Audit of financial statements of banks

The conduct of audit of financial statements of banks is regulated in detail by the following regulations:

• Law on Accounting and Audit
• Law on Banks 
• Decision on External Audit of Banks 

Below is the summary information contained in the above regulations.

The NBS shall determine and publish the List of External Auditors (hereinafter: List) eligible to perform audit of financial statements of banks. In order to be included in the List, an external auditor must meet the following criteria:

• comply with the conditions prescribed for an audit firm by the law governing audit,
• employ at least six certified auditors licensed to perform audit, at least three of whom have a minimum three-year work experience in auditing financial statements of banks,
• employ at least 20 staff members in the organisational unit responsible for audit operations, 
• the audit firm, its legal representative and employees who are certified auditors licensed to perform audit have good business reputation.

To be included in the List, the audit firm shall submit to the NBS a written request together with supporting documentation proving compliance with the above criteria. The NBS shall make a decision within 30 days after receiving a duly completed request. The NBS shall publish the List on its website. A listed external auditor is obliged to submit documentation to the NBS, proving that the prescribed criteria have been met as of 30 June of the current year, once annually, by no later than 15 July of that year. Upon issuing a decision establishing that the prescribed criteria have been met, or a decision on the deletion of an external auditor, the NBS will update the existing, or compile and publish a new List of External Auditors.

A listed external auditor may not, in the course of the same year, engage in auditing of financial statements of a bank and provide consultancy services to that bank, nor conduct an audit of financial statements for the year during which such services were provided. A bank may not appoint an external auditor that generated more than a half of its total income in the previous year from auditing the accounts of that bank. The external auditor may conduct no more than five consecutive audits of regular annual financial statements of the bank.

The external auditor may not conduct an audit of financial statements of a bank for the year in which one of its employees was temporarily hired to work in, or by which he/she was temporarily hired at the time of conducting the audit. If the audit is performed by a non-listed external auditor, or if the audit was conducted in breach of the provisions of the Law on Banks and other regulations, the NBS shall not accept the audit report.

The audit report includes:

• external auditor’s opinion,
• audited financial statements,
• opinion on compliance of business reports with financial statements for the same business year and the business report that was the subject of this opinion,
• letter on financial statement presentation, and
• analyses for the NBS’s purposes.

The bank shall submit to the NBS the adopted individual financial statements, with the audit report, along with a letter to the management, for the previous business year within 120 days after the end of that year.

No later than 15 days from the submission of the audit report, the bank shall publish:

• a complete external auditor’s report on its website and keep it there until the publication of the auditor’s report for the next business year, and
• external auditor’s summary report in at least one daily newspaper circulated in the territory of the Republic of Serbia.

If the NBS refuses to accept the external auditor’s report, the bank shall replace such report on its website with a report on a newly conducted audit prepared by another external auditor based on the new audit.