UNOPS supported Montenegro’s EU acquis alignment in the area of statutory audits of annual accounts and consolidated accounts, including of public interest entities. The primary goal of this assignment has been to provide expert assistance to the Ministry of Finance to amend the Law on Auditing in line with the EU acquis and provide assistance to the Ministry in developing the Regulatory Impact Assessment of the proposed legislation.

The UNOPS expert provided comprehensive assistance to the Ministry of Finance in amending Montenegro’s Law on Auditing to align with key EU directives and regulations, including Directive 2006/43/EC, Regulation (EU) No. 537/2014, and the Corporate Sustainability Reporting Directive (EU) 2022/2464. The advisor further ensured the alignment between the amendments to the Law on Auditing and the ongoing revisions to the Law on Accounting to maintain consistency across related legislation.

To develop the draft Law, the K4R programme expert facilitated the dialogue between a wide range of stakeholders, addressed practical implementation concerns, and integrated the new corporate sustainability requirements into the legislation during the entire proceedings of the multi-sectoral working group established to review the draft Law. Finally, a concordance table has been prepared against the respective EU law, as well as a Regulatory Impact Assessment in line with Montenegro’s government guidelines.

The new Law on Auditing in line with the EU acquis should ensure enabling conditions for all businesses to become competitive and have equal treatment in the EU market. For domestic firms, strengthening the system of internal and external audits will ensure that audits to business entities are done in line with the highest international standards of objectivity and impartiality, supporting business entities to perform their business operations in a responsible and strategic manner. In regard to accounting, the new Law will also translate into accurate, timely and comprehensive financial reports that support the proper functioning of the market, as well as a solid basis for improved policy and decision making. This will ultimately benefit the people of Montenegro by fostering a stronger economy, creating job opportunities and enhancing trust in the business environment.

“Given the importance of accurate, timely and comprehensive financial reports for the proper functioning of the market and the fact that many users of financial information rely on the quality of the work of statutory auditors and audit firms, which therefore fulfills a particularly important social function, changes to existing legislation in the field of auditing are very important. The importance of amending regulations to harmonize with EU law is also significant, considering that accession to the EU is Montenegro’s main strategic goal.” – Mladen Vlahović, Technical Specialist on EU Integration.

The assignment directly supports SDG 8: Decent Work and Economic Growth by strengthening the system of internal and external audits, thus ensuring that audits to business entities are done in line with the highest international standards of objectivity and impartiality.

SDG 12: Responsible Consumption and Production is also strengthened by encouraging companies to adopt sustainable practices and disclose environmental performance through the enforcement of accurate financial and non-financial reporting and auditing.

Finally, the assignment contributes towards SDG 13: Climate Action through the alignment with the Corporate Sustainability Reporting Directive (EU) 2022/2464.