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    Country by Country Financial Reporting and Auditing Framework

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    Croatia – Crowe Horwath Croatia (prepared February 2015)

    Preparation of and Filing of Statutory Financial Statements

    All companies are obliged to annual financial statements and file these with the FINA (http://www.fina.hr).

    The Register of Annual Financial Reports is an electronic booklet containing all financial reports of legal and physical entities that pay the profit tax as well as legal and physical entities in bankruptcy.

    All corporations and LLPs are required to prepare full financial statements comprising a balance sheet, an income statement and explanatory notes to the financial statements. Medium and large-sized corporations and LLPs are also required to prepare and file a management report. Certain small and medium-sized companies/LLPs have an option to file abbreviated financial statements with the Federal Gazette. Abbreviated financial statements provide for some reduced disclosure, e.g. a condensed balance sheet and less notes disclosures.

    Accounting documents can be stored as originals, electronic records, or micrographic storage medium.  Payment lists, analytical evidence of salary, for which the company is obliged to pay contributions, are  kept permanently. Documentation for data entry in the General Ledger is kept for eleven years, while the documentation for the supporting records is kept for seven years.

    Financial Reporting Framework

    Under the Croatian National Accounting Law (updated 24 October 2007), the following categories of entities are required to use IFRS:

    • All listed companies and those that are preparing to go public;
    • All financial institutions;
    • All large enterprises. Large enterprises are those that exceed two of the following three criteria: revenue higher than HRK (Croatian Kuna) 260 million; total assets higher than HRK 130 million; the number of employees greater than 250;
    • Any other companies as required by financial sector supervisory authorities;
    • All who are composing consolidated financial statements according to IFRS; and
    • All other enterprises can voluntarily choose to use IFRS, or they can use standards adopted by Financial Reporting Standards Board.

    All other corporations/LLPs

    According to the Law on accounting, entrepreneurs, that should prepare annual financial statements in accordance with Croatian financial reporting standards (HSFI), should include in financial statements as follows: Balance sheet, Income statement, Cash flow, Statement of changes in equity and Notes to the financial statements.

    Small entrepreneurs are obliged to resent only a balance sheet, income statement and notes to the financial statements.

    The structure and content of annual financial statements is prescribed by Minister of Finance and financial statements must provide a true and fair view of the financial position and performance of the company.

    Annual financial statements are also in the cases of legal changes, opening bankruptcy procedure or liquidation on the date that proceeds the day of registration status changes, the opening of the bankruptcy procedure or liquidation proceedings.


    Annual financial statements are signed by authorized persons and are kept permanently in the original. The Regulation on the structure and content of annual financial statements for entrepreneurs is prescribing the form and presentation in financial statements (profit and loss account, balance sheet…) while HSFI 3 states that the accounting policies used in preparation of the financial statements should be included in the financial statements. 

    Also, the statutory financial statements are the starting point for determining the taxable income of an entity for corporation and trade tax purposes in Croatia.

    Audit Requirements for Corporations and LLPs Registered in Croatia

    In general, all corporations and LLPs must have an audit on their statutory financial statements   if their income exceeds HRK 30 million annually or if they are preparing consolidated financial statements. Regardless of their size, all listed companies are subject to a statutory audit.

    Audit Exemption

    Subject to the above, small private corporations/LLPs may not need an audit of their annual accounts if the revenue is below HRK 30 million annually - unless the company's articles of association say it must or enough shareholders ask for one.  Alternatively, there may be a requirement specified by other third parties for an audit (i.e. in a bank loan/overdraft agreement).


    Audit Appointment, Rotation and Joint Audits

    Auditors are elected by the shareholders and appointed by management or - if present - the supervisory board of an entity for only one or more years.  Croatia does not have any rules relating to mandatory rotation of audit firms but there are guidelines within the ethical standards regarding partner rotation. Joint audits are not prohibited in Croatia.

    Auditing Standards and Ethical Framework

    Crowe Horwath Croatia applies auditing standards ("ISA") promulgated by the IASB that are also local standards. The Code of Ethics is based on the IFAC Code of Ethics (IESBA).

    Audit Regulation

    Crowe Horwath Croatia is subject to the following external and internal monitoring processes with regard to their audit practice.

    External Monitoring

    The Croatian audit practices are subject to periodic external peer reviews by the Croatian Auditors Chamber. The peer reviews have to be completed every three years.

    Internal Monitoring

    Crowe Horwath Croatia has established an annual firm monitoring process known as internal inspections. The internal inspections are led by the Quality Assurance Partner within the respective firm. The internal inspections cover all certified auditors of a firm who perform statutory audit engagements. The results of the annual internal inspections are used to develop and further enhance the quality of the audit processes within the firm.

    Transparency Report

    Crowe Horwath Croatia prepares an annual transparency report that is available on our website and covers information about the respective audit firm's governance and ownership structure, its quality control and monitoring system, its independence policies and measures, its continuing professional education processes and its remuneration principles for senior personnel.


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    David Chitty - Audit
    London, United Kingdom
    +44 20.7842.7292

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