DEVELOPMENT OF ACCOUNTING REGULATION IN MONTENEGRO - FINANCIAL REPORTING STANDARDS AND THE REPORTING NEEDS OF SMEs

Abstract

The paper discusses development of accounting regulation in Montenegro by introduction of International Standards for Financial Reporting and how this standardization effects the economy and SME’s performance. In 2015 International Accounting Standards Board issued International Standards for Financial Reporting (ISFR) for small medium enterprises (SMEs) which introduced few changes in reporting needs of SMEs. Changes that were introduced lessened the reporting needs for SMEs however new ISFR for SMEs were not introduced in Montenegro. The aim of this paper is to discuss how current standards supported by national legislation are affecting Montenegro as transition economy and if this standardization is enhancing the development of SME sector. Based on qualitative research and interview with executives of 150 SMEs in Montenegro we will present how standards are applied in practice and if they have increased the quality of reporting for SMEs.