Browse Profiles > Croatia > International Financial Reporting Standards
  Score Rank
Standards Compliance Index 49.17 out of 100 33
Business Indicator Index 5.82 out of 12 63
Croatia

International Financial Reporting Standards

Summary
According to the Deloitte IAS Plus website, under Croatian Accounting Law, certain specific entities are required to apply International Financial Reporting Standards (IFRSs): (1) listed companies and those that are preparing to go public; (2) financial institutions; (3) large enterprises; (4) other companies as required by financial sector supervisory authorities; and (5) companies that are required to prepare consolidated financial statements according to IFRSs. Deloitte emphasizes, however, that the IFRSs that are applied are only those that were translated as of March 31, 2004. However, IFRSs 6, 7, and 8 have not yet been translated or published, and some amendments to International Accounting Standards (IASs) and IFRSs that were made after March 31, 2004 have also not been incorporated into Croatian accounting requirements. All enterprises other than those enumerated in the Accounting Law may either apply IFRSs or use standards adopted by the Financial Reporting Standards Board (FRSB). As of May 2007, these FRSB standards are IASs as they existed in 2000. According to a 2007 self-assessment published by the Croatian Association of Accountants and Financial Experts (CAAFE), the FRSB will prepare national accounting standards for private sector entities that decide not to apply IFRSs. The standards will be a short version of IFRSs.

    General Overview

    According to the Deloitte IAS Plus website, the Croatian Accounting Law requires the following entities to apply International Financial Reporting Standards (IFRSs): (1) listed companies and those that are preparing to go public; (2) financial institutions; (3) large enterprises, i.e., entities with (a) revenues higher than HRK 216 million, (b) total assets higher than HRK 108 million, and (c) more than 250 employees; (4) other companies as required by financial sector supervisory authorities; and (5) companies that are required to prepare consolidated financial statements according to IFRSs. Deloitte emphasizes, however, that "the National Accounting Law requires enterprises that use IFRSs to use IFRSs translated and published in the National Gazette by the Croatian Financial Reporting Standards Board." This means that the IFRSs used in Croatia are only those that were translated by March 31, 2004. IFRSs 6, 7 and 8 had not been translated or published by that time, nor had certain amendments to IASs and IFRSs. According to the Croatian Association of Accountants and Financial Experts (CAAFE) report of 2007, the Accounting Law contains the full text of each IFRS applied in Croatia. The CAAFE organizes the translation of the IFRSs, and the translation itself is done by the 'Big Four' audit companies. The CAAFE published the translated 2004 IFRSs in the National Gazette "Narodne Novine."
    The Deloitte website further states that the companies that do not fall under categories enumerated in the Croatian Accounting Law may either apply IFRSs or use standards adopted by the Financial Reporting Standards Board (FRSB). As of May 2007, these are the International Accounting Standards (IASs) that existed in 2000. According to the CAAFE's 2007 self-assessment of Croatia's accounting and auditing framework, the FRSB will prepare national accounting standards for private sector entities which decide not to apply IFRSs. The standards will be a short version of 2004 IFRSs. In the meantime, as stated above, these companies must use the IASs of 2000.
    According to the CAAFE report of 2006, prior to January 1, 2006, the regulator for the Croatian securities market was the Croatian Securities and Exchange Commission (CSEC). There were no additional accounting requirements for listed entities. Insurance supervision was carried out by the Insurance Companies Supervisory Authority (ICSA), which had no responsibility for monitoring and enforcement of accounting and auditing requirements in Croatia. The European Bank for Reconstruction and Development (EBRD) report of 2007 notes that on January 1, 2006, Croatia established the Croatian Financial Services Supervisory Agency (CFSSA), which, pursuant to the 2006 Act on the Croatian Financial Services Supervisory Agency, assumed the responsibilities and competencies of the former CSEC, ICSA, and the Agency for Supervision of Pension Funds and Insurance. The 2006 CAAFE report states that the Croatian National Bank (CNB) supervises banks and similar financial institutions, but it does not monitor or enforce accounting and auditing requirements. The boards of the Varaždin Stock Exchange (VSE) and the Zagreb Stock Exchange (ZSE), respectively, monitor financial reporting, accounting, and auditing requirements.
    In its 2002 Report on the Observance of Standards and Codes (ROSC) on Accounting and Auditing, the World Bank pointed out that there was "no enforcement or monitoring of compliance with IASs other than through the audit process" (p. 7). At the time of the assessment, neither the Ministry of Finance (MoF) nor any other organization was authorized to enforce compliance with IASs by any company. It should be noted, however, that the CSEC had limited powers to enforce compliance of privatization investment funds. The World Bank also reported that, "while the apparent quality of many of the IAS financial statements reviewed was good, there were significant variations in the level of compliance with IAS. Some of the financial statements presented for review did not purport to comply with IAS" adding that "companies are also required to submit different financial information at different times to separate authorities and some financial information about companies that is available to the public may not be reliable" (2002, p. 1).
    Croatia applies the International Federation of Accountants (IFAC) Code of Ethics (CAAFE 2007). The CAAFE is a member of the IFAC (IFAC website).


    The Principles

    IFRS 1: First-time Adoption of International Financial Reporting Standards (effective 2006)

    According to the Deloitte IAS Plus website, IFRS 1: First-time Adoption of International Financial Reporting Standards was issued in June 2003 and amended in June 2005. Croatian companies, however, apply a March 31, 2004 translated version of the IFRSs. Therefore, amendments to IASs and IFRSs since March 31, 2004 have not been incorporated.

    IFRS 2: Share-based Payment (effective 2005)

    According to the Deloitte IAS Plus website, IFRS 2 Share-based Payment was issued in February 2004 and applies to annual periods beginning on or after January 1, 2005. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IFRS 3: Business Combinations (effective 2004)

    According to the Deloitte IAS Plus website, IFRS 3 Business Combinations was issued in March 2004 and is applicable for business combinations for which the agreement date is on or after March 31, 2004. Croatian companies apply a translated version of IFRSs that were in effect on March 31, 2004.

    IFRS 4: Insurance Contracts (effective 2006)

    According to the Deloitte IAS Plus website, IFRS 4 Insurance Contracts was issued in March 2004 and amended in August 2005. Croatian companies, however, apply a translated version of IFRSs as of March 31, 2004. Therefore, amendments to IASs and IFRSs since March 31, 2004 have not been incorporated.

    IFRS 5: Non-current Assets Held for Sale and Discontinued Operations (effective 2005)

    According to the Deloitte IAS Plus website, IFRS 5 Non-current Assets Held for Sale and Discontinued Operations was issued in March 2004 and is applicable for annual periods beginning on or after January 1, 2005. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IFRS 6: Exploration for and Evaluation of Mineral Resources (effective 2006)

    According to the Deloitte IAS Plus website, IFRS 6: Exploration for and Evaluation of Mineral Assets was issued in December 2004 and is applicable for annual periods beginning on or after January 1, 2006. Croatian companies, however, apply a translated version of IFRSs as of March 31, 2004. Therefore, amendments to IASs and IFRSs since March 31, 2004 have not been incorporated.

    IFRS 7: Financial Instruments: Disclosures (effective 2007)

    According to the Deloitte IAS Plus website, IFRS 7: Financial Instruments: Disclosures was issued on August 18, 2005 and is applicable for annual periods beginning on or after January 1, 2007. Croatian companies, however, apply a translated version of IFRSs as of March 31, 2004. Therefore, amendments to IASs and IFRSs since March 31, 2004 have not been incorporated.

    IAS 1: Presentation of Financial Statements (effective 2007)

    According to the Deloitte IAS Plus website, the effective date of IAS 1 (rev. 2003): Presentation of Financial Statements was January 1, 2005. However, IAS 1 was amended in August 2005. Croatian companies, however, apply a translated version of IFRSs as of March 31, 2004. Therefore, amendments to IASs and IFRSs since March 31, 2004 have not been incorporated.

    IAS 2: Inventories (effective 2005)

    According to the Deloitte IAS Plus website, IAS 2: Inventories was revised in December 2003. The revised standard is effective for periods commencing January 1, 2005. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IAS 7: Cash Flow Statements (effective 1994)

    According to the Deloitte IAS Plus website, IAS 7: Cash Flow Statements (revised 1992) is applicable for periods beginning on or after January 1, 1994. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors (effective 2005)

    According to the Deloitte IAS Plus website, IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors was revised in December 2003. The revised standard is effective for periods commencing January 1, 2005. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IAS 10: Events after the Reporting Period (effective 2005)

    According to the Deloitte IAS Plus website, IAS 10: Events After the Balance Sheet Date was revised in December 2003. The revised standard is effective for periods commencing January 1, 2005. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IAS 11: Construction Contracts (effective 1995)

    According to the Deloitte IAS Plus website, IAS 11: Construction Contracts is applicable for periods beginning on or after January 1, 1995. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IAS 12: Income Taxes (effective 2001)

    According to the Deloitte IAS Plus website, IAS 12: Income Taxes is applicable for periods beginning on or after January 1, 1998. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IAS 14: Segment Reporting (effective 1998)

    According to the Deloitte IAS Plus website, IAS 14 Segment Reporting is applicable for periods beginning on or after July 1, 1998. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IAS 16: Property, Plant and Equipment (effective 2005)

    According to the Deloitte IAS Plus website, IAS 16 Property, Plant and Equipment Sheet Date was revised in December 2003. The revised standard is effective for the periods commencing on January 1, 2005. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IAS 17: Leases (effective 2005)

    According to the Deloitte IAS Plus website, IAS 17: Leases was revised in December 2003. The revised standard is effective for periods commencing January 1, 2005. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IAS 18: Revenue (effective 1995)

    According to the Deloitte IAS Plus website, IAS 18: Revenue is applicable for periods beginning on or after January 1, 1995.Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IAS 19: Employee Benefits (effective 2006)

    According to the Deloitte IAS Plus website, IAS 19: Employee Benefits was issued in 1998 and is applicable for periods beginning on or after January 1, 1999 and amended in December 2004. The amendment is applicable for periods beginning on or after January 1, 2006. Croatian companies, however, apply a translated version of IFRSs as of March 31, 2004. Therefore, amendments to IASs and IFRSs since March 31, 2004 have not been incorporated.

    IAS 20: Accounting for Government Grants and Disclosure of Government Assistance (effective 1984)

    According to the Deloitte IAS Plus website, IAS 20: Accounting for Government Grants and Disclosure of Government Assistance is applicable for periods beginning on or after January 1, 1984. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IAS 21: The Effects of Changes in Foreign Exchange Rates (effective 2005)

    According to the Deloitte IAS Plus website, IAS 21: The Effects of Changes in Foreign Exchange Rates was revised in December 2003. The revised standard is effective for periods commencing January 1, 2005. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IAS 23: Borrowing Costs (effective 1995)

    According to the Deloitte IAS Plus website, IAS 23: Borrowing Costs is applicable for periods beginning on or after January 1, 1995. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IAS 24: Related Party Disclosures (effective 2005)

    According to the Deloitte IAS Plus website, IAS 24: Related Party Disclosures was revised in December 2003. It is applicable for annual periods beginning on or after January 1, 2005. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IAS 26: Accounting and Reporting by Retirement Benefit Plans (effective 1998)

    According to the Deloitte IAS Plus website, IAS 26 Accounting and Reporting by Retirement Benefit Plans is applicable for periods beginning on or after January 1, 1998. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IAS 27: Consolidated and Separate Financial Statements (effective 2005)

    According to the Deloitte IAS Plus website, IAS 27: Consolidated and Separate Financial Statements was revised in December 2003. The revised standard is effective for periods commencing January 1, 2005. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IAS 28: Investments in Associates (effective 2005)

    According to the Deloitte IAS Plus website, IAS 28: Investment in Associates in December was revised 2003. The revised standard is effective for periods commencing January 1, 2005. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IAS 29: Financial Reporting in Hyperinflationary Economies (effective 1990)

    According to the Deloitte IAS Plus website, IAS 29: Financial Reporting in Hyperinflationary Economies is applicable for periods beginning on or after January 1, 1990. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IAS 31: Interests in Joint Ventures (effective 2005)

    According to the Deloitte IAS Plus website, IAS 31: Interests in Joint Ventures was revised in December 2003. The revised standard is effective for periods commencing January 1, 2005. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IAS 32: Financial Instruments: Disclosure and Presentation (effective 2005)

    According to the Deloitte IAS Plus website, IAS 32: Financial Instruments: Disclosure and Presentation was issued in December 2003 and is applicable for annual periods beginning on or after January 1, 2005. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IAS 33: Earnings per Share (effective 2005)

    According to the Deloitte IAS Plus website, IAS 33: Earnings per Share was revised in December 2003. The revised standard is effective for periods commencing January 1, 2005. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IAS 34: Interim Financial Reporting (effective 1999)

    According to the Deloitte IAS Plus website, IAS 34: Interim Financial Reporting is applicable for periods beginning on or after January 1, 1999. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IAS 36: Impairment of Assets (effective 2004)

    According to the Deloitte IAS Plus website, IAS 36: Impairment of Assets was issued in March 2004. It is applied to goodwill and intangible assets acquired in business combinations after March 31, 2004 and to all other assets for annual periods beginning on or after March 31, 2004. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IAS 37: Provisions, Contingent Liabilities and Contingent Assets (effective 1999)

    According to the Deloitte IAS Plus website, IAS 37: Provisions, Contingent Liabilities and Contingent Assets was issued in July 1998 and is applicable for periods beginning on or after July 1, 1999. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IAS 38: Intangible Assets (effective 2004)

    According to the Deloitte IAS Plus website, IAS 38: Intangible Assets was revised in March 2004. The revised standard is applied to the accounting for intangible assets acquired in business combinations after March 31, 2004, and to all other intangible assets for annual periods beginning on or after March 31, 2004. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IAS 39: Financial Instruments: Recognition and Measurement (effective 2006)

    According to the Deloitte IAS Plus website, IAS 39: Financial Instruments: Recognition and Measurement was issued in December 2003 and amended in 2005. Croatian companies, however, apply a translated version of IFRSs as of March 31, 2004. Therefore, amendments to IASs and IFRSs since March 31, 2004 have not been incorporated.

    IAS 40: Investment Property (effective 2005)

    According to the Deloitte IAS Plus website, IAS 40: Investment Property in December 2003. The revised standard is effective for periods commencing January 1, 2005. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    IAS 41: Agriculture (effective 2003)

    According to the Deloitte IAS Plus website, IAS 41: Agriculture is applicable for periods beginning on or after January 1, 2003. Croatian companies apply a translated version of IFRSs as of March 31, 2004.

    Jump to other standards


    Sources of Assessment

    Croatian Association of Accountants and Financial Experts, "Assessment of the Regulatory and Standard- Setting Framework," Self-assessment prepared as part of the International Federation of Accountants' (IFAC) Member Body Compliance Program, May 2006. Available from International Federation of Accountants website. Accessed July 19, 2006. (CAAFE 2006)

    Croatian Association of Accountants and Financial Experts, "Response to the IFAC Part 2, SMO Self-Assessment Questionnaire," Self-assessment prepared as a part of the International Federation of Accountants' (IFAC) Member Body Compliance Program, May 2007. Available form International Federation of Accountants website. Accessed on July 19, 2007. (CAAFE 2007)

    Deloitte & Touche Tohmasu IAS Plus website. Accessed on July 19, 2007. (Deloitte IAS Plus website)

    World Bank, "Croatia: Report on the Observance of the Standards and Codes (ROSC) - Accounting and Auditing," June 2002. Available from World Bank website. Accessed on July 19, 2007. (WB 2002)

    Relevant Organizations

    Croatian Association of Accountants and Financial Experts- Računovodstvo i financije (CAAFE) (in Croatian only)

    Croatian Financial Services Supervisory Agency - Hrvatska Agencija Za Nadzor Financijskih Usluga (CFSSA)

    Croatian National Bank - Hrvatska Narodna Banka CNB)

    Croatian Securities and Exchange Commission - Hrvatska Agencija Za Nadzor Financijskih Usluga (CSEC)

    Financial Reporting Standards Board (FRSB)

    Insurance Companies Supervisory Authority (ICSA)

    Ministry of Finance - Ministarstvo Financija (MoF)

    Varaždin Stock Exchange - Varaždinska Burza (VSE)

    Zagreb Stock Exchange - Zagrebačka Burza (ZSE)



    Relevant Legislation/Regulation

    Accounting Act, 2005 (in Croatian only)

    Translated IFRSs as of March 31, 2004 as Published in the National Gazette, (in Croatian only)

    Audit Law, 1992 (in Croatian only)

    Companies Act, 1995

    Securities Market Law, 2002

    Rules on the Content and Form of Financial and Business Reports of Public Joint Stock Companies, 2003

    Act on the Croatian Financial Services Supervisory Agency, 2006



    Supplementary Sources

    Deloitte & Touche Tohmatsu, "International Accounting Comparison," 2000. Available from IAS Plus website. Accessed on July 19, 2007. (Deloitte & Touche Tohmatsu 2000)

    European Bank for Reconstruction and Development, "Commercial Laws of Croatia - An Assessment by the EBRD," 2007. Available from European Bank for Reconstruction and Development website. Accessed on July 19, 2007. (EBRD 2007)

    International Federation of Accountants website. Accessed on July 19, 2007. (IFAC website)

    PricewaterhouseCoopers, "Guide to Doing Business and Investing in Croatia," 2006. Available from PricewaterhouseCoopers website. Accessed on July 19, 2007. (PwC 2006)

    SEEUROPE.NET, "Southeast Europe Investment Guide 2007 - Croatia," 2007. Available from SEEUROPE.NET website. Accessed on July 19, 2007. (SEEUROPE.NET 2007)
    ©  Copyright 2008 Financial Standards Foundation. All Rights Reserved. Terms of Use | Contact