New audit law 2025

mladenrakocevicrac
Sep 9
2 min read

Main Differences Between the Audit Law of 2017 and 2025 in Montenegro

A Comparative Overview of Key Changes in Financial Audit Regulations

Auditing financial statements is crucial for ensuring transparency and trust in the financial system. In 2025, Montenegro adopted a new Audit Law, replacing the previous one from 2017. This legislation significantly upgraded the legal framework and aligned it more closely with European standards. Below is an overview of the main differences.

1. Scope of Application

2017: The law primarily regulated financial statement audits and the issuance of licenses.

2025: The scope is expanded to include not only statutory audits but also other engagements such as report reviews, voluntary audits, and assurance services.

2. Status of Authorized Auditor

2017: An authorized auditor could operate independently or through an audit firm, with minimal restrictions.

2025: Auditors may work as entrepreneurs but are prohibited from auditing public interest entities or consolidated statements. They also cannot engage in other business activities or serve as founders of an audit firm.

3. Independence and Ethics

2017: Independence requirements were defined with basic prohibitions, such as not auditing clients to whom accounting services were provided or where the auditor had an ownership stake.

2025: The new law introduces stricter rules, including a ban on accepting gifts and services, restrictions if there is a significant financial or family interest, an expanded definition of conflicts of interest, and mandatory audit confidentiality.

4. Licensing

2017: Licenses were issued by the Ministry, with requirements including accountant certification and three years of experience.

2025: Basic requirements remain, but now the government sets fees, recognition of foreign licenses is more stringent, and there are detailed registration rules for auditors and firms from the EU and third countries.

5. Audit Firms

2017: Firms needed to have a majority of licensed auditors and Ministry approval.

2025: Higher standards are set—at least one full-time auditor (or two for public interest entities), mandatory proof of good reputation, and comprehensive internal controls, fee policies, and quality assurance mechanisms.

6. Transparency and Supervision

2017: The Ministry maintained and published a register of auditors and firms.

2025: In addition to the register, firms must now retain audit files and client records, publish annual transparency reports, and clearly disclose fees for audit and other services.

7. Audit Engagement Contracting

2017: The audit contract was regulated only by general provisions—written form and basic elements under the Law on Obligations, without specific deadlines or mandatory clauses.

2025: Major innovations require contracts to be concluded by October 31 for the current year, or by November 30 for consolidated statements. Mandatory elements include team structure, planned hours, time accounting, final invoice, and total service price. Firms are prohibited from outsourcing audit work, and contracts cannot be terminated during the audit except for justified reasons—disagreement in opinion is not sufficient. For public interest entities, termination can be initiated by shareholders (minimum 5%), supervisory bodies, or the Ministry.

Conclusion

The new Audit Law of 2025 brings comprehensive modernization to Montenegro’s audit system. While the 2017 law laid the foundation, the new regulation delivers clearer independence standards, stricter operating conditions, greater transparency, and stronger supervision. Of particular importance is the detailed regulation of audit contracting, which further strengthens accountability and trust in auditors’ work.