We would like to highlight that, although it is not a regulatory requirement, we have undertaken a pilot implementation of audit quality indicators based on the methodology of the Center for Audit Quality (CAQ) in the United States.

The significant influence of the EU's legislative and regulatory agenda is changing the scope of auditing in Montenegro, a candidate country. Independent external reviews and assurance services on non-financial information, including environmental, social, and corporate responsibility (ESG), as well as data and artificial intelligence (AI) systems, have been introduced into EU legislation as tools to ensure the proper implementation of key building blocks of the Green Deal and the digital agenda, which aligns with the same strategic direction in Montenegro.

In this context, the demand for auditing is expanding into new domains, particularly sustainability reporting and algorithmic systems. Auditing firms are transforming and evolving from experts in financial information to new areas of expertise, such as certifying ESG data and ensuring compliance with AI data and systems of major digital platforms in line with the requirements of the EU Digital Services Act (DSA) and the Digital Markets Act (DMA). Just as financial audits contribute to building trust for the proper functioning of the market economy, these new types of audits will serve the public interest and play a key role in addressing challenges related to the development of more sustainable and ethical digital economies. The contribution of auditors to society will now extend beyond investors to include consumers and citizens.

This paradigm shift for auditing firms will inevitably affect the auditing market in ways that may not have been anticipated. Is the EU auditing ecosystem properly structured to accommodate these new dimensions? Will the structure of the EU auditing market create unexpected risks and consequences? These are questions that only the development of future events will answer. SFAI Montenegro is committed to being an active and constructive participant in this strategic journey.

Our experience in the pilot implementation and subsequent practical application in the audit cycle and documentation of the working paper sets for individual clients in the 2024 audits fully met our expectations, precisely because we appropriately applied this highly useful and quality approach of utilizing automated tools and techniques in the auditing process.

In 2024, SFAI Montenegro was actively involved in scientific and professional publishing in the fields of accounting, auditing, corporate finance, banking, and banking management in collaboration with the renowned publishing house iLearn d.o.o., Belgrade.

Based on years of experience in enhancing quality control, in consultation with our colleague Paul Thompson, CPA, and Professor Dr. Edin Glogić, Dean of the FINRA University Faculty in Bosnia and Herzegovina, a certified auditor, certified internal auditor, and forensic auditor, we have decided to appoint Professor Glogić as the newly appointed Director of Internal Quality Control.

In the same context, we have made the decision to engage Associate Professor Dr. Ivana Ljutić as an expert in corporate law and governance, serving as a non-executive director for corporate governance and international taxation.

The appointments of Professor Glogić and Dr. Ljutić are driven by two strategic goals: improving the quality of audits and corporate governance within SFAI Montenegro and driving these efforts with our esteemed clients.

The segment of internal continuous professional education for all members of the engaged audit teams in the calendar year 2024 was organized through 98 methodological units, each lasting 60 minutes.

We tested the possibility of using artificial intelligence in auditing as an additional pilot tool, in line with all the limitations and warnings from IFAC, Accountancy Europe, and EFAA.

We support the activities of the International Center for Sustainable Reporting and Governance and actively engage as a partner and leader of initiatives.