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Comparative Analysis of Internal Audit Functioning in the Republic of Croatia and European Union

In certain segments and relevant aspects of internal audit function, there is a major overlap in answers provided by Croatian organizations and those operating in the European Union. Internal audit function as a form of internal control over business activities is present in large business systems both in Croatia and in the European Union. Furthermore, activities that internal audit performs in Croatia and in the European Union are also almost the same. In terms of scope of work, internal audit departments in the European Union, and in Croatia in particular, are still primarily focused on implementation of traditional internal financial audit and business operations audit, and to somewhat lesser extent on management audit. Furthermore, economic branches in which internal audit functions in Croatia and in the European Union are almost the same. In terms of scope of work, internal audit departments in the European Union, and in Croatia in particular, are still primarily focused on implementation of traditional internal financial audit and business activities audit, and to a lesser extent to management audit. The reasons for establishing internal audit function in surveyed organizations in Croatia and in the European Union are also very similar. Key differences between audit function in Croatia and in the European Union, which are primarily the consequence of the fact that in Croatia internal audit function has only recently began being organized in a more serious manner and applied in practice, are in certain organizational assumptions and methodological aspects of internal audit performance in practice. As opposed to European companies in which internal audit department has an adequate organizational position, which is a prerequisite for independent and objective internal audit function, in Croatian companies in most cases the existing status is not acceptable. Furthermore, as opposed to European Union where the majority of surveyed organizations have an audit committee, in Croatia this function almost does not exist. While in the European Union internal auditors have advisory function to management in terms of risk management strategies, internal audit function in Croatia devotes less attention to this significant activity. Internal auditors in Croatia, contrary to their peers in the European Union, pay less attention to to internal audit planning, and utilize only basic work methods and tecniques, and to a lesser extent those that are supported in terms of modern information technologies achievements.

internal auditing; internal audit function; internal audit profession

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