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AUDIT LAW

I. GENERAL PROVISIONS
Article 1
This Law regulates the conditions and the manner oI perIorming audits oI legal and physical entities
which perIorm their activities, and have their representative oIIice in the Republic oI Macedonia
(hereaIter: the subject oI audit), which are obligated either by law or on their own demand to submit
their Iinancial reports and accounting records Ior auditing and other questions related to the audit.
Article 2
Audit, in the context oI this Law, means an examination and evaluation oI the Iinancial reports and
accounting records, as well as the inIormation and methods applied in their preparation, and, on that
basis, expression oI an independent proIessional opinion as to whether those reports truly and Iairly
present the condition oI the assets, capital, receivables and liabilities, and the results oI the operation
oI the audit subject.
The audit Irom paragraph 1 oI this Article, comprises an examination and evaluation oI operations,
the organization oI the business Iunctions, the manner oI business decision making, and the
Iunctionality oI the inIormation system oI the audit subjects, as well as other important questions
about their operation.
II. AUDIT COMPANY
Article 3
The audit is perIormed by an audit company.
The audit may be perIormed by domestic and Ioreign legal audit entities, registered to perIorm such
activities in the Republic oI Macedonia in accordance with this Law and the Law Ior Trade
Companies.
II a Ioreign legal entity Ior auditing Irom paragraph 2 oI this Article, is not registered to perIorm
audits, in such case, the audit shall be perIormed only in conjunction with a domestic audit company
registered to perIorm such activities in the country oI residence(Macedonia), according to this Law
and to the Law Ior Trade Companies.
Article 4
The audit company may be established only by registered auditors.
By exception Irom paragraph 1 oI this Article, the Iounder oI an audit company may also be a legal
entity without status as an audit company iI the deposit oI the legal entity in the capital oI the audit
company does not exceed 25 Irom the total capital.
The Iounder oI audit company may establish only one audit company.
In an audit company there must be at least two employed registered auditors.
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Article 5
The Iounder oI an audit company submits an application to the Ministry oI Einance Ior issuance oI a
certiIicate to work.
Enclosed in the application Irom paragraph 1 oI this Article, the Iounder submits:
1. Ioundation contract, i.e. another articles oI incorporation;
2. draIt by-laws;
3. data Ior the persons who shall perIorm audits, bearers oI the title registered auditor, as well as
data Ior other persons who shall be employed by the audit company.
II the Iounder oI an audit company is a Ioreign legal entity Ior auditing, besides the documents
enclosed to the application Ior issuance oI certiIicate to work, i.e. the documents Irom paragraph 2 oI
this Article, must also submits a document certiIying that the Ioreign legal entity is registered to
perIorm such activities in their country oI residence and an agreement to perIorm jointly audits with
a domestic audit company.
The audit companies granted certiIicates to work, are registered in the Register oI Audit Companies,
maintained at the Ministry oI Einance.
Article 6
The Minister oI Einance is obliged to decide upon the submitted application Irom Article 5 oI this
Law, within 30 days Irom the date oI submittal.
Article 7
The Iounder oI an audit company, enclosed with the application Ior registration in the Trade
Register, among other documents, submits the Decision Ior issuance oI the certiIicate to work,
issued by the Minister oI Einance.
Article 8
The Minister oI Einance may withdraw the certiIicate to work Irom an audit company iI:
1) the certiIicate Ior work is issued on the basis oI Ialse data
2) the number oI registered auditors is reduced bellow the number prescribed by this Law, and the
audit company, within the period oI six months aIter the date oI the occurred change, does not
IulIill the number oI registered auditors up to the number prescribed by this Law, and
3) it does not insure against liability Ior the damage which may be caused during perIormance oI
the audit, according to Article 16 oI this Law.
Article 9
The audit company which, during perIormance oI the audit, reduces the number oI registered
auditors below the number prescribed by this Law, is obligated to notiIy the Ministry oI Einance
about the change within eight days aIter the date oI the change.
Article 10
When the Decision Ior withdrawal oI the certiIicate becomes eIIective, the Minister oI Einance
notiIies the Register Court to remove the audit company Irom the Trade Register.
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Article 11
The audit company, other than auditing, may perIorm activities Irom the area oI providing
accounting services and advice, Iinancial activities, operation analysis, evaluation oI the subject`s
value, organization and introduction oI internal audit, tax advice, organization and control oI the
business activity oI the legal entities, as well as other similar activities.
Eor the perIormance oI the services Irom paragraph 1 oI this Article, the audit company concludes a
contract with the user oI the services.
The registered auditor in charge oI the audit, must not perIorm the services oI paragraph 1 oI this
Article Ior the subject where he perIorms an audit.
The activities Irom paragraph 1 oI this Article, the audit company must not perIorm Ior the subject,
where it perIorms the audits.
Article 12
The audit subject chooses the audit company and concludes a contract Ior perIormance oI the audit.
Eor the perIormance oI the audit, a compensation Iee is paid, the amount oI which is determined by
the audit contract.
Article 13
An audit company which possesses shares oI the audit subject or is an investor oI Iunds in the audit
subject, may not perIorm audits oI that subject, nor oI an audit subject who is an investor oI Iunds in
the audit company.
Article 14
II an audit subject restricts the scope oI an examination or makes it impossible to apply certain audit
procedures, the audit company is obliged to state that in the report in accordance with the auditing
standards.
An audit company which is not able to perIorm the audit in satisIactory manner, due to the reasons
Irom paragraph 1 oI this Article, has a right to terminate the audit contract, beIore the expiration date
oI the contract.
Article 15
An audit company has an obligation to perIorm audit activities conscientiously and objectively and
to maintain the conIidentiality oI inIormation during perIormance oI the audit.
In order to ensure independence working in the conduct oI the audit, the audit subject must not
attempt to inIluence the audit company.
Article 16
The audit company which deliberately or due to negligence while perIormance oI the audit causes
damage to the audit subject has an obligation to pay compensation Ior that damage.
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Within the period oI seven days Irom the conclusion date oI the contract, the audit company is
obliged to insure itselI against any liability which might arise during perIormance oI the audit.
Within the period oI seven days Irom the conclusion date oI the contract, the audit company is
obliged to submit the prooI oI indemnity against liability to the Ministry oI Einance.
III. PERFORMANCE OF THE AUDIT
Article 17
The audit activities are perIormed according to this Law, the regulations oI the manner Ior
perIormance oI the audit, as well as to the International Auditing Standards, and the regulations Ior
proIessional attitude oI the auditor.
The Minister oI Einance announces the International Auditing Standards, as well as regulations Ior
proIessional conduct oI the auditor in the 'OIIicial Gazette oI the Republic oI Macedonia.
Article 18
The audit subject has an obligation to make available to the registered auditor the complete
necessary documentation, licenses and reports and to supply the auditor with all other inIormation
necessary Ior perIorming the audit and preparing reports Ior the audit perIormed.
Article 19
The registered auditor prepares and signs a report including an expert opinion Ior the audit
perIormed.
The report Irom paragraph 1 oI this Article is also signed by the director oI the audit company.
The report must be presented to all legal representatives oI the audit subject.
Article 20
The report oI the registered auditor Irom Article 19 paragraph 1 oI this Law is prepared in
accordance with International Auditing Standards and includes speciIically:
1. an explanation oI the scope oI the perIormed audit, in which is stated the Iull name oI the audit
subject, and the accounting statements which were subject to examination by the registered
auditor, and Ior applying the auditing standards or the reasons Ior not applying the same
standards.
2. an explanation oI the basis upon which the accounting statements were prepared (accounting
principles and accounting standards)
3. the opinion oI the registered auditor as to whether the Iinancial statements Iairly present the
Iinancial status and the results oI operations, and the changes in the Iinancial condition oI the
audit subject; and
4. beginning and closing date oI period Ior which the audit was perIormed the audit subject.
II during the perIormance oI an audit, the registered auditor discovers inIormation about
circumstances which could harm or cause damage to the audit subject, or discovers major violations
oI the law, the contract, or the company by-laws by the Managing Board, or the Management, the
registered auditor is obliged to disclose it in the report Ior the perIormed audit.
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Article 21
The opinion oI the registered auditor Irom Article 20 paragraph 1 point 3 oI this Law contains
evaluation oI the level oI Iairness and objectivity oI the accounting statements and it may be:
1. positive opinion - an evaluation that the accounting statements objectively present the true
Iinancial condition and operating results;
2. reserved opinion - an evaluation that the Iairness and objectivity oI some categories and
positions in the accounting statements must be accepted with reserve;
3. negative opinion - an evaluation that the accounting statements are not true and Iair
II the registered auditor during the audit procedure, evaluates that there is lack oI basis Ior
expressing a credible evaluation about the Iairness and objectivity oI the accounting statements, he
may abstain Irom expressing an opinion.
In case oI paragraph 1 point 2 and 3, paragraph 2 oI this Article, the report Ior the perIormed audit
also should include an explanation about the reasons Ior expressing such an opinion, or Ior
abstaining Irom expressing an opinion.
Article 22
II during the audit procedure a complex question arises, Ior which the registered auditor evaluates
that it`s solution requires engagement oI qualiIied persons outside oI his associates and oI the
employees oI the audit subject, the registered auditor may engage such persons, with previous
approval Irom the subject where the audit is perIormed.
The opinion oI the independent qualiIied persons which were engaged in relation to the audit tasks,
does not discharge the registered auditor Irom the responsibility Ior the opinion expressed in cases
Irom paragraph 1 oI this Article or Ior the Iindings in the report.
Article 23
The complete working papers, prepared during the audit procedure, should be maintained by the
audit company, and serves Ior the purpose oI the audit.
The audit company may not use the working papers Irom paragraph 1 oI this Article Ior other
purposes without approval oI the audit subject.
Article 24
The audit company is obliged to keep the report, the inIormation and all other knowledge gained
about the operations oI the audit subject, at least 5 years Irom the end oI the audit and to ensure
complete conIidentiality.
Article 25
During the audit, the registered auditor has Iree access to the oIIicial premises and property, the right
to inspect the books, the licenses and other documentation oI the subject, as well as the right to ask
Ior explanations and inIormation Irom the representative oI the subject where the audit is perIormed
Ior all questions pertaining Ior perIormance oI the audit.
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The registered auditor has the right to be present at the annual assemblies or at the meetings oI any
other managing board oI the audit subject, to ask Ior explanations and materials and to participate in
their activities placing questions and giving answers and opinions Ior each part oI the work which
was subject oI the audit.
Article 26
The inIormation and knowledge discovered by the registered auditor during perIormance oI the
audit, represents a business secret and must not be revealed to other legal entities without
authorization.
The registered auditor must not use the knowledge acquired during perIormance oI the audit Ior
gaining property or other beneIits Ior himselI or Ior any other entity.
Article 27
The registered auditor must not perIorm an audit iI:
1. he is a shareholder or an investor oI capital in the legal entity where the audit is perIormed;
2. he is a legal agent oI the audit subject
3. he was previously an employee or legal agent oI the audit subject during the 3 years preceding
the audit;
4. he is a member oI the Board oI Directors, the Supervising Board or any other body oI the subject
where the audit is perIormed;
5. he was involved in the book keeping or he prepared the annual Iinancial statement and the
Iinancial reports oI the subject where the audit is perIormed; and
6. he is married, or relative in the Iirst line to Iourth level oI relationship, guardian, court appointed
custodian, protector, adoptive parent or adopted child, provider or dependent, co-owner or legal
agent oI the audit subject.
IV. REGISTERED AUDITOR
Article 28
An audit may be perIormed only by registered auditors, employed by the audit company.
Depending on the activities scope and complexity, a registered auditor may engage other experts
employed by the audit company.
A registered auditor may perIorm independently the audit activities in the authorizations Iramework
and determined by this Law and by the International Auditing Standards.
A registered auditor is responsible Ior accuracy oI the determined activities in the audit procedure, as
well as Ior the expressed opinion.
Article 29
A registered auditor must satisIy the Iollowing requirements.
1. high level oI education - graduated economist;
2. passed exam Ior registered auditor and acquired certiIicate Ior registered auditor;
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3. not convicted Ior crimes which might make him inappropriate Ior the audit proIession;
4. to declare a statement that in the course oI perIorming his work, he shall apply the regulations
determined by the Code oI Ethics Ior the ProIessional Accountants oI the International
Accounting Association
A candidate Ior passing the exam Ior the title oI registered auditor, should have at least 5 years oI
working experience in the Iield oI accounting or Iinancial activities, i.e. 3 years oI working
experience in the Iield oI audit and control.
Article 30
The exam Ior registered auditor shall be perIormed in Iront oI the Commission, established by the
Minister oI Einance, according to the Program prescribed by the Minister oI Einance.
The Minister oI Einance shall issue the certiIicate Ior registered auditor to a person who passes the
exam Irom paragraph 1 oI this Article.
The costs Ior passing the exam Ior the title oI registered auditor shall be born by the person taking
the exam.
The certiIicate Iorm and content, as well as the manner oI passing the exam Ior the title oI registered
auditor are prescribed by the Minister oI Einance.
Article 31
On exceptional basis oI the provisions Irom Article 30 oI this Law the Minister oI Einance may
recognize the title oI registered auditor, on the basis oI written application and enclosed
documentation, to persons who gained the title Master oI Science in the Eield oI Accounting or
Audit, and who published works in the Iield oI theory and practice oI accounting and audit, and have
at least ten years oI working experience in university teaching.
The persons Irom paragraph 1 oI this Article must IulIill the conditions Irom Article 29 paragraph 1
point 3 and 4 oI this Law.
Article 32
Persons who have acquired their certiIicate Ior registered auditor abroad, must IulIill the conditions
Irom Article 29 oI this Law and must validate their license at the Ministry oI Einance, in a manner
and procedure determined by the Minister oI Einance.
Article 33
Registered auditors and registered national auditors may gather in the Union oI Accountants,
Einancial Technicians and Auditors oI the Republic oI Macedonia.
The Union oI Accountants, Einancial Technicians and Auditors oI the Republic oI Macedonia may
perIorm publishing activities in the area oI audit, as well as other activities established by its By-law.
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V. PENALTY PROVISIONS
Article 34
A legal entity - an audit company shall pay a penalty Iee oI 10.000 to 300.000Denars iI:
1. it does not perIorm the audit according to this Law and to procedures determined with the
International Auditing Standards (Article 17);
2. it perIorms an audit, without a certiIicate to work (Article 6);
3. it perIorms the activities Irom Article 11, paragraph 1 Irom this Law Ior the subject oI audit
(Article 11, paragraph 4);
4. it perIorms an audit Ior the subject oI audit in which it possesses shares or investments, i.e. iI it
perIorms an audit oI the subject oI audit which possesses investments in the audit company
(Article 13);
5. it is not insured against liability Ior damage which it may cause by perIormance oI the audit and
iI it does not submit the prooI oI liability insurance Ior damage to the Ministry oI Einance within
the due date (Article 16, paragraph 2 and 3);
6. it does not have the approval Irom the subject oI audit Ior engaging an external expert (Article
22, paragraph1)
7. it does not secure secrecy oI inIormation and knowledge gained during perIormance oI the audit
(Article 23)
Eor the activities Irom paragraph 1 oI this Article, the responsible person oI the audit company shall
be punished with a penalty Iee oI 1.000 to 50.000 Denars.
Article 35
The subject oI audit shall pay a penalty Iee oI 10.000 to 300.000 Denars iI:
1. it limits the auditor`s scope oI investigation or it disables him to apply certain audit procedures
(Article 14, paragraph 1), and
2. it doesn`t make available to the auditor the necessary documentation, statements, licenses and
other inIormation Ior perIormance oI the audit (Article 18).
Eor the activities Irom paragraph 1 oI this Article, the responsible person oI the subject oI audit shall
be punished with a penalty Iee oI 1.000 to 50.000 Denars.
Article 36
A physical person which durably perIorms an activity - a subject oI audit shall also be punished with
a penalty Iee oI 10.000 to 100.000 Ior the activities Irom Article 35 oI this Law.
A responsible person within the physical person which durably perIorms an activity - the subject oI
audit shall also be punished with a penalty Iee oI 1.000 to 15.000 Ior the activities Irom Article 35 oI
this Law.
Article 37
A physical person - a registered auditor should pay penalty oI 1.000 to 50.000 Denars iI:
1. he does not perIorm the audit according to this Law and to procedures determined with the
International Auditing Standards (Article 17);
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2. he does not determine the right activities and expresses Ialse opinion in the Audit Report (Article
21 and Article 28 paragraph 4);
3. he uses the complete documentation prepared or obtained during the audit procedure Ior other
purposes without approval oI the subject oI audit (Article 23 paragraph 2);
4. he does not provide conIidentiality oI all data and inIormation during the perIormance oI audit
and iI he uses the results oI the audit perIormed Ior acquiring property or other beneIits Ior
himselI or Ior any other entity (Article 26);
5. he perIorms an audit in a company where he is not allowed to do so (Article 27) and
6. he perIorms an audit without being recognized as a registered auditor (Article 32).
Besides the penalty Iee Irom paragraph 1 oI this Article, the registered auditor shall also be restricted
Irom perIorming his proIessional activity in duration oI three months to one year.
VII. SPECIAL AND CLOSING PROVISIONS
Article 38
On exceptional basis oI provisions in Article 30 oI this Law, the Minister oI Einance may recognize
the title oI registered auditor, on the basis oI written application to a person IulIilling the Iollowing
conditions:
1. as graduated economist to have minimum 15 years oI working experience in managing
accounting or Iinancial activities, or
2. as graduated economist or graduated lawyer to have minimum 5 years oI working experience in
audit or controlling activities.
The person Irom paragraph 1 oI this Article must IulIill the conditions Irom Article 29, paragraph 1,
points 3 and 4 oI this Law.
The Minister oI Einance issues a temporal certiIicate Ior a registered auditor to persons who IulIill
the conditions Irom paragraph 1 and 2 oI this Article.
Article 39
Eor Iollowing, coordinating and applying the International Auditing Standards, the Minister oI
Einance establishes a Committee Ior Auditing Standards.
Article 40
The program Ior passing the exam Ior the title registered auditor and other regulations determined by
this Law, shall be brought within 180 days Irom the eIIective date this Law.
Article 41
The existing legal entities registered Ior perIormance oI audit activities, are obligated to coordinate
their organization and operation, as well as their articles oI incorporation with the provisions oI this
Law, within 30 days Irom the eIIective date oI this Law.
Article 42
AIter this Law becomes operative, the provisions oI the Law Ior Social Accounting Service
('OIIicial Gazette oI SERJ, no. 70/83, 16/85, 72/86, 74/87, 37/88, 61/88, 57/89, 79/90, 84/90 and
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20/91) and the Law Ior Social Accounting Service oI The Republic oI Macedonia ('OIIicial Gazette
oI the Republic oI Macedonia, no. 44/85), which regulate the economic-Iinancial audit aIIairs shall
become invalid.
Article 43
This Law becomes eIIective the 8
th
day Irom the publishing date in 'OIIicial Gazette oI the Republic
oI Macedonia.
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