In 2008, the Ministry of Finance of Montenegro has initialized the implementation of the accrual accounting in public sector. The Slovak Ministry of Finance has been supporting Montenegro in this effort since 2014. The assistance is aimed at improving the public sector accounting and reporting system in Montenegro. Slovak approach and experiences with similar reform were presented to Montenegrin colleagues during their two-day study visit in Bratislava by the experts involved in Slovak public sector accounting reform.
Meeting started with the presentation of Mr. Peter Ivánek, Director General of National Reporting Section at the Slovak Ministry of Finance. He outlined composition of the Slovak public sector and related organizations, budgetary and contribution, and central and local government business entities that belong to the public sector entities. According to the Act on Accounting that is unified for both private and public sector, every independent accounting unit must adhere to the mentioned law. Public sector entities submit financial reports to the Ministry of Finance. The data obtained from the reports are processed to fulfill national and international statistics requirements. The Statistical Office of the Slovak Republic is responsible for the registry of the public sector entities, while ministry is responsible for financial reporting and accounting legislation and methodology.
“The transition to accrual accounting in Slovakia engaged about 92% of public sector entities in the period from 2005 to 2008“, explained Slovak MFSR expert Lucia Kašiarová.
To shift public accountants thinking from cash-based accounting to accrual was a challenge and it often needed additional support (a helpline) and training. After the implementation of methodology in 2008 about 10 000 public accountants were trained in accrual accounting.
Montenegro to adopt new legislation
Nowadays in Montenegro the legislative procedures are applied in order to comply with International Public Sector Accounting Standards, informed Marija Uljarevic, Head of Division for Budget Accounting and Financial Reporting at the Finance Ministry of Montenegro.
Peter Ivánek presented fundamental financial and fiscal reports, obligatory for both national and external statistics. Furthermore, he explained the content of financial statements and principles of central consolidation system in the Slovak public sector. He also briefed the guests about the IT systems used for collection of financial reports and accounting.
The latest developments include free access to the financial statements register and preparation of single accounting system for central government to be implemented in about 5 years. Marcela Cisárová talked about the legislation changes related to the reforms. In conclusion, Slovak experts also highlighted the problems that may arise, especially those in assets accounting (valuation and impairments), receivables, off balance sheets and/or transfers.
Biggest city district of Bratislava inspired with its best practices
The population of Montenegro and capital city Bratislava is about the same (over the 600,000). Last day of the visit, Montenegrin guests were hosted by Mayor of Petržalka, Bratislava City District – Ján Hrčka and his colleagues. Julián Lukáček, Head of the Financial Department presented the economic processes of the self-governing unit including budgeting, accounting and local taxes administration. Inputs of all of them are used for financial reporting.
“We are glad that Petržalka municipality can be an inspiration in financial area to other countries. We showed our partners the methodology that drives economic functioning of our district”, said Lukáček.
Despite its size, Montenegro is one of the frontrunners to join the EU. The reforms are progressing both on national and local level. And Slovakia, as a long-term partner of Montenegrin Ministry of Finance and political supporter of Montenegro, wants to be helpful in this process also in the future.