Having completed the international tender procedure which included six leading international auditing firms, the Croatian National Bank selected KPMG and Deloitte & Touche to carry out a special audit program for a group of selected Croatian banks. The program will include audit procedures and diagnostic studies.

The abovementioned program will not replace or additionally review the findings of regularly performed bank audits, the main task of which continues to be the control of correctness and credibility of bank's records and financial statements. The program will primarily help the central bank to exercise its supervision function, as well as provide an efficient training of central bank examiners. Namely, selected examiners of the Croatian National Bank will join the auditing teams in all phases of the audit. Their involvement in on-the-job-training with experienced foreign auditors will improve their already acquired knowledge and skills and enable them to conduct future commercial bank examinations with a higher degree of quality.

This year, the program will include special audits of the following twelve banks: Agroobrtnička banka, Croatia banka, Dalmatinska banka, Glumina banka, Gradska banka, Hrvatska poštanska banka, Istarska banka, Jadranska banka, Karlovačka banka, Raiffeisen banka, Varaždinska banka and Županjska banka. Audits of other Croatian banks will follow. This program, however, is focused primarily on the examination of medium-sized banks, and is not based on estimated or assumed degree of risk associated with a particular bank. The reason for such a selection was the fact that there exists a reliable insight into the condition of the biggest banks - when compared to medium-sized banks, either because they have been listed on a stock exchange, or because they recently underwent the process of rehabilitation. On the other hand, the program has not focused on the smallest banks for they are less significant from the point of view of safety and stability of the banking system as a whole.

The implementation of the program will start at the beginning of May. The first results have to be presented to the Croatian National Bank by the end of July, and final documentation for the group of audited banks is to be submitted in the first half of September 1998.