Rulebook on the Audit of Leasing Company Reports (Unofficial Consolidated Text - NN 68/14, 57/16)

RULEBOOK ON THE AUDIT OF LEASING COMPANY REPORTS (UNOFFICIAL CONSOLIDATED TEXT - NN 68/14, 57/16) (Rulebook on Amendments and Supplements to the Rulebook on the Audit of Leasing Company Reports (NN No. 57/16) entered into force and applies from July 1, 2016)

Rulebook on the Audit of Leasing Company Reports (Unofficial Consolidated Text - NN 68/14, 57/16) Pursuant to Article 74, Paragraph 4 of the Leasing Act ("Narodne novine" No. 141/13), the Croatian Financial Services Supervisory Agency, at a meeting of the Board of Directors held on June 17, 2016, adopts RULEBOOK ON THE AUDIT OF LEASING COMPANY REPORTS

Introductory Provisions Article 1. (1) This Rulebook regulates the scope and content of the audit, i.e., audit procedures and the auditor's report on the completed audit of the annual financial reports, i.e., other reports of the leasing company. (2) The provisions of this Rulebook shall apply mutatis mutandis to branches of leasing companies from other European Union Member States as well as branches of leasing companies from third countries.

Definitions Article 2. Certain terms, within the meaning of this Rulebook, have the following meanings:

1. Agency means the Croatian Financial Services Supervisory Agency,
2. Act means the Leasing Act ("Narodne novine" No. 141/13),
3. Financial reports are the statement of financial position, statement of comprehensive income, statement of cash flows, statement of changes in equity, and notes to the financial reports, which may be presented in standard and non-standard formats,
4. Standard financial reports are financial reports whose structure and content are prescribed by the Act and subordinate regulations adopted pursuant to the Act,
5. Non-standard financial reports are financial reports whose structure and content are prescribed by International Financial Reporting Standards.

Scope and Content of the Audit Article 3. For the purposes of this Rulebook, audit is considered to be:

1. audit of annual financial reports, and
2. audit of other reports for the purposes of the Agency.

Audit of Annual Financial Reports Article 4. (1) The audit of annual financial reports is a procedure for verifying and assessing the annual financial reports of the leasing company, as well as verifying and assessing the data and methods applied by the leasing company in compiling the annual financial reports, on the basis of which a professional and independent opinion is given on the truthfulness and objectivity of the reports. (2) The audit of annual financial reports of the leasing company is carried out in the manner and under the conditions determined by regulations governing accounting and auditing, as well as by the rules of the auditing profession. (3) Annual financial reports must be audited for each fiscal year.

Audit of Other Reports for the Purposes of the Agency Article 5. (1) Audit for the purposes of the Agency is a procedure for verifying and assessing the correctness, accuracy, and completeness of:

1. annual supplementary reports submitted to the Agency in accordance with the Rulebook on the structure and content as well as the method and deadlines for submission of financial and supplementary reports of leasing companies, and
2. Report on the calculation of the capital of the leasing company as of the last day of the calendar year, which is submitted to the Agency in accordance with the Rulebook on the capital of the leasing company. (2) The auditing firm is obliged to check the correctness, accuracy, and completeness of the reports referred to in paragraph 1 of this Article by assessing whether these reports are compiled in accordance with the Act and regulations adopted pursuant to the Act, and whether comparable items are aligned with the annual audited financial reports. (3) The audit for the purposes of the Agency is carried out by the same auditing firm that carries out the audit of annual financial reports.

Scope and Content of the Auditor's Report Article 6. (1) Based on the audit referred to in Article 3 of this Rulebook, the auditing firm is obliged to prepare:

1. an auditor's report on the completed audit of annual financial reports, and
2. an auditor's report on the completed audit for the purposes of the Agency. (2) The auditor's report referred to in this Article is prepared and signed by an authorized auditor in their own name and an authorized representative in the name of the auditing firm.

Auditor's Report on the Audit of Annual Financial Reports Article 7. (1) The auditor's report on the completed audit of annual financial reports is prepared in accordance with regulations governing auditing and International Standards on Auditing. (2) In the auditor's report, the auditing firm is obliged to give an opinion on the truthfulness and objectivity of the financial position, results of operations, and cash flows. (3) If the leasing company has prepared non-standard financial reports for the purposes of the audit, the auditing firm is obliged to give an opinion in the auditor's report on the standard financial reports as well. (4) The opinion referred to in paragraph 3 of this Article is given by the auditing firm as an opinion on financial reports (standard and non-standard) viewed as a whole. (5) The financial reports that were the subject of the audit (standard and non-standard) are attached to the auditor's report. (6) If the leasing company has acted in the manner described in paragraph 3 of this Article, a comparison and explanation of the differences between the standard and non-standard reports are also attached to the auditor's report.

Auditor's Report for the Purposes of the Agency Article 8. (1) The auditor's report for the purposes of the Agency is prepared in accordance with the Act and regulations adopted pursuant to the Act and must contain a separate assessment of the correctness, accuracy, and completeness of the reports referred to in Article 5, paragraph 1 of this Rulebook. (2) The assessment referred to in paragraph 1 of this Article is expressed by a statement as to whether the reports are compiled in accordance with the Act and subordinate acts adopted pursuant to the Act and whether they reflect the true and objective state. (3) The reports that were the subject of the audit are also attached to the auditor's report referred to in this Article.

Reporting to the Agency Article 9. (1) The leasing company is obliged to submit to the Agency, within 15 days from the date of receipt of the auditor's report, and no later than within four months from the end of the fiscal year for which the reports are compiled, the auditor's report on the completed audit of annual financial reports and on the audit for the purposes of the Agency. (2) The leasing companies are obliged to submit the documentation referred to in paragraph 1 of this Article in the manner and in accordance with the Technical Instruction for the Use of the Web Form Entry Service and Submission of Documentation in Electronic Form and the Instruction for Filling Out Web Forms for Leasing Companies.

By Article 1 of the Rulebook on Amendments and Supplements to the Rulebook on the Audit of Leasing Company Reports (NN No. 57/16), which entered into force on July 1, 2016, paragraph 2 was amended by replacing the words: "The leasing companies are obliged to submit the documentation referred to in paragraph 1 of this Article in the manner and in accordance with the Technical Instruction for the Use of the Web Form Entry Service and Submission of Documentation in Electronic Form and the Instruction for Filling Out Web Forms for Leasing Companies" with the words: "The leasing companies are obliged to submit the documentation referred to in paragraph 1 of this Article in written form."

Article 10. (1) The General Assembly of the leasing company adopts a decision on the selection and appointment of the auditing firm that will carry out the audit of annual financial reports and other reports for the purposes of the Agency no later than by September 30 of the fiscal year to which the audit relates. (2) The leasing company is obliged to notify the Agency of the auditing firm referred to in paragraph 1 of this Article no later than within eight days from the date of holding the general meeting of the leasing company at which the decision on selection and appointment was adopted. (3) As proof of compliance with the provision of Article 74, Paragraph 8 of the Act, when submitting the reports referred to in paragraph 2 of this Article, the leasing company is obliged to inform the Agency of the total revenue of the auditing firm earned in the previous year and the revenue earned from auditing that leasing company in the previous year. (4) The leasing company is obliged to submit the reports referred to in paragraphs 2 and 3 of this Article in the manner and in accordance with the Technical Instruction for the Use of the Web Form Entry Service and Submission of Documentation in Electronic Form and the Instruction for Filling Out Web Forms for Leasing Companies.

By Article 2 of the Rulebook on Amendments and Supplements to the Rulebook on the Audit of Leasing Company Reports (NN No. 57/16), which entered into force on July 1, 2016, Article 10 was supplemented with a new paragraph 4.

Article 10.a (1) It is considered that the leasing company has submitted the documentation referred to in Articles 9 and 10 of this Rulebook at the moment when the documentation is recorded on the server for sending such documentation. (2) In justified cases of technical impossibility of submission or submission that was not properly executed (e.g., system failure, inability to read received documentation, etc.) in the manner prescribed by Articles 9 and 10 of this Rulebook, the leasing company is obliged to submit the documentation in written form, directly or by mail, for the purpose of timely reporting. The leasing company is obliged to submit the documentation in the manner prescribed by Articles 9 and 10 of this Rulebook as soon as the reasons for the impossibility of such submission cease, and no later than within 8 days from the cessation of the circumstances that caused the technical impossibility of such submission. (3) The Agency may, if necessary, request the leasing company to submit certain documentation prescribed by this Rulebook in the original or certified copy, regardless of the electronic submission carried out.

By Article 3 of the Rulebook on Amendments and Supplements to the Rulebook on the Audit of Leasing Company Reports (NN No. 57/16), which entered into force on July 1, 2016, a new Article 10.a was added after the provision of Article 10.

Article 11. (1) The auditing firm is obliged to notify the Agency in writing and without delay of all established illegalities or facts and circumstances that may in any way endanger the business operations of the leasing company:

1. significant weakness in the management of the information system,
2. materially significant difference in the assessment of risks present in the business operations of the leasing company and the valuation of balance sheet and off-balance sheet items and income statement items,
3. serious violation of internal acts,
4. significant weakness in the organization of the internal control system or failures in the application of the internal control system, and
5. facts that could lead to a qualified opinion, adverse opinion, or disclaimer of opinion on the financial reports.

Rejection of the Auditor's Report Article 12. If the Agency establishes that the audit of the leasing company's reports was not carried out or that the auditor's report was not prepared in accordance with the Act, regulations adopted pursuant to the Act, regulations governing accounting and auditing, and rules of the auditing profession, or if through the performed supervision of the leasing company's business or in another way it establishes that the auditor's report on the leasing company's reports is not based on true and objective facts, it may reject the auditor's reports and require the leasing company to have the audit carried out by authorized auditors of another auditing firm, at the expense of the leasing company.

Final Provisions Article 13. This Rulebook enters into force and applies from July 1, 2016.

President of the Board of Directors Petar-Pierre Matek