This chapter provides a comprehensive overview of the organisation of the Federation of Bosnia and Herzegovina as one of two entities in Bosnia and Herzegovina, and its territorial structure, as well as concise insights on the formulation and execution of central government and local and regional self-government budgets, on accounting and financial reporting methodology and on audit and other oversight (supervision) practice. The chapter also provides overview of initiatives and frameworks of non-financial reporting and brief assessment of challenges and future development paths in public sector accounting and auditing that the Federation of Bosnia and Herzegovina is likely to face with, given Bosnia and Herzegovina’s clear prospect of joining the EU and its status as a candidate country. Special attention is given to the challenge regarding transition to accruals.