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Elena Kostovska |
For the first time since its independence, FYR Macedonia has a clear-cut law for the accounting profession, effective as of August 3 2012. The law, while generally welcomed by accounting and tax professionals, comes with a wide range of implications for the operations of entities performing accounting services.
Given the relatively small market, the reality is that accountants are heavily involved in tax matters, from filing periodical tax returns for their clients to ad hoc tax advising, therefore, the new law affects all companies in the marketplace from the aspect of selection of their accountancy/tax partners.
The law for the accounting profession regulates:
The conditions under which individuals and entities can perform accounting services;
The criteria for obtaining official certification in the field; and
The creation of the Institute of Accountants in the country.
The law discerns between certificates and licences: certificates are issued to individuals while licences are issued to companies. The law also categorises into accountants and certified accountants.
The difference between accountants and certified accountants becomes evident mostly in the scope of services each one can perform.
Uncertified accountants can perform accounting services for any entity but can only complete and sign annual closing statements for individual traders and foundations. Effectively, this means that unless an accountant is certified he/she will not be in a position to sign financial statements for clients which are limited liability companies (LLCs) or joint stock companies.
Both accountants and certified accountants are now obliged to request that the Ministry of Finance issue official certification for their status by February 3 2013.
One radical novelty in the law is the strict prohibition on companies outsourcing accounting services to an individual who is not employed at the company in question. This restriction does not apply to outsourcing services to a legal entity that performs accounting services as part of its registered activity.
Essentially, this will change the status for many small businesses that were, until now, using freelance accountants (not officially employed in an accounting company provider).
This will create pressure on officially unemployed accountants to either register their accounting activity as sole traders or seek official employment in accounting companies. On the other hand, it will oblige companies to move away from grey-market accountants and engage in a more official relationship with authorised accountancy providers.
In practice, these changes mean that companies subject to accounting (effectively all companies) will only have three options available when it comes to their accounting:
Hire an accountant or certified accountant who will perform accounting in-house; or
Outsource the accounting function to a certified accountant "sole trader"; or
Outsource the accounting function to a licensed accounting company.
Speaking of the regulation of the client-accountant relationships, it is now mandatory to conclude an official engagement agreement between clients and accounting providers should accounting providers be external parties (either certified sole-trader accountants or licensed accounting companies). The failure to possess a valid agreement between client and provider results in a penalty of €3,000 ($3,900) – €4,000 payable by the provider.
With regard to accounting companies who will now be required to obtain a licence for performing accounting services, all accounting providers will be required, by January 31 2013 to file an application for their accounting licence. The criteria for receiving an accounting licence include:
At least two accountants employed at the company, of which at least one must be certified; and
Proof for professional indemnity with a minimum amount of €20,000 per indemnity case.
Elena Kostovska (elena.kostovska@eurofast.eu)
Eurofast Global, Skopje Office, FYR Macedonia
Tel: +389 2 2400225
Website: www.eurofast.eu
