Nowadays audit profession is faced with an excessive evolution of the information and communication technology (ICT). The effects of ICT on auditing are dual. On the one hand, auditing is faced with ...the digitalization of companies' business operations, and on the other, auditors must be able to adapt their methodologies to these changes in order to be able to audit implemented ICT in the companies' business operations. One of the latest ICT innovations includes the application of blockchain technology (BCT) in different business operations of a company, which represents the object of auditing. In order to audit BCT, auditors must apply appropriate audit procedures, whereas analytical procedures (APs) represent the most useful one. The subjects of this paper are external and internal auditors, and their application of APs for auditing implemented BCT in the companies' business operations, in Croatia. Therefore, the main objective of this paper is to investigate the differences in the APs' application and its usefulness for auditing BCT, as an emerging ICT, between external and internal auditors. To investigate the main objective of the paper, desk research and survey research were conducted. Overall results indicated that external and internal auditors in Croatia are aware that auditing BCT requires the application of advanced APs, for what they need to possess excellent knowledge about APs and BCT. Obtained results showed that auditors in Croatia possess below-average knowledge about APs and BCT. Therefore, the necessity for specialized education of external and internal auditors is inevitable. Regarding the investigation of differences in the readiness to audit BCT between external and internal auditors in Croatia, the results confirmed that external auditors are more ready to audit BCT than internal auditors. Finally, research results confirmed that the application of advanced APs in audit engagements will increase the efficiency and effectiveness of companies' business operations supported by the BCT.
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Internal auditors are facing today’s fast-paced business conditions that challenge them to implement adequate information technology and use analytical procedures as key audit techniques. Continuous ...technology improvement enables the development and application of analytical procedures that were unimaginable in the time of ‘paper-based auditing’. The research idea is to investigate the level and improvements of analytical procedures by internal auditors working in contemporary business conditions in Croatia. Given that the advancement of technology supports the application of complex analytics, the investigated problem includes an analysis of coherence between available technology and applied analytical procedures. The importance of using analytical procedures can be confirmed by the positive effects these procedures have in internal auditing as they increase its effectiveness and efficiency. In relation to this, the research also includes an investigation of the level, differences and complexity of analytical procedures used in internal audit in order to determine the current state of and prospects for improving the effectiveness and efficiency of internal audit activity in Croatia. Considering the purpose and possibilities of analytical procedures, the research examines the extent to which, measured by the analytical procedures application level, internal audit functions in Croatia are adapting to contemporary business conditions and changing professional processes. The research issues are analyzed by using the theoretical overview, guidance provided by rofessional institutions, and the importance that internal auditing has as a corporate governance mechanism. The research will provide insights into whether and to what extent the required methodology is respected and will assess the progress of the Croatian internal auditing in a contemporary environment. The advancement of internal auditing in Croatia will be assessed by comparing research results with the global state of the profession. In addition, the research will result in the perspectives of internal audit progress related to the skills and knowledge of internal auditors regarding contemporary technology and their competence to use complex analytics in their work. The research data were collected using a survey. The obtained responses were analyzed by using appropriate statistics (frequencies, proportions, Chi-Square, Kruskal-Wallis, Mann-Whitney U, Kolmogorov-Smirnov and Shapiro-Wilk tests).
The future of work of both external and internal auditors is exciting and promising, as well as, in the same time, threatening and extremely demanding. The exciting and promising part is connected ...with lots of possibilities for auditors’ professional career developments and specialization, while the threatening and demanding part is directed towards the ongoing demand and need for continuous education and upgrading their knowledge base and skill sets in order to be able to stay up to date with all developments and changes in their and their clients’ internal and external surroundings. Today these surroundings are characterized by big data and usage of information and communication technologies (ICTs), among which the blockchain technology (BCT) is described as the most pervasive and promising one. This paper is primarily driven by the scarcity of literature and conducted scientific researches regarding the specialized educations and expertise that auditors need to attend and possess in order to be able to exist in the blockchain-based business environment. Therefore, the main research objective of this paper was to determine critical external and internal auditors’ expertise that they need to possess in order to be relevant and successful in the blockchain-based business environment. In order to achieve this main objective, desk research and survey research were conducted. Survey research was conducted on a sample of external and internal auditors in Croatia. In general, results of the empirical research showed that both external and internal auditors in Croatia think that they need to possess high level of expertise in advanced analytical procedures (APs) in order to be able to audit blockchain-based business operations. Consequently, this then instantaneously increases auditors’ demand for specialized education in fields of BCT, APs, and data analytics (DAs) in general.
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The paper investigates whether a supportive control environment is associated with the internal audit effectiveness and what characteristics of a control environment are important in this respect. A ...survey was conducted via a questionnaire on 54 mostly large companies in Croatia. Appropriate methods of statistical analysis were used in order to analyse the survey results. According to the research results, in the case of a supportive control environment there is a greater chance that the internal audit will be effective and that its recommendations will be taken into account to a greater extent. In addition, the survey results showed a statistically significant correlation between perceived internal audit effectiveness and a higher level of supportive control environment.
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The activities of the internal audit and audit committee in a company are of exceptional importance for the good practice of corporate governance. For the audit committee, performing numerous roles ...and responsibilities of are not possible without the appropriate interactions with the internal audit department. On the other hand, the quality of the internal audit operations in a company is largely determined by the cooperation with the audit committee. This research analyses the influence of the audit committee on the internal audit operations in the sense of achieving the numerous roles and tasks of modern internal auditing in the system of corporate governance. On the basis of the conducted empirical research, using a questionnaire, the following hypothesis was tested: the efficiency of the internal audit function increases through its inclusion in the activities of the audit committee. Before the analysis and discussion on the results of the conducted empirical research on the influence of the audit committee on the improvement of internal audit activity, obtained by using methods of analysis and synthesis, induction, deduction and comparative method, some relevant aspects are researched regarding the relation between the internal audit function and the audit committee in the system of corporate governance.
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Internal audit is an indispensable resource and a source of information for the audit committee. Audit committees have to meet a number of obligations and responsibilities which is not possible ...without adequate communication with the internal audit. Internal audit is often seen as an "eyes and ears" of the audit committee. On the other hand, one of the key factors for the successful internal auditing functioning in an organization is a support that audit committee provides to the internal audit function. Previous studies stress out the importance of mutual interaction which is extremely important for reciprocal strengthening. of each other’s functions. The purpose of this paper is to investigate the relevant theoretical features of the connection between internal and Audit Committee.
In today's chaotic, complex, unpredictable, and extremely dynamic business environment, it is more than ever essential to operate in a way that will ensure sustainable operations and demand for ...companies’ goods or services. Employing contemporary corporate governance, advanced information technology, and adequate financial management are significant foundations for sustaining high profitability and adequate financial stability as crucial objectives that ensure adding value for companies' owners. Covid-19 is an excellent stress test for every entity, as for micro-companies, so for the largest multinational corporations. Nowadays, in the era of the world Covid-19 pandemic, companies challenge to maintain business operations and going concern assumption. However, in every crisis or adverse situation, some companies take enormous benefits of it. Pharmaceutical and biotechnology companies can be characterized as the major players during this last, still actual crisis. Their role can be observed from two angles, first as a provider of necessary drugs for curing Covid-19 patients and from the other side, as a developer of effective and efficient vaccine which will ‘save the world’ and brought us back to the ‘old normal’. This paper seeks to investigate financial determinants that are the most significant for the profitability of the pharmaceutical and biotechnology companies. The question is how those companies coped with the Covid-19 crisis, and what is the impact on their profitability in 2020 compared to previous operating years? Another question is how is the development of the vaccine financed and are R&D expenses significantly increased in 2020? Therefore, the objective of the paper is to investigate the impact of the Covid-19 crisis on the profitability of global pharmaceutical and biotechnology companies. The research covers 52 entities on the global level for the period from 2010 to 2020. Data will be analysed by applying adequate panel data analysis and moderator regression analysis. Keywords: profitability ratios, pharmaceutical and biotechnology companies, Covid-19
Good corporate governance depends on well balanced relations between supervisory mechanisms in the corporate governance process. Relations between the supervisory board, as the internal supervisory ...mechanism, and external auditing, as the external supervisory mechanism, are crucial for the development of good corporate governance practice. This paper focuses on analyzing the relationship between the supervisory board and external auditing in order to determine the current state of that relationship in the Republic of Croatia and to determine possible guidelines for improving the relationship between the supervisory board and external auditing in practice. In addition, this study analyzes the relationship between the supervisory board and external auditing, which could lead to the maximum efficiency of both the supervisory board and external auditing and tests that relationship in practice using publicly traded companies in Croatia. This study also analyzes the impact of the audit committee on the efficiency of the supervisory board and external auditing.
Lately, the role of internal audit is viewed with great importance in the context of the supervisory mechanisms of corporate governance, which is a direct result of requests for more effective ...corporate governance and the need for control. Corporate governance foundation may be considered through the four cornerstones: Audit Committee, Executive Management, Internal Auditors and External Auditors. Internal audit contributes to corporate governance effectiveness through relations and communication with other cornerstones. It is believed that by providing assurance on the effectiveness of risk management, control and governance processes, internal audit is becoming a "key cornerstone" underlying the effective management. This paper analyzes how internal audit contributes to strengthening the governance processes through its relation with the primary beneficiaries, managers and the Audit Committee. The Audit Committee, focused on oversight of financial reporting, controls and risk management, relies on internal audit to assist in carrying out its responsibilities. Also, internal audit provides advice to managers at all levels and information related to the effectiveness of the internal control and risk management processes as well as other important services. It may be concluded that internal audit activities, through its impact on other participants in governance, affect the quality of corporate governance. Internal audit is an important factor in achieving effective governance and is considered as an "integral part of corporate governance mosaic".
U radu se obrađuju relevantne značajke korporativnog upravljanja kao ishodište za razmatranje uloge revizijskog odbora. Cilj je istražiti ulogu i odgovornosti revizijskog odbora, njegovo članstvo i ...unutarnju organizaciju te relevantne aspekte suradnje s eksternim i internim revizorima uključujući i komunikaciju s menadžmentom. Primarne funkcije revizijskog odbora najčešće se povezuju s područjem internih kontrola i upravljanja rizicima, financijskog izvještavanja, primjene zakonskih propisa i regulative te s relevantnim područjima i pitanjima u svezi procesa eksterne i interne revizije. Bez obzira na to radi li se o kontinentalnim sustavima korporativnog upravljanja za koje je karakteristična dvojna (dvorazinska) upravljačka struktura (nadzorni odbor i uprava) ili o angloameričkim sustavima korporativnog upravljanja u kojima se skupna uloga uprave i nadzornog odbora integrira u jedinstveni odbor direktora (board of directors) s izvršnim i neizvršnim direktorima, revizijski odbor je jedan od specijaliziranih pododbora na kojeg se delegiraju odgovarajuće nadzorne funkcije.
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