AUDIT
Our team consists of four authorized auditors registered with the Croatian Finance Ministry who have extensive experience in providing audit services, as well as two audit assistants.
We perform audits in accordance with the Croatian Audit Act, Accounting Act, International Standards on Auditing (ISA), and the Code of Ethics for Professional Accountants.
In Croatia, financial reporting and audit requirements are prescribed by the Accounting Act. Audit requirements following changes in the legal status of a business, when incorporating a company or making contributions in kind or rights are also regulated by the Companies Act.
Financial Statement Audit
A financial statement audit involves an objective and independent examination and evaluation of financial statements to make sure that an organization’s assets, liabilities, capital, and business results provide a fair and accurate representation of its financial position.
Financial auditing stems from a legislative obligation of the Republic of Croatia under the Audit Act and Accounting Act.
Businesses required to conduct financial statement audits include:
Joint-stock companies listed on the stock exchange
Joint-stock companies, limited liability companies, and limited partnerships that meet two out of the three criteria in the year before the audit:
Total assets of €3,500,000
Revenues over €5,000,000
On average, at least 25 employees across the business year
Acquirers or startups involved in mergers, acquisitions, or divisions
Nonprofits with revenues over €1,327,228.08 in the previous business year
Startup, Merger, Acquisition, and Division Audits
Under the provisions of the Companies Act, businesses are required to conduct audits following legal status changes such as startups, mergers, acquisitions, and divisions. Audits are performed at the request of company shareholders or the Commercial Court.
The goal of post-status change audits is to make sure that no investors have been deprived of their share of the capital during the transaction.
Audits Following an Increase/Reduction of Share Capital
Audits following capital increases/reductions are regulated by the Companies Act. These special audits are accompanied by assurance reports.
Share capital increases are audited if the share capital of an existing business or a startup has been increased by contributions in kind or rights.
Capital increases from the company’s own funds, such as reserves or retained earnings, also require special audits post-increase.
Capital reduction audits are performed after regular as well as simplified reductions of share capital
EU Project Audit
If the total amount of your project proposal exceeds €200.000,00, you are legally required to audit your project.
The aim of the EU project audit is to make sure that all expenses incurred in the project were actually spent as intended, in line with the budget. The auditor will check whether all conditions of the Grant Agreement for non-repayable financial assistance have been met.
During the verification of the actual costs of implementation of the EU project, the auditor will check the accounting documentation, public procurement records, contracts and purchase orders, proofs of services, goods receipts, proofs of completion, proofs of purchase, proofs of payment, proofs of tax and/or VAT payment, and employee records.
Irregularities in project implementation include any violations of the EU legal regulations, national legislation, and provisions of the General or Special Conditions of the relevant Grant Agreement.
Auditor Review of Nonprofit Financial Statements
Nonprofit organizations with annual revenues between €398,168.43 and €1,327,228.08 in the previous business year are required to provide their financial statements for review.
Reviews of nonprofit financial statements are carried out in accordance with the International Standard on Review Engagements and the Croatian Act on the Financial Operations and Accounting of Nonprofit Organizations.
Unlike the financial statement audit, where the auditor provides an opinion on the financial statements, a review of nonprofit financial statements is performed to make sure that the financial statements are in line with the financial reporting framework.