TRANSPARENCY OF AUDIT FIRMS, AUDIT COMMITTEE EFFECTIVENESS AND INTERNAL AUDIT EXISTENCE

Effective corporate governance and mechanisms of corporate governance provide an incentive for company’s management in achieving their goals which are important for company, but also for all interested users, for shareholders. The aim of this study is to analyze internal and external mechanisms of corporate governance, for Croatian listed companies, in 2013. Based on research objectives, sample of 147 listed companies and 53 audit firms were collected from: Amadeus database ; Zagreb stock exchange website ; Register of annual financial statements and official Croatian Audit Chamber website. Conclusions about mechanisms of corporate governance, based on the sample and created indexes, are as follows: 18% external auditors provide other services to companies ; 60% companies does not published the amount of charges paid to audit firms ; 26% listed companies are audited by Big Four ; 68% transparency reports of audit firms are available ; 8% audit firms have all important transparency report elements ; 38% companies does not establish audit committee ; most of audit committees have medium efficiency ; companies with more effective audit committee choose Big Four ; there is significant relationship between financial indicators (total assets, total equity, number of employees and number of managers) and audit committee effectiveness and 40% companies does not have internal auditor.