Internal audit is an independent consulting activity in the bank. It is organized as a special organizational part of the bank. By its function and organization, the internal audit is independent of the activities that audits. The internal audit examines and evaluates the overall activities of the bank in all its organizational units.The internal audit is carried out on the basis of an annual plan or on the basis of established irregularities in the business, and its task is to reduce risk and eliminate irregularities. It is also the task of advising the Supervisory Board of the Bank and the Management Board, proposing ways of eliminating irregularities and reporting on the transparency of certain business processes at the bank. This paper explains the role and operation of internal audit in accordance with the regulations, rules, principles and standards of the profession. In its work, internal audit is obliged to apply international standards, national laws and internal rules of the bank. Furthermore, the concept, division and control of General administrative expenses is explained in detail in the paper, and models of depreciation calculation are presented in a concrete practical example. At the end of a detailed explanation obligations of internal audit related to the reporting of the Management Board, Supervisory Board and the Croatian National Bank.