The audit of the financial statements of Croatian companies is regulated by the Accounting Law and the Audit Law. Debtors are determined by the accounting law while the conditions and regulations of the audit process are determined by the audit law. In the event of a change in the company’s status, merger, acquisition and demerger Company law determines the process.
The audit of financial statements involves the verification and evaluation of the annual financial statements and consolidated reports, the data and methods used in their preparation and on this basis to form the opinion of independent experts on the matter. Article 20 of the accounting law determines the debtors of the audit of financial statements according to their size and their importance for the national economy. Thus, the obligation to audit individual and consolidated reports has:
- Medium and large entrepreneurs
- Public interest companies, entrepreneurs established in accordance with Croatian regulations and whose shares are listed on a regulated market
- Parent companies of medium and large groups
- Entrepreneurs who have requested the listing of their shares on the regulated market
- Entrepreneurs who meet two of the three criteria of the 2020 reports: assets of 15 million HRK, turnover of 30 million HRK and an average of 25 employees. Although small and micro-entrepreneurs are not subject to mandatory audit, if they also meet two of the three criteria mentioned above, they become subject to mandatory audit.
- Entrepreneurs who have participated in mergers or divisions of companies as buyers.
The company’s auditor is chosen and appointed by the company’s general meeting at the end of September of the current year at the latest. The auditing company performing the services must have a work permit issued by the Ministry of Finance and the Auditor General must meet all the prescribed conditions for performing the audit.
To conclude, for the audit services of the financial statements for the year 2021, companies have the deadline for selecting the auditor until September 30. All rights and obligations of both parties are governed by a written contract which is then reported to the Ministry of Finance. The agreed fee amount may not be subject to any form of conditioning and must not depend on or be associated with other services provided to the audited entity.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.