Sanja Sever Mališ

The Impact of Accounting Estimates on Financial Position and Business Performance – Case of Non-Current Intangible and Tangible Assets☆

Abstract Financial statements represent a great source of information for companys financial position and business performance evaluation. Management judgment depends on the information base which is given at the time of judgement. Each judgement is by its nature subjective, so the results of the estimation can differ. Non-current tangible and intangible assets represent a significant proportion of assets of many companies. There is a plenty of space for applying accounting estimates in order to recognise and measure such assets. The research model confirmed the volatility of financial condition and performance of a company as a result of different accounting estimates.

Inspection Results on the Quality of Auditing

Financial statements auditing is conducted in order to protect public interest. In order to achieve that, it is necessary to establish the trust in auditor’s work. One of the quality control mechanisms are the inspections over the auditors and auditing firms performed by an independent authorized institution. Following that practice, the Croatian Audit Chamber is performing the inspection of auditors and auditing firms since 2010. The aim of this paper is to compare the results of inspections carried out in Croatia with the results in the selected European countries. The reports on audit inspection show that there is still room for improvements in terms of the audit quality. The conclusions of the research point towards the lack of auditor’s professional scepticism with regard to the statements of management. This refers to the importance of professional scepticism in audit fields which are exposed to increased risks in the context of the financial market and global economic crises. According to the experience of selected countries, the inspections that were carried out by an independent professional body have increased the quality of the performed audits. However, there are clear suggestions that there is still plenty of space for significant improvements.