This note is prepared as part of theFSAP. Its main objective is to describe the status andrecent developments in corporate financial reportingframework in Montenegro and highlight key issues relevant tofinancial sector. The note represents a technical annex tothe main FSAP Aide-Memoire and seeks to provide a high leveloverview of developments since the 2007 A&A ROSC2, aswell as highlight the areas that are most relevant to thefinancial sector. The Annex 1 to this note offers details onstatus of implementation of 2007 A&A ROSC policyrecommendations and was based on the team’s knowledge ofcorporate financial reporting reforms in Montenegro andlimited research. Montenegro has undertaken notable effortsto improve the corporate financial reporting framework sincethe 2007 A&A ROSC, especially in improving the statutoryframework and efforts to align it with the EU acquiscommunautaire. However, implementation and enforcement offinancial reporting and auditing requirements has beenhampered by major capacity and resource constraints. Themajor consequences are that, with exception of banks andinsurance companies, there is limited quality financialinformation on corporate entities available in the marketthat is reliable for economic decision making or supervisionof financial sector entities. The capacity and skills of theaccounting and auditing profession in Montenegro needsfurther development while the institutions responsible foraccounting and auditing regulation, in some cases, are atinception. acquis communautaire.
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