TRENDS ON REPORTING MATERIALITY INFORMATION IN THE INDEPENDENT AUDITOR’S REPORT – CASE OF CROATIA

It is known that the financial statement audit represents the corporate governance mechanism crucial for ensuring the appropriate quality of the financial reporting process and financial statements. One of the most significant aspects of the financial statement audit process is the application of the materiality concept. Auditors apply the concept in planning and performing the process, as well as in evaluating the effects of identified misstatements. The International Accounting Standards Board (IASB) de fines that the information provided in financial statements is material if could reason ably be expected that will influence the business decisions of the stakeholders. Although not mandatory, recent Standards and regulation changes resulted in reporting mate riality details by a significant number of auditors in Croatia. The research question is how that practice develops from the implementation year, 2016, to nowadays, 2020, and what can be expected in the future. Following the research problem, the objective of the paper will be to investigate the current state and future perspective of disclosing information regarding materiality in the independent auditor’s report in Croatia. To investigate the research problem, we analyzed independent auditor’s reports of Croa tian listed companies (public interest entities - PIEs) from 2016 to 2019. The research is conducted by applying appropriate statistical methodology as descriptive statistics, cluster analysis, and non-parametric tests, and regression analysis.