Accounting Law – Comprehensive Reform of Financial Reporting in Montenegro
The Parliament of Montenegro has adopted the Accounting Law (“Official Gazette of Montenegro”, No. 089/25 of 05.08.2025), which comprehensively and modernly regulates the field of accounting for legal entities and entrepreneurs. This law introduces numerous innovations aimed at increasing transparency, accuracy, and reliability of financial information, as well as strengthening professional standards in Montenegro’s accounting practice.
The law regulates, among other things: classification of legal entities and groups of legal entities, accounting documents and business books, the method of keeping business records, issuance and revocation of licenses for providing accounting services, inventory of assets and liabilities, preparation and publication of financial statements, organization of accounting, and conditions for performing asset valuation.
Key objectives and importance of the accounting law
This Accounting Law represents an important step toward harmonizing Montenegro’s legislation with international accounting standards and the practices of the European Union. Its main goal is to:
- increase the reliability of financial statements and ensure better protection for users of accounting information (investors, banks, the public, and the state);
- ensure uniform application of International Financial Reporting Standards (IFRS);
- clearly define the responsibilities and qualifications of accounting professionals;
- improve business transparency and strengthen confidence in the financial data of legal entities.
The law particularly emphasizes the importance of professional ethics and competence, prescribing precise conditions that must be met by natural and legal persons providing accounting services.
Classification of legal entities and groups
One of the most significant innovations is the clear classification of legal entities into micro, small, medium, and large. The criteria for classification are based on:
- the average number of employees during the financial year,
- total annual income,
- total assets.
For example, micro legal entities have up to 10 employees, income up to €900,000, and assets up to €450,000, while small legal entities have up to 50 employees, income up to €10 million, and assets up to €5 million. This categorization allows for proportional application of legal obligations and simplifies procedures for smaller entities.
Similarly, the classification of groups of legal entities is regulated—they are divided into small, medium, and large depending on the same financial criteria, but on a consolidated basis. This ensures consistency in reporting and better analysis of the economic performance of related entities.
Keeping business books and accounting responsibility
The Accounting Law specifies that business books must be kept and financial statements prepared by a qualified person designated by the legal entity’s general act. Such a person must have appropriate education, experience, and moral integrity.
Keeping business books and preparing financial statements may also be entrusted to an external accounting service, provided that the service is registered and licensed in accordance with the law. In that case, the legal entity is obliged to register the service agreement with the Tax Administration and record the responsible person managing the books on its behalf.
License for providing accounting services
Accounting services may only be provided by a legal entity or entrepreneur that holds a license for providing accounting services issued by the Ministry of Finance. The conditions for obtaining the license include:
- registration of the activity in the Central Register of Business Entities,
- no criminal record for founders and responsible persons,
- employment of a person with a higher education degree (level VII-1) – field of social sciences, subfield economics / holding higher education of at least 180 ECTS credits and a professional title in the field of accounting obtained from a professional organization in Montenegro that is a member of the International Federation of Accountants, in accordance with the Montenegrin Accounting Education Standard CORS-1, or holding a license of a certified auditor issued in accordance with the law regulating auditing,
- appropriate technical and spatial capacities.
These provisions aim to suppress informal and unqualified accounting practices and raise professional standards within the sector.
Deadlines and transitional provisions
To ensure effective implementation of the accounting law, specific compliance deadlines have been prescribed:
- legal entities must align their operations with the new provisions within six months,
- providers of accounting services must register in the Register of Providers within 120 days of the adoption of accompanying by-laws,
- individuals who need to obtain professional titles have a period of 36 months to meet this requirement.
The Accounting Law also confirms that all previously issued certificates and licenses remain valid, thereby ensuring continuity in the work of the accounting profession.
Conclusion
The new Accounting Law represents a significant reform in the field of financial reporting in Montenegro. Its implementation will strengthen the integrity and professionalism of the accounting profession, improve the reliability of financial data, and create a more stable business environment.
The law enters into force on the eighth day following its publication in the “Official Gazette of Montenegro”.
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