The Croatian Accounting Act states that large entrepreneurs and entrepreneurs whose securities are listed on the stock exchange must keep records and prepare financial statements according to the principles of the law and to International Financial Reporting Standards while other companies may choose to apply either IFRS or International Accounting Standards.
Croatian entities operating abroad which under the foreign legislation are not obliged to keep business records, are however subject to the Croatian Accounting Act. The same applies to units of foreign companies operating in Croatia.
The business books are the general ledger, the journal and the auxiliary books. While the journal records the daily transactions, the general ledger is a record of changes in assets, liabilities, income and expenditure.  The general ledger and the journal must be kept for at least eleven years, the auxiliary books for seven years. The books have to be prepared in Croatian kunas.
Financial statements have to be prepared for a business year, which usually corresponds to the calendar year, and are prepared on the basis of the records kept. Regulatory financial statements are the balance sheet, the income statement, the statement of changes in equity, the cash flow statement and notes to the financial statements.
For accounting purposes, companies are classified as small, medium or large. A small company  is a natural person or legal entity that does not meet two of the following conditions: the total balance sheet assets are not more than HRK 27 million; the income of the twelve months prior to the preparation of the balance sheet is not more than HRK 54 million and the average number of employees is not more than 50.
A medium-sized company is a company that meets two of the above mentioned criteria but does not meet two of the following requirements: the total balance sheet assets are not more than HRK 108 million, the income in the 12 months prior to the preparation of the balance sheet is not more that HRK 216 million and the average number of employees is not more than 250. A large company is one that exceeds two of the above mentioned conditions.