounting, financial analysis and control services, the tax and other types of business consultancy services, valuation of capital, assets and liabilities, the court expert testimony services, the services of preparation and economic assessment of investment projects and other related services, except where regulated otherwise by a special regulation.
Article 44
A licensed certified auditor may not carry out an audit of a legal person:
1) In which he is the owner of a stake or shares or has a significant financial influence with the auditee or has a significant interest in a related legal person of the auditee;
2) In which he is the director, i.e. a member of the management or supervisory body, a procurator and an attorney of the auditee or of the legal person possessing a significant interest in the related legal person of the auditee;
3) In which a general manager, i.e. a member of the management or supervisory body or procurator is his blood relative in the direct line of descent, blood relative in the collateral line of descent up to the third degree of consanguinity, or spouse;
4) In which he has provided the services referred to in Article 45, paragraph 1, item 3) of this Law;
5) If other circumstances occur that can influence the independence of the licensed certified auditor.
The prohibitions to provide the services enumerated in paragraph 1 of this Article shall additional pertain to the licensed certified auditors who carry out the audit of consolidated annual financial statements with the auditee.
The prohibition referred to in paragraph 1 shall pertain to the year for which the audit is carried out, as well as to the year in which the audit is carried out.
The licensed certified auditor may not seek or receive monetary and non-monetary gifts or services from the auditee with which he carries out the audit or from another legal, i.e. natural person that is related to such auditee, except where an impartial, reasonable and informed third party would assess their value as insignificant and negligible.
The prohibitions referred to in paragraphs 1 and 4 of this Article shall additionally pertain to the members of the audit team and other persons that are not licensed certified auditors, but are participating in the audit.
Article 45
An audit firm may not carry out an audit with an auditee:
1) In which it has stakes or shares, or stakes and shares in a legal person related to the auditee;
2) That is the owner of stakes or shares of the audit firm;
3) If the audit firm, i.e. any organisational unit in the network to which it belongs, i.e. a person associated with the audit firm has provided to the legal person in the year for which audit is carried out, as well as in the year in which audit is carried out the following services:
(1) Preparation and maintaining of books of account and preparation of financial statements,
(2) Valuation of capital, assets and/or liabilities that will be reflected in the financial statements, i.e. in which there is an obvious conflict of interest,
(3) Representation in court proceedings in relation to tax cases,
(4) Tax calculation and filing of tax returns for natural persons that are managers in the financial sector of the company,
(5) Advice in relation to bookkeeping postings of tax liabilities,
(6) Design of internal audit and internal control systems, as well as their implementation,
(7) Design and application of information systems in the field of accounting,
(8) Actuary services,
(9) Other services that, under specific circumstances, could jeopardise the independence of a licensed authorized auditor or an audit firm and/or influence the valuation of items in financial statements;
4) If it is connected with the legal person in a different manner when such a connection can affect the independence and impartiality of the audit.
The prohibition to perform the services referred to in paragraph 1 of this Article shall additionally pertain to the audit firms carrying out the audit of consolidated annual financial statements with the auditee.
The audit firm may not seek or receive monetary and non-monetary gifts or services from the auditee with which it carries out audit or from other legal, i.e. natural person that is associated with such auditee, except where an impartial, reasonable and informed third party would assess their value as insignificant and negligible.
In the case of a status change with the auditee whose financial statements are subject to the audit, the audit firm shall check whether there are any potential threats to its independence, i.e. to the independence of the licensed certified auditor within the meaning of Articles 29 and 30 of this Law and to terminate the business relations that may affect their impartiality within three months from the occurrence of status change at the latest.
Notification by Auditors and Other Persons who are Carrying out Audit
Article 46
A licensed certified auditor shall notify without delay the audit firm with which he is employed of the occurrence of circumstances referred to in Article 44 of this Law.
The members of the audit team and other persons who are not licensed certified auditors, but are participating in the audit, shall notify the audit firm with which they are employed without delay of the occurrence of circumstances referred to in Article 44 of this Law.
Article 47
A shareholder, i.e. a member of an audit firm shall notify the audit firm without delay of the occurrence of circumstances referred to in Article 45 of this Law.
Prohibition of Other Persons’ Influence
Article 48
Owners i.e. shareholders of an audit firm, as well as the director i.e. members of management or supervisory bodies of such firm or of an associated person, shall not exert influence on carrying out of an audit and on expression of audit opinion thereby jeopardizing the independence and objectivity of a licensed certified auditor that performs the audit.
Reduction of Number of Auditors
Article 49
An audit firm in which the number of licensed certified auditors falls below the number prescribed by this Law shall notify the Chamber and the Commission of this change within eight days from the date on which the change occurred.
An audit firm in which, during the course of an audit, the number of licensed certified auditors falls below the number prescribed by Article 4, paragraph 1, item 1) of this Law, i.e. Article 31, paragraph 3 of this Law, shall provide the legally prescribed number of licensed certified auditors within three months or to discontinue the audit operations and notify the legal person with which the audit is carried out, the Chamber and the Commission thereof, within eight days from the date on which the change occurred, and the legal person shall entrust the audit commenced to another audit.
In the cases referred to in paragraphs 1 and 2 of this Article, the audit firm may not conclude new audit contracts until it has again fulfilled the conditions referred to in Article 4, paragraph 1, item 1) of this Law i.e. in Article 31, paragraph 3 of this Law, and has notified the Chamber and the Commission thereof.
Replacement of the Audit Firm and Auditor
Article 50
An audit firm may carry out audits of the same public-interest company for consecutive 10 years at the maximum from the beginning of auditing, except where regulated otherwise by a special law.
Following the expiry of the maximum permitted period referred to in paragraph 1 of this Article, the audit firm may not perform audits with the same public-interest company over the following four years.
The audit firms shall perform replacement of the licensed certified auditor, signatory of the audit report i.e. the key audit partner each seventh year at the latest from the beginning of performing the audit of financial statements with the same reporting entity.
The licensed certified auditor, i.e. the key audit partner may carry out audits with the same reporting entity again three years from the date of signing of the last audit report for such reporting entity.
Article 51
A key audit partner or a licensed certified auditor who is carrying out a statutory audit in the name of an audit firm with the auditee, prior to the expiry of a time limit of at least one year or, in the case of a statutory audit of a public-interest company, a time limit of two years at the minimum from the moment when he has ceased carrying out the tasks of a licensed certified auditor or a key audit partner in relation to the engagement on the audit:
1) Cannot take a key position in executive management positions with the auditee;
2) Cannot become a member of the Audit Commission i.e. where such a committee does not exist, a member of a body performing the functions that are equivalent to the functions of the Audit Commission;
3) Cannot become a member of the supervisory body of the auditee.
The prohibition referred to in paragraph 1 of this Article shall additionally pertain to the members of the audit team and other persons who are not licensed certified auditors, but who have participated in the audit within the meaning of Article 1 of this Article and shall apply for the period of one year from the date of termination of employment with the audit firm.
Reporting and Confirming of Independence of an Audit Firm
Article 52
An audit firm shall report to a legal person that is subject to audit, i.e. to Audit Commission that the legal person is obliged to establish in compliance with Article 53 of this Law, on the key issues arising from carrying out of the audit, and in particular on the significant deficiencies of the internal control relating to the financial reporting process as well.
The audit firm shall, prior to concluding an agreement on carrying out of statutory audit, i.e. on the occasion of resumption of carrying out of the statutory audit, assess and document the following:
1) Whether there are any threats to independence in compliance with Article 29 of this Law, vis-à-vis the legal person whose audit of the regular annual financial statement it carries out and the protective mechanisms against such threats;
2) Whether it has competent employees, time and resources required for carrying out of statutory audit;
3) Whether the key audit partner holds the licence for carrying out audit, issued in compliance with this Law.
The audit firm that is carrying out audit with the public-interest companies shall, once a year, in writing, confirm its independence vis-à-vis the company whose audit of financial statements it carries out and to notify the Audit Commission referred to in Article 53 of this Law of any additional services provided to such company, as well as to discuss the potential threats to its independence and the protective mechanisms against such threats.
IV AUDIT COMMISSION WITH COMPANY AND INTERNAL AUDITOR
Establishing and Composition of Audit Commissions
Article 53
The public-interest companies shall have an Audit Commission (a committee tasked with monitoring of business operations).
The Audit Commission shall carry out the tasks in compliance with the law regulating companies.
The Audit Commission shall be made up of at least three members appointed in compliance with the law referred to in paragraph 2 of this Article.
The Audit Commission shall either be a separate commission or a commission of the management, i.e. supervisory board of the auditee, and it shall be made up of the non-executive members of the management body and/or the members of the supervisory body of the auditee and/or the members appointed by the shareholders’ general meeting of the auditee, or, in case of the auditees without shareholders, it shall be appointed by an equivalent body.
At least one member of the Audit Commission must be competent for the field of accounting and/or auditing.
The Commission members, as a whole, must be competent for the business activity pursued by the auditee.
The majority of the Audit Commission members must be independent from the auditee. The chairperson of the Audit Commission shall be appointed by the members or by the supervisory body of the auditee and he shall be independent from the auditee. The chairperson of the Audit Commission may be elected by the shareholders’ general meeting of the auditee on the annual basis.
By way of exception from paragraph 1 of this Article, the public-interest companies which in compliance with the special regulations have bodies with competences of the Audit Commission referred to in paragraph 2 of this Article shall not be obliged to establish it in compliance with this Law.
By way of exception from paragraph 1 of this Article, the public-interest companies which are subsidiaries, i.e. members of groups of companies that on the level of the group have an Audit Commission and that carry out the competences referred to in paragraph 2 of this Article on the level of the group, shall not be obliged to establish it in compliance with this Law, except where regulated otherwise by a special law.
Article 54
A legal person shall entrust carrying out of internal audit activities to a person that holds a certificate of the Chamber of the acquired title of certified internal auditor, unless where regulated otherwise by a special law.
The title of certified internal auditor may be acquired by a person:
1) That acquired a higher education degree after completing second degree studies, in accordance with the law governing higher education, i.e. after completing undergraduate studies in the duration of four years at the minimum;
2) That has three years of professional experience in carrying out of statutory or internal audit, i.e. five years of professional experience in performing accounting activities;
3) That has passed the examination for acquiring of this title in compliance with the programme of the Chamber;
4) That has not been convicted of the criminal offences within the meaning of Article 5 of this Law.
The experience obtained in on the basis of a permanent or fixed-term employment contract shall be considered as professional experience needed for the taking of the examination for the acquisition of the title of certified internal auditor.
A certified internal auditor shall, for the purpose of continuous professional development, attend expert courses, seminars and lectures with the minimum duration defined in the programme of continuous professional development for certified internal auditors of the Chamber.
A certified internal auditor may not be a member of the management and may not perform other tasks in the company.
V THE CHAMBER OF CERTIFIED AUDITORS
Status and Seat of the Chamber
Article 55
The Chamber shall be an independent professional organisation of licensed certified auditors employed with the audit firms, of audit firms and of independent auditors, which shall have the capacity of a legal person, with the rights, obligations and responsibilities determined by this Law and the statute of the Chamber.
The Chamber shall have an account.
The seat of the Chamber shall be in Belgrade.
The Chamber can have its branches in compliance with the statute.
The Chamber shall be registered with the Business Registers Agency, in compliance with the law.
Article 56
Membership in the Chamber shall be mandatory for the audit firms, independent auditors and licensed certified auditors employed with an audit firm, i.e. with an independent auditor.
An audit firm and an independent auditor shall acquire membership in the Chamber on the date of entry in the Register of Audit Firms and Independent Auditors.
A licensed certified auditor shall acquire membership in the Chamber on the date on entry in the Register of Licensed Certified Auditors.
The membership of an audit firm and of an independent auditor in the Chamber shall be terminated on the date of submission of an application for deletion from the Register referred to in paragraph 2 of this Article, as well as in other cases in compliance with this Law and the statute of the Chamber.
The membership of a licensed certified auditor in the Chamber shall be terminated on the date of deletion from the Register referred to in paragraph 3 of this Article, as well as in other cases in compliance with this Law.
Entrusted Tasks of the Chamber
Article 57
The Chamber shall perform the following tasks as public authorizations:
1) Adopt and implement the examination programme for the acquisition of the title of certified auditor, organize examinations for acquiring the title of certified auditor and issue a certificate for title of certified auditor;
2) Regulate more detailed conditions and procedure for exemption from taking the examination referred in Article 9 of this Law;
3) Adopt a programme for continuous professional development and organize specialized vocational development of licensed certified auditors;
4) Prescribe the minimum working documentation that constitutes the content of methodology of work;
5) Maintain the Register of Licensed Certified Auditors;
6) Maintain the Register of Audit Firms and Independent Auditors;
7) Maintain the Register of Measures Imposed;
8) Determine the amount of membership fee for the members of the Chamber;
9) Determine the amount of the fee for entry in the Registers of the Chamber, fee for examinations conducted by the Chamber, fee for issuing excerpts from the Registers, certificates and confirmations on the records maintained by the Chamber, as well as of other fees prescribed by law and the Chamber’s bylaws;
10) Conduct investigative, disciplinary and other procedures in compliance with the statute and the Chamber’s bylaws.
The tasks referred to in paragraph 1 of this Article shall be carried out by the Chamber as the entrusted tasks.
The acts referred to in paragraph 1, items 1) through 4) and items 8) and 9) of this Article shall be adopted upon prior consent by the Ministry, which shall, prior to providing such consent, acquire opinion from the Commission.
Article 58
In addition to the tasks referred to in Article 57 of this Law, the Chamber shall carry out the following tasks as well:
1) Determine the application of the Code of Professional Ethics of Auditors;
2) Monitor the application of ISA;
3) Adopt and implement the examination programme for the acquisition of the title of certified internal auditor, organize examinations for the acquisition of the title of certified internal auditor and issue a certificate for title of certified internal auditor;
4) Adopt a program of continuous professional development and organize professional development of certified internal auditors;
5) Monitor the reputation of the members of the Chamber, i.e. the carrying out of audit tasks in compliance with the Code of Professional Ethics of Auditors;
6) Provide expert assistance to the members of the Chamber;
7) Deliver to the Ministry and to the Commission the annual financial statement with auditor’s opinion and annual report on work;
8) Cooperate and provide expert assistance to the Ministry and to the Commission in carrying out of the tasks in compliance with this Law;
9) Implement training and certification for the acquisition of other titles in auditing in compliance with the Chamber’s bylaws;
10) Perform other activities as well, in compliance with this Law and other laws and the statute.
Article 59
The Chamber shall keep as confidential all data, facts and circumstances that it has obtained while performing activities in compliance with the provisions of this Law.
The provision of paragraph 1 of this Article shall additionally apply to the members of the Chamber bodies, employees and former employees with the Chamber i.e. to other persons who have had access to confidential data while working at the Chamber.
The business secrets shall be kept in compliance with this Law, except where regulated otherwise by special regulations.
Article 60
The Chamber shall acquire the means for operation from:
1) The membership fee paid by the members of the Chamber;
2) The entry fee for the Registers of the Chamber;
3) Other sources, in compliance with the law and acts of the Chamber.
Article 61
The funds of the Chamber shall be kept in the account of the Chamber.
The person duly authorized by the acts of the Chamber shall be responsible for using the funds of the Chamber.
The Chamber shall be liable for its obligations with the entire assets at its disposal.
Article 62
The Statute of the Chamber shall regulate in more detail: activities performed by the Chamber within its legal authority; method of performing the activities of the Chamber; internal organization and operation of the Chamber; composition, method and procedure for election and competences of the Chamber bodies; rights and duties of audit firms, independent auditors and licensed certified auditors as members of the Chamber; as well as other issues of significance for the operation and organization of the Chamber, in compliance with this Law.
Consent to the Statute of the Chamber in the part relating to the exercise of public authorizations referred to in Article 57 of this Law, shall be provided by the Ministry upon prior obtaining the opinion of the Commission.
Article 63
The Chamber shall publish the Statute of the Chamber in the "Official Herald of the Republic of Serbia".
The acts that the Chamber passes in compliance with this Law shall be published on the web site of the Chamber.
Article 64
The bodies of the Chamber shall be:
1) The Assembly;
2) The Council;
3) Other bodies of the Chamber.
The competence, duration of the mandate and the method of work of the bodies of the Chamber shall be determined by means of the Statute.
Article 65
The Chamber shall keep:
1) The Register of Audit Firms and Independent Auditors;
2) The Register of Licensed Certified Auditors;
3) The Register of measures imposed.
The Chamber shall, upon receipt of the decision referred to in Article 14 of this Law, without delay enter the audit firm, i.e. the independent auditor in the Register referred to in paragraph 1, item 1) of this Article.
The Chamber shall, upon receipt of the decision referred to in Article 7 of this Law, without delay enter the licensed certified auditor in the Register referred to in paragraph 1, item 2) of this Article.
An audit firm, i.e. an independent auditor and a licensed certified auditor shall acquire the right to carry out audit on the date of entry in the Registers referred to in paragraph 1, items 1) through 2) of this Article.
The Registers referred to in paragraph 1 of this Article shall be maintained in Serbian language.
The Registers referred to in paragraph 1 of this Article shall be regularly updated and published in the web site of the Chamber.
The Registers referred to in paragraph 1 of this Article shall be public records.
The method of maintaining the Registers referred to in paragraph 1 of this Article shall be regulated in more detail by the Chamber.
The Chamber may additionally maintain other registers in compliance with the law, statute or bylaws.
Register of Audit Firms and Independent Auditors
Article 66
The Register of Audit Firms and Independent Auditors shall comprise at the minimum:
1) The business name, address, registration number, TIN and legal form;
2) Contact information and internet address;
3) Address of each branch and associated person in the country and abroad;
4) Name and surname and registration number of all licensed certified auditors that are employed with the audit firm, i.e. with the independent auditor;
5) Data on the founders, in compliance with the regulations on registration of economic operators;
6) Data on the general manager, i.e. on the members of the management body, in compliance with the regulations on registration of economic operators;
7) Data on the membership in the network;
8) All other registrations of the audit firm, i.e. of the independent auditor with the competent authorities of the Member States and the competent authorities of the third countries, including the name of the registration authority and registration number, if any.
The audit firms, i.e. the independent auditors shall notify the Chamber of the changes of all facts and circumstances based on which they are entered in the Register referred to in paragraph 1 of this Article, within eight days from the date of the occurrence of such changes.
Data that are delivered to the Chamber must be signed by the person authorized to represent the audit firm, i.e. by the independent auditor.
Data that are delivered to the Chamber, and which are delivered by audit firms from the Member States and the audit firms from third-countries must be translated into Serbian language by an authorized person in compliance with the law.
The audit firms from third-countries, which are registered in compliance with this Law, must be specifically designated as such in the Register referred to in paragraph 1 of this Article.
Registration of an Audit Firm from a Member State
Article 67
A Member State audit firm shall be entered in the relevant register within the meaning of this Law on the basis of a submitted application for registration that is submitted to the Chamber.
Enclosed with the application for registration referred to in paragraph 1 of this Article, it shall also deliver a certificate of the competent authority of the Member State in which it is registered, i.e. in which the permit for carrying out of statutory audits is issued, which may not be older than three months from the date of submission of the application for registration.
The registered audit firm referred to in paragraph 1 of this Article may carry out audit provided that the key audit partner holds the licence for carrying out audit issued in compliance with this Law.
Data and evidence required for entry in the Register in compliance with this Law shall be delivered with the application.
Register of Licensed Certified Auditors
Article 68
The Register of licensed certified auditors shall comprise at the minimum:
1) The name, surname and registration number of the licence;
2) The name, address, internet address and registration number of the audit firm with which the licensed certified auditor is employed or with which he is connected as a partner or in some other manner;
3) All other registrations of the licensed certified auditor with the competent authorities of the Member States and with the competent authorities of the third countries, including the name of the registration authority and registration number, if any;
4) The date of issuance, i.e. renewal of the licence.
The licensed certified auditor shall notify the Chamber of the changes of all facts and circumstances based on which he has been entered in the Register referred to in paragraph 1 of this Article within eight days from the date of occurrence of such change.
Data that are delivered to the Chamber must be signed by the licensed certified auditors.
Data that are delivered to the Chamber, and which are delivered by the Member States auditors and third-countries auditors must be translated into Serbian language by an authorized person in compliance with the law.
The third-countries auditors, which are registered in compliance with this Law, must be specifically designated as such in the Register referred to in paragraph 1 of this Article.
Article 69
The Register of measures imposed shall comprise at the minimum:
1) The name of the legal person, i.e. the name and surname of the natural person against which the measure is imposed;
2) The measure which has been imposed;
3) The number and date of the decision on imposition of the measure.
By way of exception from paragraph 1, item 1) of this Article, the name of the legal person, i.e. the name of the natural person against which the measure has been imposed does not have to be published in the Register referred to in paragraph 1 of this Article:
1) Where a sanction imposed against the natural person shows that the publication of personal data would be disproportionate;
2) Where the publication would jeopardize the stability of the financial markets or the criminal investigations that are in progress;
3) Where disproportionate damage would be made through the publication to institutions or individuals from the case.
The Commission shall decide on the exceptions referred to in paragraph 2 of this Article.
Deletion of Audit Firms and Independent Auditors from the Register
Article 70
Deletion of audit firms and independent auditors from the Register that is maintained in compliance with Article 65, paragraph 1, item 1) of this Law shall be performed on the basis of the Ministry decision on repealing of the permit to carry out audits, i.e. Commission decision on revocation of the permit to carry out audits, in compliance with this Law.
When the decision on repealing of the permit to carry out audits referred to in paragraph 1 of this Article has become enforceable, the Ministry shall deliver a copy of the decision to the Chamber, to the Commission and to the Business Registers Agency.
When the decision on revocation of the permit to carry out audits referred to in paragraph 1 of this Article has become enforceable, the Commission shall deliver a copy of the decision to the Ministry, to the Chamber and to the Business Registers Agency.
Deletion of Licensed Certified Auditors from the Register
Article 71
Deletion of the licensed certified auditors from the Register that is maintained in compliance with Article 65, paragraph 1, item 2) of this Law shall be performed on the basis of a decision of the Ministry on repealing of a decision on licence issuance, i.e. of a Commission decision on revocation of a licence for carrying out audits, in compliance with this Law.
When the decision on repealing of the decision on licence issuance, referred to in paragraph 1 of this Article, becomes enforceable, the Ministry shall deliver a copy of the decision to the Chamber and to the Commission.
When the decision on revocation of the licence to carry out audits referred to in paragraph 1 of this Article becomes enforceable, the Commission shall deliver a copy of the decision to the Ministry and to the Chamber.
In the case of death of a licensed certified auditor, the Chamber shall ex officio delete such licensed certified auditor from the Register.
The Chamber shall ex officio delete from the Register the licensed certified auditor within 30 days from the date of expiry of the period for which the licence has been issued, unless an application for licence issuance has been submitted.
Deletion of Measures from the Register
Article 72
The measures referred to in Articles 81 and 94 of this Law shall be deleted from the Register upon the expiry of five years from the date of passing of the decision on the imposition thereof.
By way of exception from paragraph 1 of this Article, the measure of revocation of the permit to carry out audits from an audit firm i.e. an independent auditor, as well as of the licence from a certified auditor for performing audits shall be deleted from the Register upon the expiry of ten years from the date of passing of the decision on the imposition thereof.
Transparency of Chamber’s Operations
Article 73
The Chamber shall inform the public of all the issues within the scope of competence of the Chamber.
The Chamber shall notify the Ministry and the Commission of the disciplinary proceedings conducted against the members of the Chamber before the competent bodies of the Chamber.
If the disciplinary proceedings find that there is reasonable doubt that a criminal offence has been committed, the Chamber shall additionally be obliged to notify the competent justice authorities.
The Chamber shall, at the request of the authorities referred to in paragraphs 2 and 3 of this Article, deliver the needed data on the facts it has knowledge about.
Oversight of Chamber’s Operations
Article 74
The Ministry shall oversee the legality of operations and acts of the Chamber.
The Ministry and the Commission shall oversee the performance of activities referred to in Article 57, paragraph 1 of this Law, within the scope determined by this Law.
When carrying out the oversight activities referred to in paragraphs 1 and 2 of this Article, the Ministry and the Commission may request relevant reports and data from the Chamber, i.e. they may conduct direct inspection of the operations of the Chamber.
The Chamber shall deliver the reports and data referred to in paragraph 3 of this Article to the Ministry and to the Commission within 30 days from the date on which the data was requested, unless the Ministry, i.e. the Chamber determines a shorter time limit.
Provisions of the law regulating state administration shall apply in carrying out oversight over public authorisations of the Chamber.
VI QUALITY CONTROL OF THE OPERATIONS OF AUDIT FIRMS, INDEPENDENT AUDITORS AND LICENSED CERTIFIED AUDITORS
Article 75
The Commission shall carry out control of the quality of operations of audit firms, independent auditors and licensed certified auditors in order to check whether they act in compliance with the ISA and the provisions of this Law when carrying out audits.
The control and method of carrying out the quality control of operations should be proportionate to the complexity of activities carried out by the audit firm, i.e. by the independent auditor, which shall be additionally regulated by the bylaws of the Commission.
Quality control of the operations shall be carried out in an objective manner and in a procedure which excludes any conflict of interest between the persons that are carrying out the control of the quality of operations and the audit firms, independent auditors and licensed certified auditors.
Provisions of the law regulating general administrative procedure shall be applied in the procedure of quality control of operations, unless where regulated otherwise by this Law.
For the purpose of carrying out the quality control referred to in paragraph 1 of this Article, the Commission shall pass the methodology for quality assurance of the audits completed, quality assurance of operations of audit firms, independent auditors and licensed certified auditors.
Method of Carrying Out Controls
Article 76
A quality control of operations of an audit firm shall be ensured by:
1) Monitoring, collecting and reviewing of reports and notifications submitted to the Commission by the audit firms, independent auditors and licensed certified auditors, in compliance with this Law;
2) Carrying out reviews of the business operations of audit firms and independent auditors;
3) Imposition of measures in the quality control procedure, in compliance with this Law.
Carrying out of reviews of the business operations of the audit firms and independent auditors referred to in paragraph 1, item 2) of this Article shall include:
1) A review of the internal system for quality control;
2) A review of independence of the licensed certified auditor, independent auditor and audit firm in relation to the auditee;
3) A review of compliance of the audit procedures with the law and the ISA;
4) A quality assessment in respect of the engaged resources (the composition of the audit team and working hours);
5) A review of the calculated prices for audit services;
6) A direct assessment of the quality of work of the licensed certified auditor.
It shall be determined, by means of the review of the internal system of quality control referred to in paragraph 2, item 1) of this Article, whether the audit firm and the independent auditor have established adequate guidelines and procedures for:
1) Taking responsibility related to the quality of work performed;
2) Compliance with the ethical requirements;
3) Establishing and maintaining relations with the entities under obligation to have their financial statements audited, as well as with the recipients of other services;
4) Forming the audit teams;
5) Carrying out of audit in compliance with the law and the ISA;
6) Ensuring successful operation of the guidelines and procedures related to the internal procedures for quality control, and their observance in practice.
The direct review of the quality of work of a licensed certified auditor referred to in paragraph 2, item 6) of this Article shall be carried out by reviewing the entire working documentation on an audit completed with at least one reporting entity.
The persons that are carrying out quality control of operations shall provide the required number of selected audit documents, i.e. samples for testing, in order that the review in question has quality and comprehensiveness, by applying the ISA and the requirements related to the independence of their work, in compliance with Article 29 of this Law.
Regular and Extraordinary Controls
Article 77
Regular quality control of operations of audit firms shall be carried out in compliance with the annual plan for quality control of operations of audit firms, independent auditors and licensed certified auditors that shall be passed by the Commission.
On the basis of a risk analysis, the Commission shall carry out the regular control of the quality of operations of audit firms and independent auditors at least once in every six years, and with an audit firm that is carrying out audit of public-interest companies at least once in every three years.
The quality control referred to in paragraph 2 of this Article can also be carried out more often, in particular in respect of the audit firms, i.e. independent auditors against which measures have been imposed in the control procedure, i.e. audit firms for which high risk has been determined based on the risk analysis referred to in paragraph 2 of this Article.
The Commission shall notify in writing the audit firm and the independent auditor on the quality control of the operations of audit firms and independent auditors, prior to the beginning of the control.
An extraordinary quality control of the operations of audit firms can be initiated by the Commission upon receiving a notification from the National Bank of Serbia, the Chamber, courts of relevant jurisdiction and other authorities that there is reasonable doubt that the audit firm does not carry out audits in compliance with this Law and the ISA, i.e. if they establish omissions and irregularities in audit reports and operations of the audit firms.
An extraordinary control referred to in paragraph 5 of this Article can also be initiated by the Commission if it determines, within its competences regulated by the law that an audit firm does not carry out audits in compliance with this Law and the ISA, as well as at the proposal of the shareholders and the owners of the stakes.
The Commission shall prescribe the procedures for receiving and acting upon the notifications referred to in paragraphs 5 and 6 of this Article, in compliance with the law regulating protection of personal data.
Persons that are Carrying out Controls
Article 78
The quality control of operations of audit firms, independent auditors and licensed certified auditors shall be carried out by the persons employed with the Commission for indefinite period of time with full working hours, licensed certified auditors with the minimum of five years of work experience in carrying out audit activities.
The persons that are performing the quality control of operations referred to in paragraph 1 of this Article may not carry out quality control of operations of an audit firm, i.e. independent auditor with which they had participation in ownership, management, with which they were employed or connected in any other manner with such audit firm, i.e. independent auditor three years prior to the beginning of quality control of operations at the minimum.
The persons that are performing the quality control of operations referred to in paragraph 1 of this Article shall, prior to each quality control, make a statement that there is no conflict of interest between them and the audit firm, independent auditor or licensed certified auditor that are subject to quality control of operations.
The persons that are carrying out quality control of operations referred to in paragraph 1 of this Article shall complete an additional training in accordance with a programme determined by the Chamber.
The Commission may hire experts in the case of specific tasks or audits of public-interest companies involving a high risk where that is necessary for their adequate performance. In such a case, experts may not be involved in Commission’s decision making.
In the case of hiring an expert, the Commission should ensure that there is no conflict of interest between the expert and the licensed certified auditor, i.e. auditee within the meaning of paragraph 3 of this Article. The hired expert must sign a statement on non-existence of the conflict of interest within the meaning of paragraph 3 of this Article and must have at least seven years of experience in auditing of financial statements, of which two years of experience in auditing public-interest companies at the minimum.
Obligations of an Audit Firm and Independent Auditor in the Control Procedure
Article 79
An audit firm, i.e. an independent auditor that are subject to the quality control of operations shall enable the authorized person of the Commission to examine the audit reports, working documentation, as well as other documentation based on which the audit reports were drawn up.
The audit firm, i.e. the independent auditor that is subject to the quality control of operations shall, at the request of the authorized person of the Commission, enable quality control of operations in its seat.
Article 80
A record shall be prepared on a concluded quality control of operations, which shall include significant findings and conclusion.
The record of quality control of operations of an audit firm, i.e. independent auditor shall be delivered to the audit firm, i.e. to the independent auditor.
The Commission shall publish aggregate results of the quality reviews of the operation of audit firms and independent auditors once a year on its web site.
Measures in the Procedure of Quality Control of Operations of Audit Firms and Independent Auditors
Article 81
Where it is determined in a quality control procedure of operations that an audit firm, i.e. an independent auditor does not act in compliance with the provisions of this Law and other rules of audit profession, the following measures can be taken:
1) Order that the identified irregularities are removed;
2) Impose public reprimand;
3) Conditionally revoke the licence for carrying out audits;
4) Issue a temporary ban for a period of up to three years whereby the audit firm and the independent auditor shall be prohibited from carrying out statutory audits;
5) Impose an interim ban for a period of up to three years whereby the founder (member) or a member of the management body of the audit firm or the founder (member), i.e. member of the management body of the public-interest company shall be prohibited from performing functions with the audit firm, i.e. public-interest company;
6) Revoke a permit for carrying out of audits;
7) Impose a fine.
The Commission shall impose the measures referred to in paragraph 1, items 1), 2), 3), 6) and 7) of this Article by means of a decision.
The decision referred to in paragraph 2 of this Article shall be final. An administrative dispute can be initiated against the decision.
The Commission shall deliver the decision on imposition of the measure referred to in paragraph 2 of this Article to the Chamber, on the following day from the date on which such decision has become enforceable.
The Chamber shall enter the decision on imposition of the measure referred to in paragraph 2 of this Article without delay in the Register of Measures Imposed.
The measures referred to in paragraph 1, items 4) and 5) of this Law shall be imposed by a court in misdemeanour proceedings, in compliance with the law.
Guidelines for Imposition of Measures
Article 82
The Commission shall pass guidelines to be applied when determining the type of measure that is to be imposed against an audit firm, i.e. independent auditor, as well as against a licensed certified auditor in a quality control procedure of the operations, and take as the minimum for consideration the following facts and circumstances:
1) The seriousness and the duration of the breach of provisions of this Law and other rules of auditing profession;
2) The degree of responsibility of the audit firm, i.e. independent auditor, as well as of the licensed certified auditor for the audit report issued;
3) The financial power of the audit firm, i.e. independent auditor, as well as of the licensed certified auditor;
4) The amount of proceeds acquired;
5) The level of cooperation of the controlled audit firm, i.e. independent auditor, as well as of the licensed certified auditor in the quality control procedure of their operations;
6) The previously imposed measures in compliance with this Law.
The Commission may additionally take into account other facts and circumstances that may influence the effectiveness of measures imposed.
Method of Implementation of the Measures
Article 83
The Commission shall implement the measures referred to in Articles 81 and 94 of this Law, in the following manner:
1) Directly;
2) In cooperation with other authorities;
3) By submitting requests to competent judicial bodies.
Contents of Decisions on Removal of Irregularities Determined
Article 84
The decision whereby removal of irregularities determined is imposed shall in particular include:
1) A description of irregularities the removal of which has been imposed by the decision;
2) A time limit within which the audit firm, i.e. the independent auditor shall be obliged to remove the irregularities and deliver a report on the removal of irregularities;
3) A method of removal of irregularities;
4) Evidence of removal of irregularities that the audit firm, i.e. the independent auditor shall deliver to the Commission.
Removal of Irregularities Determined
Article 85
The Commission shall, by means of a decision, order the removal of the irregularities determined if:
1) The ownership structure and management of the audit firm are not in compliance with the provisions of this Law, i.e. if the independent auditor acts contrary to Article 17 of this Law;
2) The audit firm, i.e. the independent auditor does not act in compliance with the provisions of Articles 20 and 21 of this Law;
3) The audit firm does not publish the transparency report in compliance with Article 24 of this Law;
4) The audit firm, i.e. the independent auditor performs additional services contrary to Article 45 of this Law;
5) The audit firm, i.e. the independent auditor does not deliver the reports and notifications within the meaning of Article 25 and Article 66, paragraph 2 of this Law;
6) The audit firm, i.e. the independent auditor does not comply with the conditions for issuance of a licence for carrying out audits in compliance with this Law;
7) If the audit firm, i.e. the independent auditor do not act in compliance with the provisions of this Law and the secondary legislation adopted on the basis of this Law.
Report on Removal of Determined Irregularities
Article 86
An audit firm, i.e. an independent auditor shall, within a time limit that may not be shorter than 15 days or longer than 90 days, remove the irregularities determined and to submit to the Commission a report that shall include a description of the measures taken, as well as to enclose proof of the removal of irregularities.
Article 87
The Commission shall impose a public reprimand by means of a decision where it determines that:
1) The audit firm, i.e. the independent auditor has not complied with the decision whereby the removal of irregularities determined has been ordered;
2) The licence of the licensed certified auditor who carries out auditing tasks with an audit firm, i.e. with an independent auditor, has been revoked;
3) The audit firm, i.e. the independent auditor has breached, more than four times over the last two years, the duty of timely and correct submission of reports, i.e. notifications, or has in some other manner interfered with carrying out of the quality control of their operations;
4) If the audit firm, i.e. the independent auditor fails to implement an adequate system of internal controls in compliance with the ISA, where that has no significant impact on the operations of the audit firm, i.e. the independent auditor.
Interim Ban on Carrying Out of Statutory Audits
Article 88
An interim ban on carrying out statutory audit shall be imposed if:
1) The measure of public reprimand has been imposed against the audit firm, i.e. the independent auditor in the previous control, and such measure has not been deleted from the register within the meaning of this Law;
2) If the audit firm, i.e. the independent auditor does not remove the irregularities determined, within an additional time limit set by the Commission;
3) If the audit firm, i.e. the independent auditor does not implement an adequate system of internal controls in compliance with the ISA, where that significantly impacts the operations of the audit firm.
The interim ban referred to in paragraph 1 of this Article can be imposed with the maximum duration of three years from the date of passing of the decision on the imposition of the measure.
The audit firm, i.e. the independent auditor may resume carrying out the tasks of statutory audits following the expiry of the period for which the ban has been imposed, upon prior notification to the Commission that they begin to perform the statutory audit.
Revocation of Licence for Carrying Out of Audits
Article 89
The Commission shall revoke a licence for carrying out audits by means of a decision:
1) Where it has been issued on the basis of false information;
2) If the audit firm no longer complies with the conditions referred to in Articles 12, 13 and 15 of this Law i.e. if the independent auditor loses the licence for carrying out audits, and they fail to comply with such conditions again within a time limit of 60 days;
3) If the number of licensed certified auditors falls below the number prescribed and the audit firm, within a time limit of three months from the occurrence of such change, fails to increase the number of licensed certified auditors up to the number prescribed by this Law and fails to notify the Chamber and the Commission thereof;
4) If the measure of a temporary ban on conducting activity has been imposed on the audit firm in the previous control, which has not been deleted from the register within the meaning of this Law;
5) If the audit firm i.e. independent auditor does not act in compliance with the provisions of this Law and other regulations governing audit of financial statements;
6) If the audit firm i.e. independent auditor has been banned from conducting the audit activity by means of a decision of a court of relevant jurisdiction;
7) If the audit firm i.e. independent auditor does not have an established system of internal controls in compliance with the ISA or does not apply it;
8) If the audit firm i.e. independent auditor acts contrary to the regulations governing prevention of money laundering and financing of terrorism - at a reasoned proposal of the authority competent for the implementation of regulations on the prevention of money laundering and financing of terrorism.
The Commission shall deliver the decision on revocation of the licence for carrying out audits to the audit firm, i.e. independent auditor, and when it becomes enforceable - to the Ministry, the Chamber and the Business Registers Agency.
In the case the permit for operation of a Member State i.e. a third country audit firm has been revoked, the Commission shall act in compliance with Article 14, paragraph 6 of this Law.
In the case where the compliance with the conditions referred to in paragraph 1, item 2) of this Article depends on completion of a proceeding before the competent authorities, the time limit shall be suspended until the completion of that proceeding.
Conditional Revocation of Licence for Carrying Out of Audits
Article 90
The Commission may, by means of a decision on conditional revocation of the licence for carrying out audits, determine that the licence shall not be revoked if the audit firm, i.e. the independent auditor, on which such measure has been imposed, in a period that may not be shorter than six months and longer than two years, does not commit another breach of this Law when carrying out audits.
The Commission shall revoke the decision on conditional revocation of the licence for carrying out audits and shall revoke the licence if the audit company, i.e. the independent auditor on which the measure of conditional revocation of licence has been imposed, during the period determined in the decision referred to in paragraph 1 of this Article commits a new breach of this Law when carrying out audits.
Prohibition for the Founders and Members of the Management Body of an Audit Firm
Article 91
The founder (member) of an audit firm or a member of the management body of an audit firm can be, within the meaning of Article 81, paragraph 1, item 4) of this Law, temporarily prohibited from conducting their function in such firm if the firm acts contrary to Article 45 of this Law.
Prohibition for the Founders and Members of the Management Body of a Public-Interest Company
Article 92
The founder (member) of a public-interest company or a member of the management body of such company can be, within the meaning of Article 81, paragraph 1, item 5) of this Law, temporarily prohibited from conducting their function if the company acts contrary to Article 36 of this Law, unless where regulated otherwise by special regulations.
Article 93
The Commission may, by means of a decision, impose a fine against an audit firm amounting up to 10 per cents of the income earned over the previous financial year from the services of financial statements’ auditing, for the actions for which the measures referred to in Article 81, paragraph 1, items 1) through 6) of this Law can be imposed.
The measure referred to in paragraph 1 of this Article can also be imposed jointly with the measures referred to in Article 81, paragraph 1, items 1) through 6) of this Law.
Following the delivery to the audit firm, the decision referred to in paragraph 1 of this Article shall be an enforceable document.
The fine referred to in paragraph 1 of this Article shall be paid into the account of the Commission.
Measures in the Procedure of Quality Control of the Work of Licensed Certified Auditors
Article 94
If the Commission determines in the procedure of quality control that a licensed certified auditor does not act in compliance with the provisions of this Law and other rules of auditing, it may take the following measures:
1) Issue a reprimand;
2) Impose a public reprimand;
3) Conditionally revoke the licence;
4) Revoke the licence;
5) Impose a fine.
The Commission shall impose the measures referred to in paragraph 1 of this Article by means of a decision.
The decision referred to in paragraph 2 of this Article shall be final. An administrative dispute can be initiated against the decision.
The Commission shall deliver the decision on imposition of the measure referred to in paragraph 2 of this Article to the Chamber, on the following day from the date on which such decision has become enforceable.
The Chamber shall enter the decision on imposition of the measure referred to in paragraph 2 of this Article without delay in the Register of Imposed Measures.
In the procedure of quality control of the work of licensed certified auditors by the Commission, provisions of Articles 79, 80 and 89 of this Law shall apply mutatis mutandis.
Article 95
The Commission shall, by means of a decision, issue a reprimand to a licensed certified auditor if the licensed certified auditor does not act in compliance with the rules of auditing in such a manner, however, that it does not have a significant impact on the quality of the audit report.
Article 96
The Commission shall, by means of a decision, issue a public reprimand to a licensed certified auditor if:
1) The licensed certified auditor does not act in compliance with the rules of auditing, and the conditions for revocation of the licence, i.e. for conditional revocation of licence are not fulfilled;
2) If a reprimand has been issued in the previous control, within the meaning of this Law and it is determined in the repeated control that the deficiencies that have been the basis for the imposition of such measure have not been removed and the reprimand has not been deleted from the Register referred to in Article 69 of this Law.
Conditional Revocation of the Licence
Article 97
The Commission may, by means of a decision on conditional revocation of licence, rule that the licence shall not be revoked if the person, on which such measure is imposed, in the period stated in the decision, does not commit another breach of the provisions of this Law when carrying out audits.
The Commission shall cancel the decision on conditional revocation of licence and revoke the licence if the person on which the measures of conditional revocation of licence is imposed, during the period determined commits another breach of this Law when carrying out audits, due to which it is possible to revoke the licence, i.e. to issue a reprimand.
Article 98
The Commission shall revoke the licence from a certified auditor by means of a decision:
1) If the licence has been obtained by stating false data;
2) If the person has been finally convicted of the criminal offences within the meaning of Article 5 of this Law.
The Commission shall revoke the licence by means of a decision if the licensed certified auditor, when carrying out audit:
1) Acts contrary to Articles 44 and 51 of this Law;
2) Acts contrary to the rules of audit and if due to that the audit report that he has signed contains deficiencies, i.e. is misleading for the users of the audit report;
3) Does not comply with the obligation to protect confidential information;
4) Does not act in compliance with the provisions of this Law and the ISA.
Article 99
The Commission may, by means of a decision, impose a fine against a licensed certified auditor up to the amount of twelvefold average of the salaries earned by such auditor over the past three months preceding the month in which the fine is imposed, for any actions for which the measures referred to in Article 94, paragraph 1, items 1) through 4) of this Law can be imposed.
The measure referred to in paragraph 1 of this Article can additionally be imposed jointly with the measures referred to in Article 94, paragraph 1, items 1) through 4) of this Law.
The decision referred to in paragraph 1 of this Article, following the delivery to the licensed certified auditor, shall be an enforceable document.
The fine referred to in paragraph 1 of this Article shall be paid into the account of the Commission.
Reporting of Irregularities of Public-Interest Undertakings
Article 100
When a licensed certified auditor, i.e. an audit firm that is carrying out an audit of a public-interest undertaking suspects that irregularities, including fraud, have occurred or may occur in the part of the auditee’s audited financial statements, they shall inform the auditee and request that investigative actions are carried out on that basis and that necessary measures are taken that would impact the irregularities perceived and prevent their future occurrence.
In case that the auditee has not explored the irregularities perceived, the licensed certified auditor, i.e. the audit firm shall notify the Commission.
Notification of irregularities referred to in paragraph 2 of this Article, by the licensed certified auditor, i.e. audit firm shall neither be considered as a breach of the confidentiality agreement concluded with the auditee, nor shall it be subject to any other legal restriction for disclosure of information.
The licensed certified auditor, i.e. the audit firm shall notify the Audit Commission with the public-interest company, the Chamber and the Commission in the following cases when there is:
1) A significant breach of the law, regulations and administrative guidelines that are specifically impacting the management of the public-interest company;
2) A significant danger or doubt regarding continuation of operations of the public-interest company;
3) A disclaimer of opinion on financial statements or issuing of an adverse opinion.
Article 101
The Commission shall, once a year, inform the Committee of European Auditing Oversight Bodies of all the measures imposed on audit firms, independent auditors and licensed certified auditors. Such information shall be included in the annual report of the Committee of European Auditing Oversight Bodies.
The Commission shall, without delay, notify the Committee of European Auditing Oversight Bodies of the revoked permits of audit firms and revoked licences of certified auditors for carrying out audits.
VII PUBLIC OVERSIGHT OF AUDITING
Article 102
The Commission shall conduct public oversight of auditing within the meaning of this Law with the aim of protecting the public interest in operation of the Chamber, audit firms, independent auditors and licensed certified auditors.
Members of the Commission that are making decisions relating to the implementation of this Law must be non-practitioners within the meaning of this Law.
Article 103
The Commission shall, within the competences laid down by this Law, conduct oversight of:
1) The implementation of the programme for taking examination, recognition and organisation of examinations for acquiring the title of certified auditor;
2) Determining and implementation of the programme of continuous professional development of licensed certified auditors;
3) Issuing, renewal and repealing the licences of the certified auditors;
4) Issuing and repealing the audit firms’ and independent auditors’ permits for carrying out audits;
5) Application of the ISA;
6) Application of the Code of Professional Ethics of Auditors;
7) Implementation of investigative, disciplinary and other proceedings conducted by the Chamber.
The Commission shall perform other tasks as well, in compliance with this Law.
The Commission shall cooperate with the Chamber, supervisory authorities in the Republic of Serbia, supervisory authorities of the Member States and with the supervisory authorities of the third countries.
Method of Carrying Out the Tasks
Article 104
The Commission shall carry out the tasks referred to in Article 103 of this Law, by:
1) Providing consents and opinions on the bylaws of the Chamber in compliance with this Law, monitoring the implementation of these acts and proposing amendments thereto;
2) Considering the annual report on the work of the Chamber, which the Chamber shall deliver within 30 days from the adoption in the Assembly meeting.
Measures in Oversight Procedure
Article 105
Where the Commission assesses that there is reasonable doubt that certain illegal actions and irregularities have been committed in the course of activities of the Chamber, it can:
1) Request reports and other data on irregularities perceived;
2) Order measures aimed at removing them;
3) Propose initiating proceedings for determining responsibilities of the Chamber’s bodies of, i.e. its employees;
4) Take other measures within the scope of its competence as well.
Financing of the Commission’s Competences Entrusted by the Law
Article 106
With a view to carrying out the activities in compliance with this Law, the Commission shall be financed by:
1) A special contribution for carrying out quality controls of the operations of audit firms;
2) Other sources in compliance with the law.
The Commission shall pass an act whereby the special contribution referred to in paragraph 1, item 1) of this Article shall be determined, upon prior obtaining consent from the Ministry.
Rules of Procedure, Work Programme and Work Report
Article 107
The Commission shall pass the rules of procedure which shall regulate the method of work of the Commission when carrying out the activities entrusted to it by this Law.
The Commission shall publish the annual work programme and the annual work report on its web site.
The Commission shall deliver the annual work report to the Ministry and notify the Ministry of the implementation of competences laid down by this Law twice a year at the minimum.
The Committee for Public Oversight of Auditing
Article 108
The Committee for Public Oversight of Auditing (hereinafter: the Public Oversight Committee) shall provide expert assistance to the Commission with a view to the implementing the provisions of this Law.
The Public Oversight Committee shall consider and grant consents to the general and individual acts passed by the Commission within its competences laid down by this Law.
The Public Oversight Committee shall have a Chairman and six members.
The members of Public Oversight Committee shall be appointed and dismissed by the Government, and specifically:
1) The Chairman and four members - at the proposal of the Minister in charge of finances;
2) One member - at the proposal of the National Bank of Serbia;
3) One member - at the proposal of the Securities Commission.
In order to be nominated for a member of Public Oversight Committee a candidate must meet the following requirements:
1) Have a higher education degree in a scientific field of economic or legal sciences after completing second degree studies in compliance with the law governing higher education, i.e. after completing undergraduate studies in the duration of four years at the minimum;
2) Have at least five years of professional experience at a managerial position in the field of accounting, auditing, finance or law or eight years of work experience in these fields;
3) Have not been convicted for criminal offences within the meaning of Article 5 of this Law.
One member of the Public Oversight Committee referred to in paragraph 4, item 1) of this Article must be a representative of the Chamber, but, in compliance with this Law, he cannot take part in decision making.
The Chairman and the members of the Public Oversight Committee referred to in paragraph 4, item 1) of this Article can be nominated among the ranks of civil servants holding a post, i.e. among the appointed persons.
The members of the Public Oversight Committee shall be elected for a period of four years and the same persons can be re-elected one more time at the most.
The members of the Public Oversight Committee shall make their decisions independently and autonomously.
The amount of remuneration for work for the Chairman and the members of the Public Oversight Committee shall be determined by the Government at the proposal by the Ministry.
The expert and administrative tasks for the needs of the Public Oversight Committee shall be carried out by the Commission.
Mutual Recognition of Regulations in Respect of Public Supervision
Article 109
The Commission and the competent authorities for public supervision in the Member States in which the audit firms or certified auditors have obtained the permits, i.e. the licence for performing audits or are registered for performing these tasks, shall mutually recognize the regulations governing the method of work and supervision over audit firms and licensed certified auditors.
An audit firm that has been issued a permit in compliance with this Law, and which carries out audits in another Member State (a host Member State) shall be subject to quality control of the internal quality control system in compliance with this Law, as well as to the quality control of carrying out the audit, that is performed in the host Member State over the audit that has been carried out in that Member State.
In the case of a statutory audit of the consolidated financial statements, no additional requirements in respect of the statutory audit relating to registration, quality control review, accounting standards, professional ethics and independence can be imposed against an audit firm from a Member State, i.e. against an auditor from a Member State that is carrying out statutory audit of a subsidiary legal person established in the Member State.
In the case of a statutory audit of the financial statements of an economic entity with the business seat in a Member State, whose securities are traded on the regulated market of the Republic of Serbia in compliance with the regulations governing the capital market, no additional requirements in relation to the statutory audit concerning registration, quality control review, auditing standards, professional ethics and independence can be imposed against the audit firm, i.e. the audit firm from the Member State carrying out the statutory audit that is registered for carrying out statutory audits in compliance with this Law.
A third-country audit firm or a third-country auditor that has obtained a permit for carrying out audit in compliance with this Law shall be subjected to the system of quality control and public oversight in compliance with this Law.
Article 110
The Commission and the Public Oversight Committee shall keep as confidential all data, facts and circumstances that they have acquired while performing the activities in compliance with the provisions of this Law.
Provision of paragraph 1 of this Article shall also apply to the employees and former employees with the Commission, i.e. to other persons to which confidential information were made available when working with the Commission.
Business secrets within the meaning of paragraph 1 of this Article shall be kept in compliance with this Law, except where regulated otherwise by special regulations.
Provisions of this Law shall not apply to the Commission and Chamber members with regard to the exchange of data and cooperation with the competent Member States’ authorities relating to activities in compliance with this Law.
The method and conditions applicable to the exchange of data, audit documentation and other documents shall be determined by the Commission by means of its bylaws.
Provision of paragraph 4 of this Article shall apply to the exchange of data with competent third-countries’ authorities, where an agreement on mutual cooperation has been concluded.
VIII INTERNATIONAL COOPERATION
Cooperation with the Member States
Article 111
The Commission shall provide assistance, deliver information and cooperate with competent Member States’ authorities that are responsible for approval, registration, work quality review and oversight of Member States’ auditors, i.e. audit firms.
The Commission members shall comply with the obligation of confidentiality event after the termination of their membership, concerning all data obtained during cooperation with the competent authorities referred to in paragraph 1 of this Article.
Upon receipt of a request from the competent Member States’ authorities for delivery of information, the Commission shall without delay provide all pieces of information requested.
The Commission shall take measures that are necessary to collect the requested information.
Where the Commission is not able to obtain the information requested, it shall notify thereof the competent authority that has filed he request.
The Commission may refuse a request for delivery of information:
1) If their publication may have a negative impact on the sovereignty, security or public order of the Republic of Serbia;
2) If, before the authorities of the Republic of Serbia, judicial proceedings relating to the same activities have already been initiated against the audit firms, independent auditors and licensed certified auditors;
3) If the competent authorities of the Republic of Serbia have already passed a final judgement against the persons referred to in item 2) of this paragraph for the same actions.
If the Commission gets the data from other competent authorities, it may use such data only for carrying out of its work on the basis of this Law and within the administrative or judicial proceedings related thereto.
Article 112
Where it is determined in an oversight procedure that the audit firms, independent auditors and licensed certified auditors carry out or have carried out activities that are contrary to the provisions of this Law in the territory of another Member State, the Commission shall notify the competent authority of the Member State.
If the Commission receives a notice from a competent Member State authority that the audit firms, independent auditors and licensed certified auditors in the territory of the Republic of Serbia carry out or have carried out activities that are contrary to the provisions of this Law, it shall take measures in compliance with this Law and notify thereof the authority that has delivered the notice.
If a competent Member State authority requests that quality control of the operations of audit firms, independent auditors and licences certified auditors be carried out in the Republic of Serbia, the Commission may refuse the request for carrying out the control or request relating to participation of representatives of the competent authority of another Member State in carrying out of a control:
1) If such control could have a negative impact on the sovereignty, security or public order of the Republic of Serbia;
2) If judicial proceedings have already been initiated before the authorities of the Republic of Serbia relating to the same actions against audit firms, independent auditors and licensed certified auditors;
3) If the competent authorities of the Republic of Serbia have already passed the final judgement against the persons referred to in item 2) of this paragraph for the same actions.
In the case referred to in paragraph 3, items 2) and 3) of this Article, the Commission shall notify the competent authorities of the Member States on the proceedings initiated and on the final judgements.
Cooperation with Third Countries
Article 113
The Commission may permit that the working documentation or other documents possessed by the licensed certified auditors, independent auditors and audit firms be delivered to the competent third-country authorities on condition that:
1) The working documentation or other documents are relating to audits of financial statements and consolidated financial statements of the companies that have issued securities in a third country or that are part of a group which prepares consolidated financial statements;
2) The transmission of working documentation is carried out through the Commission towards the competent third-country authorities at the request of the competent third-country authority only;
3) The conditions referred to in paragraph 2 of this Article are fulfilled;
4) There is a concluded agreement on cooperation between the Commission and the competent third-country authority;
5) The transmission of personal data to a third country is carried out mutatis mutandis and in compliance with the provisions of Article 111 of this Law and the law on protection of personal data;
6) The competent third-country authorities comply with the conditions prescribed by the European Commission with a view to improving cooperation among the competent authorities.
The agreement referred to in paragraph 1, item 4) of this Article shall mandatorily include:
1) An explanation of the request for delivery of working documentation and other documents;
2) The provisions on obligation to protect data confidentiality by the persons currently or previously employed with the competent third-country authorities;
3) The provisions on obligation to use the working documentation and other documents by the competent third-country authorities for conducting oversight and review of the quality of operations only, in compliance with Articles 14 through 16, Articles 65 through 72 and Articles 75 through 101 of this Law.
The Commission may refuse a request of a competent third-country authority:
1) If the delivery of working documentation, i.e. documents could have a negative impact on the sovereignty, security or the legal order of the Republic of Serbia;
2) If judicial proceedings have already been initiated before the competent authorities of the Republic of Serbia relating to the implementation of public oversight and control of operations of the licensed certified auditors, independent auditors and audit firms;
3) If the competent authorities of the Republic of Serbia have already passed the final judgement in the judicial proceedings related to the implementation of public oversight and quality control of operations.
By way of exception from paragraph 1 of this Article, the Commission may permit the licensed certified auditors, independent auditors and audit firms to deliver the working documentation and other documents directly to the competent third-country authorities, on condition that:
1) The documentation is used for the purpose of initiating proceedings by the competent authorities in the third country;
2) The delivery of documentation is not contrary to the obligations that the licensed certified auditors, independent auditors, and audit firms are obliged to comply with;
3) There is an agreement on cooperation with the competent third-country authorities that provides the competent bodies of the Republic of Serbia with direct access to working documentation and other documents;
4) The competent third-country authority that is sending the request notifies the Commission in advance of each direct request for delivery of working documentation, i.e. documents, inclusive of the statement of reasons;
5) There is compliance with the conditions specified in paragraph 2 of this Article.
The Commission shall notify the European Commission of the cooperation referred to in paragraphs 1 and 4 of this Article.
Article 114
A fine ranging from RSD 300,000 to RSD 3,000,000 shall be imposed for an economic offence against a legal person:
1) That acts contrary to Article 14, paragraph 3 of this Law;
2) With which an audit is carried out, if it fails to select an audit firm in the manner and within the time limit referred to in Article 32 of this Law;
3) With which an audit is carried out, if it fails to act in compliance with the provisions of Article 36 of this Law;
4) If it acts contrary to Article 54, paragraph 1 of this Law;
5) That as a public-interest company has not established an Audit Commission in compliance with Article 53 of this Law.
The responsible person with the legal person shall additionally be sanctioned for the acts referred to in paragraph 1 of this Article for an economic offence, with a fine ranging from RSD 20,000 to RSD 200,000.
Article 115
A fine ranging from RSD 300,000 to RSD 3,000,000 shall be imposed for an economic offence against the Chamber:
1) If it fails to acquire the consent in compliance with the provisions of Article 10, paragraph 2 and Article 57, paragraph 3 of this Law;
2) If it fails to carry out the tasks prescribed by the provisions of Article 57 of this Law;
3) If it fails to deliver the annual financial statement and the annual work report in compliance with Article 58, paragraph 1, item 7) of this Law;
4) If it fails to act in compliance with the provisions of Article 59 of this Law;
5) If it fails to publish the documents in the manner prescribed by the provisions of Article 63 of this Law;
6) If it acts contrary to the Article 65, paragraphs 2 and 3 of this Law.
For the acts referred to in paragraph 1 of this Article, the responsible person of the Chamber shall be sanctioned for an economic offence, in accordance with their responsibilities, with a fine ranging from RSD 20,000 to RSD 200,000.
Article 116
A fine ranging from RSD 100,000 to RSD 2,000,000 shall be imposed for a misdemeanour against the legal person referred to in Article 48 of this Law, if it acts contrary to the provision of that Article.
A fine ranging from RSD 50,000 to RSD 150,000 shall be imposed for a misdemeanour against the natural person referred to in Article 48 of this Law, as well as against the responsible person with the legal person referred to in paragraph 1 of this Article, if they act contrary to the provisions of that Article.
X TRANSITIONAL AND FINAL PROVISIONS
The Public Oversight Committee
Article 117
The Board for Public Oversight of Auditing, which was established in compliance with the Law on Auditing ("Official Herald of the RS", Nos. 62/13 and 30/18), shall continue to operate as the Public Oversight Committee, in compliance with the provisions of this Law.
Article 118
The Commission shall pass the acts and to take over the competences allocated by means of the provisions of this Law, within one year from the date of entry into force of this Law.
The agreement between the Commission and the Chamber shall regulate in more detail the issues of taking over of employees that carry out the tasks of quality control, the documentation, objects and equipment necessary for exercising of the competences determined by this Law.
Article 119
The Chamber, as established in compliance with the Law on Accounting and Audit ("Official Herald of the RS", Nos. 46/06, 111/09 and 99/11 - other law), shall continue to operate in compliance with the provisions of this Law.
The Chamber shall harmonize the existing acts and pass new acts in compliance with the provisions of this Law within one year from the date of entry into force of this Law.
Validity Term of the Licence and Harmonization of Operations
Article 120
The audit firms shall harmonize their operations with the provisions of this Law within one year from the date of entry into force of this Law at the latest and to notify the Commission and the Chamber thereof.
If an audit firm fails to deliver the notification referred to in paragraph 1 of this Article within 90 days from the date of expiry of the time limit referred to in that paragraph, the Chamber shall ex officio, without delay, delete such firm from the Register.
Professional Titles and Licences
Article 121
The professional title of certified auditor shall be recognized, in compliance with this Law, to the persons who by the date of entry into force of this Law acquired the certificate or the decision on the title of certified auditor, by taking an exam according to the program of the Federal Government.
The professional title of certified auditor shall be recognized, in compliance with this Law, to the persons who, by the date of entry into force of this Law, acquired the certificate or who hold the decision on the title of certified auditor without taking an exam in compliance with the Law on Auditing of Accounting Statements ("Official Gazette of the FRY", Nos. 30/96, 74/99, 1/00 and 71/01).
The professional title of certified auditor i.e. certified internal auditor shall be recognized, in compliance with this Law, to the persons who, by the date of entry into force of this Law, acquired the professional title of a certified auditor i.e. certified internal auditor in compliance with the Law on Accounting and Auditing ("Official Herald of the RS", Nos. 46/06, 111/09 and 99/11 - other law) and the Law on Auditing ("Official Herald of the RS ", Nos. 62/13 and 30/18).
The licences issued to the certified auditors in compliance with the Law on Auditing ("Official Herald of the RS", Nos. 62/13 and 30/18) shall be valid until the date of expiry thereof.
Article 122
The persons who by the date of entry into force of this Law have commenced taking exam according to the programme of the Chamber for acquiring of the titles of certified auditor and certified internal auditor can take the remaining exams according to the programme in accordance with which they have commenced taking such exam.
The applications for issuance of licence i.e. of auditing permit which have been submitted by the date of entry into force of this Law shall be decided on in compliance with the regulations that were in force by the date of entry into force of this Law.
The procedures pertaining to the auditing quality control and imposition of measures, which have been initiated by the date of entry into force of the Commission acts referred to in Article 118 of this Law, shall be resolved in compliance with the regulations that were in force by the date of entry into force of this Law.
Deletion of Measures Already Imposed
Article 123
Provisions of Article 72 of this Law in respect of the time limit for deletion of imposed measures from the Register shall additionally apply to the measures imposed until the date of entry into force of this Law, in compliance with the Law on Auditing ("Official Herald of the RS", Nos. 62/13 and 30/18)
Calculation of Time Limit for Replacement of Licensed Certified Auditor
Article 124
The time limit for replacement of the audit firm i.e. of the licensed certified auditor, signatory of the audit report within the meaning of Article 50 of this Law shall begin to run from the first performed audit of financial statements with the same reporting entity starting from the date of entry into force of this Law.
Effect of Admission of the Republic of Serbia to the European Union
Article 125
From the date of admission of the Republic of Serbia to the European Union, provisions of Article 24, Article 30, Article 33, paragraph 8, Article 34, Article 37, paragraph 7, Article 40, Article 42, paragraph 4, Article 45, Article 50, Article 52, paragraph 3, Article 76 and Article 77, paragraphs 2 and 3, Article 78, paragraphs 2, 4, 5 and 6, Article 83 and Article 100 of this Law, which pertain to the audit firms that perform audits of the public-interest companies, as well as to carrying out of quality control of auditing and public supervision in the part regulated by the Regulation on special requirements regarding statutory audit of public-interest entities (Regulation (EU) No 537/2014) shall be repealed.
From the day of admission of the Republic of Serbia to the European Union, the Regulation on special requirements regarding statutory audit of public-interest entities (Regulation (EU) No 537/2014) shall apply to the audit firms that perform audits of the public-interest companies, as well as to carrying out of quality control of auditing and public supervision of such audit firms.
Until the day of admission of the Republic of Serbia to the European Union, provisions regulating cooperation with third countries i.e. provisions relating to auditors and audit firms of the third countries shall apply to cooperation with the Member States, to auditors and to the audit firms of the Member States.
Provisions of Article 7, paragraph 16, Article 14, paragraph 6, Article 67, Article 101, Article 109 and Article 110, paragraph 4, Articles 111 and 112, as well as of Article 113, paragraph 1, item 6) and paragraph 5 of this Law shall apply from the date of admission of the Republic of Serbia to the European Union.
Application of Previously Adopted Secondary Legislation
Article 126
Until the beginning of application of the secondary legislation adopted on the basis of this Law, the secondary legislation adopted on the basis of the Law on Auditing ("Official Herald of the RS", Nos. 62/13 and 30/18) shall apply.
Article 127
On the day of entry into force of this Law, the Law on Auditing ("Official Herald of the RS", Nos. 62/13 and 30/18) shall be repealed.
Article 128
This Law shall enter into force on 1 January 2020.