World Bank Report on the Observance of Standards and Codes in Croatia

Abstract

This diagnostic assessment is part of a joint initiative by the World Bank and International Monetary Fund (IMF) to prepare Reports on the Observance of Standards and Codes (ROSC). The report was prepared by a team from the World Bank on the basis of the findings from a diagnostic review. The World Bank team comprised Mr. Erik van der Plaats and Mr. David Nagy.

The Croatian institutional framework has undergone several important changes. However, further capacity building relating to monitoring, enforcing, and strengthening supervision (except for banks) is needed to ensure proper application of International Financial Reporting Standards (IFRS) and national accounting standards. Public availability of legally mandated financial statements for companies - other than banks - is limited. This undermines the value added of the financial reporting function in the Croatian market economy and partially reflects a general lack of user demand for financial statements. Except for banks, there is at present no systematic enforcement of the quality of financial statements besides the statutory audit function.

The report concludes that Croatia should take further steps in order to achieve its goal of developing a robust financial reporting framework tailored to the needs of the Croatian market economy, and aligned with the acquis communautaire, international standards and best practices.

Keywords: World Bank IMF Finance Banking Financial Statements Capital Markets Corporate Financial Reporting IFRS ISA Accounting Auditing Corporate Governance