Croatian Audit Chamber

The Croatian Audit Chamber (CAC) was responsible for the quality assurance (QA) review system in Croatia from 2010 to 2017, under the supervision of the Audit Public Oversight Committee. During this period, CAC established and operated a QA system that was aligned with the requirements of the International Federation of Accountants (IFAC) Statement of Membership Obligations 1, including developing policies and procedures to support its implementation and ongoing monitoring.

Following amendments to the Audit Act in 2017 to align with European Union audit reform requirements, responsibility for the QA system was transferred to the Ministry of Finance (MoF), effective January 1, 2018. The MoF established an independent inspection function to carry out QA reviews using the methodology of the Committee of European Audit Oversight Bodies, consistent with European Union requirements and SMO 1. The QA system is operational, and the MoF publishes annual reports on the results of inspections.

CAC has supported the transition and ongoing development of the QA system by sharing its experience and contributing to discussions on maintaining alignment with SMO 1 requirements. Ongoing discussions have considered potential enhancements to the QA framework, including the allocation of responsibilities between the MoF and CAC.

In its current role, CAC supports audit quality by providing continuing professional development on quality management and auditing standards. CAC has translated and adopted the International Standard on Quality Management 1, International Standard on Quality Management 2, and International Standard on Auditing 220 (Revised), effective December 2022, and continues to deliver training and awareness-raising activities for its members.

Current Status: Sustain

The Audit Act, adopted in 2017 and subsequently amended, establishes that the Ministry of Finance (MoF) is responsible for setting initial professional development (IPD) and continuing professional development (CPD) requirements for certified auditors. The Croatian Audit Chamber (CAC), under the oversight of the MoF, is authorized to deliver IPD training programs for candidates, administer professional examinations, and provide CPD for certified auditors.

The IPD program and professional examination content are prescribed through a rulebook issued by the MoF and incorporate key elements of the International Education Standards (IES), including technical competence, professional skills, and assessment of professional competence. Practical experience requirements are established and verified prior to admission to the profession, consistent with IES requirements.

Certified auditors are required to complete a minimum of 120 hours of CPD over a three-year period. CPD activities are monitored by the MoF, and failure to comply may result in the suspension or revocation of a practicing license. CAC supports the implementation of CPD requirements by delivering a range of training programs and has introduced competency-based assessments within its CPD offerings to further align with IES requirements.

CAC also engages with universities and international professional accountancy organizations to support the continued alignment of education and training requirements with the IES, including through collaboration and knowledge sharing initiatives.

Current Status: Sustain

International Standards on Auditing (ISA) are required by law in Croatia, with responsibility for the translation and publication of the standards assigned to the Croatian Audit Chamber (CAC), under the oversight of the Ministry of Finance (MoF).

CAC has established processes to translate, publish, and disseminate ISA on an ongoing basis, including collaboration with regional partners to support translation efforts. The translated standards are made available to members, and CAC continues to enhance the accessibility and presentation of these materials.

CAC supports the implementation of ISA by providing training, guidance, and technical resources to its members. This includes regular courses, workshops, and annual events focused on auditing standards, as well as the incorporation of ISA into initial professional development and continuing professional development programs. The application of ISA is also subject to review as part of the quality assurance system.

While a structured translation and implementation support framework is in place, the most recent available translation corresponds to an earlier version of the IAASB Handbook. Ongoing efforts to translate and adopt more recent standards are in progress.

CAC is encouraged to continue its efforts to ensure the timely translation and implementation of the latest ISA to maintain alignment with current international standards.

Current Status: Review & Improve

Under the Audit Act, all auditors in Croatia are required to comply with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA), as translated and published by the Croatian Audit Chamber (CAC), under the oversight of the Ministry of Finance (MoF).

CAC has established processes to translate, publish, and disseminate the Code of Ethics and its revisions on an ongoing basis. The 2022 edition of the Code has been translated and is applicable in Croatia, and efforts are ongoing to translate subsequent revisions.

CAC supports the implementation of ethical requirements by providing training, guidance, and technical resources to its members. This includes organizing seminars and discussions on key ethical topics, including independence and non-audit services, and incorporating ethical requirements into initial professional development and continuing professional development programs. Compliance with ethical requirements is also considered within the quality assurance review system and in the investigation and disciplinary processes.

While a structured framework for translation and implementation is in place, the most recent revisions to the Code have not yet been fully translated and implemented.

CAC is encouraged to continue its efforts to reduce the timelag between the issuance of new and revised ethical standards and their translation and application in Croatia.

Current Status: Review & Improve

The Ministry of Finance is responsible for establishing public sector accounting standards in Croatia.

Public sector entities apply national accounting standards that are based on an accrual framework. International Public Sector Accounting Standards (IPSAS) issued by the International Public Sector Accounting Standards Board have not been adopted in Croatia, and no formal plans for their adoption or convergence have been publicly indicated.

The Croatian Audit Chamber (CAC) does not have direct responsibility for the adoption or implementation of public sector accounting standards. CAC has indicated that it has undertaken outreach efforts in the past to promote IPSAS adoption, including participating in meetings and consultations with the Ministry of Finance and the State Audit Office.

While these efforts demonstrate an awareness of the importance of international public sector standards, there has been limited evidence of recent activities in this area. CAC is encouraged to continue engaging with relevant stakeholders, as appropriate, to support the development of public sector financial reporting and to promote alignment with IPSAS.

Current Status: Review & Improve

The Audit Act, adopted in 2017 and subsequently amended, established a mandatory investigation and discipline (I&D) system for certified auditors and audit firms in Croatia. Since January 1, 2018, responsibility for the I&D system has been assigned to the Ministry of Finance (MoF), replacing the previous role of the Croatian Audit Chamber (CAC).

The MoF is responsible for the investigation of potential breaches and the imposition of disciplinary measures. The system is operational and broadly aligned with the requirements of the International Federation of Accountants (IFAC) Statement of Membership Obligations 6, although certain aspects, such as the composition of disciplinary bodies, may not fully reflect all SMO 6 best practices.

CAC completed all I&D procedures initiated under its previous mandate and continues to contribute to the overall enforcement environment through a supplementary mechanism. In 2019, CAC established a Court of Honor to address breaches of members’ obligations to the organization, including violations of its statutes and internal regulations, as well as disputes between members and with third parties. The process includes a reconciliation phase prior to formal proceedings, and outcomes of disciplinary actions are published.

While the Court of Honor provides an additional layer of oversight, certain elements, such as the involvement of the same individuals in both reconciliation and disciplinary proceedings and the absence of non-accountants in its composition, do not fully align with SMO 6 best practices.

CAC is encouraged to continue engaging with the MoF, as appropriate, to support the effectiveness of the statutory I&D system and to strengthen the alignment of its own processes with SMO 6, including consideration of independent composition and separation of investigative and disciplinary functions.

Current Status: Review & Improve

The Croatian Audit Chamber (CAC) participates in the development and implementation of financial reporting standards in Croatia through its engagement with the Ministry of Finance (MoF) and the Board for Financial Reporting Standards. In this role, CAC contributes to consultations on financial reporting requirements and provides technical input on the transposition and application of European Union directives and regulations into national legislation.

Under the Accounting Act, public interest entities are required to apply International Financial Reporting Standards (IFRS) as endorsed by the European Commission. CAC has supported the development and implementation of this framework through ongoing collaboration with relevant authorities and stakeholders.

CAC supports the implementation of financial reporting standards by organizing roundtables, workshops, and conferences on current IFRS-related topics. It also develops guidance materials to assist auditors in applying financial reporting requirements, including guidance on the preparation and public disclosure of financial statements. In addition, CAC incorporates IFRS and related topics into its continuing professional development programs.

CAC also engages with stakeholders, including regulators and other experts, to assess the impact of new and revised standards and to support their effective implementation in practice.

Current Status: Sustain