Governor Žigman regulates the rejection of bank reports and auditing with a new decision

The Croatian National Bank has published in Narodne novine no. 115/2026 a new Decision on the Rejection of Annual Financial Statements of Credit Institutions and the Content of the Audit for the Purposes of the Croatian National Bank, registered under number 1376. The Decision was adopted on September 28, 2026, in Zagreb by the Governor dr. sc. Ante Žigman, under personal number 402-091/09-26/AŽ, and was published in the official gazette on Friday, October 9, 2026.

Legal Basis and Background

The Decision was adopted based on Article 223, paragraph 10, and Article 224, paragraph 7 of the Credit Institutions Act (Narodne novine no. 22/2026), as well as Article 43, paragraph 2, item 10 of the Croatian National Bank Act (Narodne novine no. 75/2008, 54/2013, and 47/2020).

It further regulates four areas: the reasons for rejecting the annual and annual consolidated financial statements of credit institutions, the content of the audit for the purposes of the Croatian National Bank, the method of issuance and the range of ratings provided by the audit firm, and the reasons for rejecting the ratings of audit firms given in accordance with Article 224, paragraph 1 of the Credit Institutions Act.

Upon the date of entry into force, the previous Decision on the Rejection of Annual Financial Statements of Credit Institutions and the Content of the Audit for the Purposes of the Croatian National Bank (Narodne novine no. 22/2019, 139/2022, and 150/2024) shall cease to be valid.

Reasons for Rejection of Reports

The Croatian National Bank shall reject the annual financial statements or the annual consolidated financial statements if it determines that they were prepared contrary to regulations or that the reports for which a positive opinion was issued in the audit report do not provide a true and fair view of the financial position and business performance.

Reports are considered to be prepared contrary to regulations if:

• they are prepared contrary to the provisions on the structure and content of the annual financial statements of credit institutions,
• they are prepared contrary to the applicable financial reporting framework, namely Regulation (EC) No 1606/2002 and Commission Regulation (EU) 2023/1803,
• The Croatian National Bank determines that the submitted reports are mutually inconsistent or are not mathematically and logically correctly prepared.

Reports do not provide a true and fair view if The Croatian National Bank, through the supervision process, determines illegalities, irregularities, and weaknesses in the operations of the credit institution or group that have a significant impact on the presentation of the financial position, business performance, and cash flow, or determines a factual state by which the ability of the credit institution to continue operations indefinitely is jeopardized.

What the Audit for the Purposes of the Croatian National Bank Includes

The audit for the purposes of the Croatian National Bank is a verification and assessment process carried out by the credit institution’s audit firm regarding:

• adherence to risk management rules,
• adequacy of the performance of the risk control function, the compliance monitoring function, and the internal audit function,
• the state of digital operational resilience and the appropriateness of ICT risk management, in accordance with Regulation (EU) 2022/2554 and the Act on the Implementation of Regulation (EU) 2022/2554 (Official Gazette no. 136/2024),
• compliance of securitization with STS criteria from Regulation (EU) 2017/2402,
• the regularity, accuracy, and completeness of reports submitted by the credit institution to the Croatian National Bank.

The audit firm is obliged to assess whether the credit institution adequately manages credit, liquidity, market, and interest rate risk in the banking book, operational risk, the risk of preventing money laundering and terrorist financing, as well as other risks. It also assesses the regularity and accuracy of the calculation of asset impairment and provisioning for off-balance sheet items in accordance with International Financial Reporting Standard 9 – Financial Instruments.

Assessments, reports, and rejection by the audit firm

Audit assessments for the purposes of the Croatian National Bank are descriptive and range from completely satisfactory to completely unsatisfactory: satisfactory, mostly satisfactory, partially satisfactory, or unsatisfactory. The audit report must contain separate assessments for each individual risk, for internal control functions, for digital operational resilience, for securitization compliance, and for reports submitted to the Croatian National Bank, along with a list of deficiencies, recommendations, and a statement on recommendations from previous years. It is signed by authorized auditors and the legal representative of the audit firm.

The audit covers reports prescribed by the Decision on Reports for the Purpose of Supervision of Credit Institutions (Official Gazette no. 100/2026) and Commission Implementing Regulation (EU) 2024/3117, which include, for example, the report on credit risk exposure by risk groups (RS4), the regulatory capital report (C 01.00), capital requirements (C 02.00), capital ratios (C 03.00), and the balance sheet (F 01.01).

The Croatian National Bank may reject the assessment of the audit firm and require the credit institution to have the assessment provided by authorized auditors of another audit firm if:

• it determines that the assessment is based on untrue and non-objective facts,
• it determines that the assessment is not adequately justified,
• through the supervision process, it identifies significant risks and deficiencies that were not included in the audit report,
• the audit firm has not corrected or supplemented its assessment following a request from the Croatian National Bank.

Entry into force and application

The Decision shall enter into force on the eighth day from the date of its publication in the Official Gazette (Narodne novine), and shall begin to apply to annual financial statements and annual consolidated financial statements prepared as of December 31, 2026.

For banks and auditors, this means that the rules for the audit season for the 2026 financial year will no longer be those from 2019, but a new, broader framework that, in addition to financial statements, also covers risk management, internal controls, digital operational resilience, and securitization. In addition to the possibility of rejecting the statements themselves, the Croatian National Bank also retains the right to reject the audit firm’s opinion and request the engagement of another auditor, which increases the responsibility of both the banks and their auditors.

Source: Official Gazette (Narodne novine) no. 115/2026, Decision on the rejection of annual financial statements of credit institutions and the content of the audit for the purposes of the Croatian National Bank, no. 1376, October 9, 2026.