The three-year compliance period for legal entities to comply with provisions of the Law on Accounting (“Official Gazette of RS”, No. 73 /2019 and 44/2021 – other laws) (“the Law”), comes to an end.
That means legal entities whose main registered activity is the provision of accounting services (“the Accounting Service Providers”) must register in the Register of Accounting Service Providers (“Register”), and the obligation for all legal entities that engage an entity with bookkeeping and preparation of financial statements, to engage only a registered entity in the aforementioned Register.
From 2023, accounting services will only be provided by legal entities registered in the Register. For registration, one must have a Chambers of Authorized Auditors license, which can be issued to an entity whose main registered activity is the provision of accounting services and whose founder, i.e. the beneficial owner and the management body, has not been convicted of a criminal offense in the sense of the law regulating the liability of legal entities for criminal offenses, that is, if it is a natural person, has not been convicted of criminal offenses prescribed by the Law on Accounting.
In addition to the above, in order to obtain a license, the Accounting Services Provider must have at least one full-time employee with a professional title in the field of accounting or auditing from a professional organization that is a member of the International Federation of Accountants.
The Ministry of Finance has issued several opinions, including the prohibition for a natural person who meets the condition in terms of an acquired professional title in the field of accounting or auditing to be listed in the Register in two places at the same time, i.e. within the data on the sole proprietor and legal entity, that it is not possible to obtain a permit based on the employment of a person based on an employment contract, as well as that a branch of a domestic legal entity cannot be the subject of registration in the Registry.
Therefore, commencing from January 1st, 2023, legal entities may only engage bookkeeping and the preparation of financial statements services from a company or a sole proprietor registered in the Register. Otherwise, they risk committing a commercial offence, i.e., a misdemeanor, for which the following fines are prescribed:
- from RSD 100,000 to 3,000,000 (approx. EUR 850 to 25,000) a commercial offence for a legal entity,
- from RSD 20,000 to 150,000 (approx. EUR 170 to 1,300) a commercial offence for a responsible person in a legal entity and
- from RSD 100,000 to 500,000 (approx. EUR 850 to 4,200) a misdemeanor for a sole proprietor.
The financial report will not be considered complete if it was drawn up by an entity that is not registered in the Register.
Another option for legal entities is to hire a person who meets requirements for bookkeeping and preparation of financial statements in terms of education, work experience. The Law does not prescribe a mandatory type of contract for the work engagement in such situation (Employment Contract, Purchase Order Contract, etc.) Such person does not have to be registered in the Register, considering that only companies and sole proprietors whose main registered activity is the provision of accounting services can be registered.
The Law provides an exception to the rule that bookkeeping and preparation of financial statements can only be entrusted to the registered Accounting Service Provider and preparation of financial statements in favor of the related legal entities.
Although the obligation in question expires in less than a week, according to the available data from the website of the Business Registers Agency, only 3,255 Accounting Service Providers are registered, and 7,000 entities currently provide accounting services as their predominant business activity. Despite the large number of entities who have not yet been registered, the Ministry of Finance has announced that compliance period will not be extended. We recommend that you approach your bookkeeper/ accounting agency and ensure that they are registered.
Please contact us for any additional company/ compliance queries.