In the period between 1991 and 1998 the state audit in the Republic of Macedonia was conducted by the Directorate for economic and financial audit within the Social Accounting Office (transformed into Payment Operations Office in 1994). During this period, the employees were also involved in evaluation of enterprises with social capital for the purpose of and within the frames of the privatization of social capital. On 01 February 1999 nine employees from the Directorate for economic and financial audit were transferred to the newly established State Audit Office.

The first State Audit Law was adopted in 1997 (Official Gazette of the Republic of Macedonia no. 65/97). The Law provided for the scope of state audit, regulated the conditions and manner of conducting state audit on public expenditures, financial statements and financial transactions, and other matters related to the audit of state bodies, local self-government units, legal entities fully or partially financed by the Budget of the Republic of Macedonia, the budgets of local self-government units and the budgets of national funds, legal entities where the state is dominant shareholder, public enterprises, the National Bank of the Republic of Macedonia, the Payment Operations Office, the funds, the agencies and other institutions established by law.

The first audits were conducted during 1998/99 and the first Annual Report on State Audit Office operation and conducted audits was submitted to the Parliament of the Republic of Macedonia in 2000.

In the following years the State Audit Law was amended several times in order to incorporate the basic principles of the Lima Declaration and to approximate to the standards and practice of the European Union. In this context the competence of the State Audit Office was extended with new subject matter and auditees (EU funds and political parties) and the potential risk within auditees was introduced as an important criterion for selection of audits in the annual program.

In addition to the regularity audit (financial and compliance audit), in 2005 the State Audit Office started conducting performance audit, and recently SAO introduced follow up audits on the implementation of recommendations, as well as theme audits.

The new State Audit Law was adopted in May 2010 (Official Gazette of the Republic of Macedonia no. 66/2010 and 145/2010). The Law aims at strengthening operational and financial independence of the State Audit Office and achieving greater effectiveness and efficiency in conducting state audit. In addition, the new Law implies compliance with the Lima Declaration of guidelines on auditing precepts and the Mexico Declaration on independence of Supreme Audit Institutions. The Law facilitates strengthening the position and the role of the State Audit Office as an independent supreme audit institution of the Republic of Macedonia, responsible for conducting state audit. In fact, the new Law denotes full compliance with international standards, European legislation and international best practice.