The new law has also established the Financial Reporting Council – a body that is similar to the Board on Standards for Financial Reporting.

Preparing financial statements

Under the new law, international financial reporting standards, as issued by the International Accounting and Assurance Standards Board (IAASB) and approved by the Financial Reporting Council, are mandatory for large, medium and small-sized entities when preparing general purpose financial statements. These standards do not apply to micro-enterprises, although other accounting and reporting rules (as issued by the council) will apply.

Consolidated financial statements should be prepared in accordance with EU Directive 78/660/EEC.

The new law defines the time limit for the retention of accounting documents:

• Payrolls should be preserved permanently;
• Financial statements and supporting documents must be retained for up to 10 years; and
• Supporting accounting evidence should be stored for a minimum of six years.

Accounting records are to be maintained in the official languages of Kosovo and using the euro in terms of currency. Large and medium-sized companies may keep accounting records in English, provided that financial statements are also translated into Kosovo's official languages.

The new law requires companies to verify at least once a year the existence and evaluation of assets, liabilities and capital through conducting an inventory of these items supported by proper evidence. Company management is responsible for ensuring that financial statements are fair and truthful.

A company's general financial statements must be filed with the council (a copy must be submitted to the Ministry of Trade and Industry) by o later than April 30 of the following year. Consolidated financial statements should be filed with the council (a copy must be submitted to the ministry) by no later than June 30 of the following year. Failure to adhere to these deadlines will be subject to a penalty varying from €5,000 to €25,000.

Auditing financial statements

Statutory audits should be conducted in accordance with the International Standards of Auditing and related guidelines of the IAASB. Financial statements of large companies must be audited by auditing firms, while those of medium-sized companies may be audited by auditing firms or individual auditors. Small businesses need not have their statutory financial statements audited.

Failure to submit audited financial statements and maintain accounting logs within the deadlines prescribed by the new law will be subject to a penalty varying from €5,000 to €10,000.

Penalties will also be imposed if a company fails to comply with the required accounting and auditing standards.

For further information please contact Mirjeta Emini at Boga & Associates by telephone (+355 42251050), fax (+355 42251055) or email (memini@bogalaw.com).

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