The aim of this dissertation was to analyze the direction and intensity of relationship between selected characteristics of internal corporate governance mechanisms, such as the independence of supervisory board and presence od internal audit in corporate structure, with the quality of unaudited financial statements, as well sa to analyze moderating effect of independence of supervisory board on relationship between quality of unaudited financial statements and effectiveness of audit commitee. The research sample was formed using business data of 123 companies whose shares were listed on the Zagreb Stock Exchange Regulated Market during the period from 2012 to 2016. which makes a total of 615 observations. Panel analysis was used in designing the statistical model needed to test the research hypotheses. The Modified Jones model was applied for the purpose of estimating value of discretionary accruals, i.e. earnings management. The result have shown that there was no statistically significant relationship between the investigated characteristics of corporate supervisory mechanisms and the dependent variable, which suggests that the majority independence of the supervisory board, moderating effect of independence of supervisory board on relationship between quality of unaudited financial statements and effectiveness of audit commitee as well as implementation od internal audit in a company are not characteristics that can succesfully reduce earnings management. The result can be explained with postulates of institutional theory in terms of fulfilling the form required by the regulation regarding the establishment of internal control mechanisms or the false presentation of their independence.