This chapter provides brief assessments on the territorial organisation, scope of the public sector, regulatory and institutional framework of the budget system, formulation and deadlines formulation of central government and local government budgets, budget execution and budget execution reporting, state of play of the accounting and financial reporting, state audit, budget oversight, internal audit, internal control systems and initiatives and frameworks of non-financial reporting. Special attention is put on the challenge regarding transition to accruals and IPSAS, given that in Serbia budgetary accounting is based on a cash basis. The chapter concludes with the notion of challenges and future development paths in public sector accounting and auditing that Serbia as the candidate country in the accession to the EU is likely to face. Special attention is put on the challenges regarding completing the requirements regarding the reporting and disclosure of non-financial information, as well as the need to further improve the completeness, accuracy and transparency of data in financial reports.