Legal Acts in English

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.

Individual notions, within the meaning of this Law, shall have the following meanings:

1) audit of financial statement (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 factually significant respects give a true and fair account of the financial position and results of operations of a legal entity in accordance with the appropriate regulations for the preparation of financial statements;

2) an auditee shall be a legal entity and/or an entrepreneur, within the meaning of the law regulating accounting, whose financial statements are subject to statutory audit, in compliance with this Law;

3) the 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 of a Member State shall be a legal entity, irrespective of the legal form thereof, which holds a permit of the competent authority of 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 entity, irrespective of the legal form thereof, which holds the permit of the competent third-country authority to carry out statutory audits, other than the legal entities registered as audit firms 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 an entrepreneur;

10) an auditor of a Member State shall be a natural person that holds a valid document of the competent authority of 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 the natural person that are 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 and/or independent auditors, and

(2) aims to distribute profits or costs, or has common ownership, control or management, common policy and auditing quality control, common business strategy, uses a common name or a significant part of professional resources;

14) an audit firm connected to an audit firm of a Member State shall be an audit firm that is which is connected to an audit firm of a Member State by means of common ownership, control or management;

15) an audit report shall be the 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), where 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) the large legal entities classified in compliance with the law regulating accounting;

(2) the legal entities that are considered to be public companies in compliance with the law regulating the capital market;

(3) all legal entities, irrespective of their size, which are declared to be the legal entities 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, that 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 and/or 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) the licensed certified auditor who signs the audit report;

25) a third country shall mean the country that is not a Member State of the European Union;

26) related parties shall mean the related parties 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 entity;

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 entity shall be the legal entity that is classified as a medium-sized legal entity in compliance with the law regulating accounting;

31) a small legal entity shall be the legal entity that has been classified as a small legal entity in compliance with the law regulating accounting;

32) the home Member State shall be the Member State that has issued the permit for carrying out audits to the audit firm in question;

33) the host Member State shall be the 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.

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 Službeni glasnik Republike Srbije and on the web site of the Ministry.