External Audit and Corporate Governance

Efficiency of corporate governance is ensured in different ways. One of those ways is external auditing. In Republic of Croatia that kind of audit is just establishing its place in corporate governance. External auditing, as a part of external supervision of company's business, is an important part of efficient governance since companies' owners are often not informed about accounting problems and there is often an informational asymmetry between owners and managers. Since external auditing has become an important part of good corporate governance this paper examines relationship between external auditing and governance structures within the company.