Croatia

As a member of the European Union (EU), Croatia’s financial reporting, auditing, and sustainability reporting requirements are shaped by applicable EU Regulations and Directives, which are implemented through national legislation. The principal corporate law framework is established by the Companies Act, while accounting, financial reporting, consolidation, statutory audit, public filing, and sustainability reporting requirements are governed primarily by the Accounting Act, as amended in 2024.

Under the Accounting Act, entrepreneurs are required to prepare annual financial statements using either Croatian Financial Reporting Standards (CFRS) or International Financial Reporting Standards (IFRS), depending on their classification. Micro, small, and medium-sized entities are generally required to apply CFRS. Large entities and public interest entities (PIEs) are required to apply IFRS as defined in Article 2 of Regulation (EC) No. 1606/2002 of the European Parliament and of the Council. The Accounting Act defines PIEs to include, among others, issuers whose securities are admitted to trading on a regulated market in an EU member state, credit institutions, insurance and reinsurance companies, leasing companies, investment fund managers and funds, pension fund entities, factoring companies, investment firms, exchanges, central securities depositories, and other entities of public significance. Croatian standards are issued by the Board for Financial Reporting Standards, an expert body established under the Accounting Act.

Statutory audit requirements are governed by both the Accounting Act and the Audit Act. The Audit Act, adopted in 2017 and amended in 2024, transposes Directive 2006/43/EC on statutory audits of annual and consolidated financial statements (Statutory Audit Directive) and provides for the implementation of Regulation (EU) No. 537/2014 on specific requirements regarding statutory audit of public interest entities. The Act regulates the provision of audit services, approval and registration of auditors and audit firms, the Croatian Audit Chamber (CAC), and the system of public oversight. The Ministry of Finance (MoF) is the competent authority responsible for audit regulation, supervision, quality assurance oversight, and public oversight of auditors and audit firms.

Audits in Croatia are conducted in accordance with International Standards on Auditing (ISA) and other pronouncements issued by the International Auditing and Assurance Standards Board (IAASB), as translated and published in Croatian by CAC with the approval of the International Federation of Accountants (IFAC). CAC is a legal entity with public authority established under the Audit Act.

In the Republic of Croatia, the audit profession is regulated, while the broader accountancy profession (e.g., bookkeeping and general accounting services) is not subject to statutory regulation.

The Audit Act, adopted in 2017 and subsequently amended, governs the regulation of statutory auditors and audit firms in Croatia. The Act establishes the legal framework for access to the audit profession, defines the roles and responsibilities of the Ministry of Finance (MoF) as the competent authority, and sets out the functions of the Croatian Audit Chamber (CAC), a professional body with public authority.

Under the Audit Act, individuals seeking to qualify as certified auditors must meet prescribed education, practical experience, and examination requirements. Candidates are required to hold a university-level degree (corresponding to at least 300 European Credit Transfer and Accumulation System (ECTS) credits), complete a minimum of five years of relevant practical experience, including at least three years in statutory audit under the supervision of a licensed auditor, and successfully pass professional examinations. Upon qualification, certified auditors are required to obtain a license from the MoF and become members of the CAC.

Following amendments to the Audit Act effective January 1, 2018, significant regulatory responsibilities were transferred from CAC to the MoF. The MoF is responsible for the approval and registration of certified auditors and audit firms, establishment of initial and continuing professional development requirements, maintenance of the public register, operation of the quality assurance review system, and the investigation and disciplinary system for auditors and audit firms. The MoF also conducts aptitude tests for foreign-qualified auditors and exercises oversight of CAC.

Within this framework and under the oversight of the MoF, CAC continues to perform delegated professional functions. These include organizing and delivering initial and continuing professional development activities as an approved provider, administering professional examinations, and translating and disseminating international auditing and ethical standards for application in Croatia.

The broader accountancy profession in Croatia is not regulated by law. There are no statutory requirements governing entry into the profession for accountants providing bookkeeping or related services. Professional organizations, such as the Croatian Association of Accountants and Financial Experts, operate on a voluntary basis and do not have regulatory authority to establish mandatory education, ethical, or professional requirements for their members.

The Audit Act, adopted in 2017 and subsequently amended, established the Ministry of Finance as the competent authority responsible for the oversight of the audit profession. In this capacity, the Ministry of Finance is responsible for setting initial professional development and continuing professional development requirements for certified auditors, issuing licenses for certified auditors and audit firms, maintaining the public register, and administering the aptitude test for foreign-qualified auditors.

The Ministry of Finance is also responsible for establishing and operating the quality assurance (QA) review system and the investigation and discipline (I&D) system for certified auditors and audit firms, as well as overseeing the activities of the Croatian Audit Chamber.

The Ministry of Finance is a member of the International Forum of Independent Audit Regulators.

The Croatian Audit Chamber (CAC)

The Croatian Audit Chamber (CAC) is a professional accountancy organization that unites all certified auditors in Croatia, and membership in the organization is mandatory. The Audit Act, adopted in 2017 and subsequently amended, regulates CAC, which operates under the oversight of the Ministry of Finance.

In accordance with the Audit Act, CAC is responsible for carrying out delegated professional functions, including organizing and delivering initial professional development training related to audit examinations, providing continuing professional development courses for certified auditors, administering professional examinations, and translating auditing and ethical standards for application in Croatia.

In addition to being an Associate member of the International Federation of Accountants (IFAC), CAC is also an associate member of Accountancy Europe.

The Audit Act, adopted in 2017 and subsequently amended, establishes the legal framework for a mandatory quality assurance (QA) review system for all statutory audits in Croatia. Since January 1, 2018, responsibility for the QA system has been assigned to the Ministry of Finance (MoF).

Under the Audit Act, audit firms that perform audits of public interest entities are subject to QA inspections on a three-year cycle, while other audit firms conducting statutory audits are subject to a six-year inspection cycle.

The MoF has established an independent inspection function to carry out QA reviews in accordance with the Committee of European Audit Oversight Bodies (CEAOB) methodology applied at the European Union level and aligned with the requirements of International Federation of Accountants (IFAC) Statement of Membership Obligations 1. The MoF publishes annual reports on the results of its QA inspections.

In addition, the Croatian Audit Chamber (CAC) has adopted the International Standard on Quality Management (ISQM) 1, International Standard on Quality Management (ISQM) 2, and International Standard on Auditing (ISA) 220 (Revised), effective December 2022, as issued by the International Auditing and Assurance Standards Board.

Current Status: Adopted

Only auditors in Croatia are subject to professional education requirements.

Under the Audit Act, adopted in 2017 and subsequently amended, the Ministry of Finance (MoF) is responsible for establishing 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 and to administer professional examinations, as well as to provide CPD for certified auditors.

To qualify as a certified auditor, candidates are required to hold a university-level degree (corresponding to at least 300 European Credit Transfer and Accumulation System (ECTS) credits), complete a minimum of five years of relevant practical experience, including at least three years in statutory audit under the supervision of a certified auditor, and successfully complete a prescribed IPD program and professional examinations.

The IPD program and examination content are established 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 and verification processes are aligned with IES requirements.

Certified auditors are required to complete a minimum of 120 hours of CPD over a three-year period. CPD programs delivered by CAC support the maintenance and development of professional competence, including for engagement partners. Efforts are ongoing to further align CPD requirements with the latest IES, including strengthening competency-based approaches to learning and assessment.

CAC also engages with universities, professional accountancy organizations, and international bodies to support alignment of education and training requirements with the IES.

Current Status: Adopted

The Audit Act, adopted in 2017 and subsequently amended, together with the Accounting Act, establishes statutory audit requirements in Croatia for large and medium-sized entities, public interest entities (PIEs), and other entities meeting prescribed thresholds.

Under the Audit Act, statutory audits are required to be conducted in accordance with International Standards on Auditing (ISA) as issued by the International Auditing and Assurance Standards Board (IAASB) and translated into Croatian. The Croatian Audit Chamber (CAC), under the oversight of the Ministry of Finance (MoF), is responsible for the translation and publication of ISA.

ISA have been translated and adopted in Croatia; however, the most recent available translation corresponds to the 2020 edition of the Handbook of International Quality Management, Auditing, Review, Other Assurance, and Related Services Pronouncements. While CAC has established processes to translate and adopt new and revised standards on an ongoing basis, including plans to translate the 2022 Handbook, these have not yet been completed.

Current Status: Partially Adopted

Under the Audit Act, all auditors in Croatia, which represent the only regulated segment of the accountancy profession, 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) and translated into Croatian. The Croatian Audit Chamber (CAC), under the oversight of the Ministry of Finance (MoF), is responsible for the translation and publication of the Code.

The 2022 edition of the International Code of Ethics for Professional Accountants (including International Independence Standards) has been translated and is applicable in Croatia. However, subsequent revisions to the Code, including the Technology-Related Revisions and other recent updates, have not yet been fully translated and implemented.

Current Status: Partially Adopted

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.

Current Status: Not Adopted

The Audit Act, adopted in 2017 and subsequently amended, establishes 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 establishing and operating the I&D system, including investigating potential breaches and imposing disciplinary measures. The system is operational and applies to all certified auditors and audit firms.

The I&D system is 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, do not fully reflect all SMO 6 best practices.

In addition, CAC has 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. This mechanism operates separately from the statutory I&D system administered by the MoF.

Current Status: Partially Adopted

As a member of the European Union (EU), Croatia’s financial reporting requirements are established through EU Regulations and Directives, which are implemented through national legislation.

The Companies Act sets general requirements for financial reporting, while the Accounting Act, as amended in 2024, establishes detailed requirements for bookkeeping and financial reporting. Under the Accounting Act, public interest entities (PIEs) are required to prepare their financial statements in accordance with International Financial Reporting Standards (IFRS) as endorsed by the European Commission and translated into Croatian. PIEs include, among others, listed companies, credit institutions, insurance and reinsurance companies, pension funds, leasing companies, and other entities of public significance.

In accordance with the European Union framework, IFRS as endorsed by the European Commission are largely aligned with IFRS as issued by the International Accounting Standards Board, with limited modifications. These modifications affect a limited number of entities, and most companies are able to assert full compliance with IFRS as issued by the International Accounting Standards Board.

Entities that are not classified as PIEs, including micro, small, and medium-sized entities, are required to apply Croatian Financial Reporting Standards issued by the Board for Financial Reporting Standards. The IFRS for Small and Medium-sized Entities has not been adopted in Croatia.

Current Status: Adopted

Relevant Organizations

• Board of Financial Reporting Standards
• Croatian Audit Chamber (CAC)
• Croatia Ministry of Finance

Relevant Legislation

• Accounting Act (as amended 2024)
• Audit Act (as amended)
• Companies Act
• Directive 2006/43/EC (Statutory Audit Directive)
• EU Regulation (EC) No. 1606/2002 (IFRS)
• Regulation (EU) No. 537/2014 (PIE audit requirements)

Relevant Publications

• CAC, SMO Action Plan, 2022.
• IFIAR, “IFIAR: Member Profile”. 
• IFRS Foundation, IFRS Application Around the World, Jurisdictional Profile: Croatia, 2016.
• IFRS Application around the World – Jurisdictional Profile: European Union, April 2021