A nonprofit organization is a legal entity established to serve public, general, or common interests without the intention of generating profit or operating on a commercial basis. These organizations function in non-economic sectors such as culture, generating income through their own activities for the purpose of social benefit. The legal forms of nonprofit organizations include associations, foundations, institutions, and cooperatives, all of which must be registered in the official Register of Nonprofit Organizations. Although the primary purpose of nonprofit organizations is to work for the common good, they are required to prepare financial statements and, depending on their income, may be subject to audit or review. Globalization and the rapid development of markets demand managerial excellence, as each poor decision results in losses and advantages for competitors, making reliable financial data and a competent accounting department crucial for every nonprofit organization. Accurate accounting records require knowledge of accounting principles and a chart of accounts that enables effective financial management and the preparation of financial statements reflecting the organization's financial condition and success. Financial reporting and auditing differ between for-profit and nonprofit organizations, and the credibility of financial statements is vital for making business decisions, which is affirmed by the auditor’s report. All financial statements must adhere to a legally prescribed structure, and organizations are responsible for the accuracy and objectivity of the data, confirmed by the auditor's opinion. Legal regulations and rules related to financial reporting and auditing are continuously being improved. Keeping up with modern trends and utilizing digital tools facilitate the audit process, making it more efficient and reliable. In Croatia, all companies subject to the Accounting Act are audited if they meet two out of three defined criteria. If the data does not exceed these thresholds or a detailed audit is not required, auditors may be engaged to perform a review of the financial statements, which involves examining specific positions and interviewing responsible individuals. This procedure provides a basic level of assurance, but not the same level as a full audit. An audit provides assurance to users of financial statements that they can rely on the presented information. Auditing is crucial for ensuring the credibility of financial statements, provided that the auditor acts ethically and professionally to make their opinion relevant. A review engagement offers a lower level of assurance compared to an audit but can be more challenging for the auditor as it relies on analytical procedures and inquiries to form conclusions.