This Master’s Thesis highlights the importance and role of quality control oversight systems in the audit profession, as well as the importance of quality, reliable, and credible financial statements for corporate governance, namely based on the theory and an actual public oversight of audit firms performed. Audits must be conducted in accordance with the laws, standards, regulations, principles, and the professional code of ethics for auditors in order for internal and external users to be able to rely on financial statements and use them as a basis for making sound business decisions. This in turn strengthens the reputation of the auditing profession and protects the public interest. In the Republic of Croatia, the main role in assessing the quality of an auditor’s work is therefore played by the oversight system entrusted to the Ministry of Finance and harmonised with the regulations of the European Union. Based on the report on the oversights of audit firms performed in the one-year oversight cycle 2020/2021, insight was obtained into illegalities and irregularities in the application of international auditing standards, as well as inconsistencies in the application of International Standard on Quality Control I. The parts of legal provisions that were not complied with by the auditors in the said cycle, the standards that were incorrectly applied or not applied at all, and the oversight measures imposed on the supervised entities according to the violations and irregularities detected are presented in this thesis. In conclusion, the analysis of oversight results revealed the weaknesses in carrying out audits of financial statements, and showed that there is room for improvement when it comes to the quality and reliability of financial statements.