Forensic accounting has long been recognized as one of the key mechanisms for the prevention, detection, and investigation of financial fraud, corruption, money laundering, and other forms of economic crime. Its importance has grown steadily in both professional practice and academic research. However, the effective application of forensic accounting depends not only on the expertise of forensic accountants but also on the quality of the institutional environment in which investigative, regulatory, and judicial authorities operate. Although the literature increasingly emphasizes the importance of institutional frameworks for conducting effective financial investigations, studies that systematically examine institutional characteristics as a prerequisite for the development and effective application of forensic accounting remain relatively limited. Against this background, the aim of this paper is to identify the institutional profiles of European Union and Western Balkan countries and to analyse their similarities and differences in terms of the quality of the institutional environment relevant to the development of forensic accounting. The empirical analysis is based on the Worldwide Governance Indicators (WGI) of the World Bank for 2024, using six governance dimensions: Voice and Accountability, Political Stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption. The sample comprises 32 countries – the 27 European Union member states and five Western Balkan countries (Albania, Bosnia and Herzegovina, Montenegro, North Macedonia, and Serbia) for which complete data are available. Hierarchical cluster analysis (Ward's method) is employed to identify homogeneous groups of countries with similar institutional characteristics, complemented by k-means clustering and non-parametric comparative analysis. The results reveal a three-tier institutional architecture of the European economic space, in which all Western Balkan countries, together with Bulgaria, Romania, Hungary, and Greece, form the institutionally weakest cluster. The EU–Western Balkans gap is largest precisely in the dimensions most directly relevant to forensic accounting: Control of Corruption (1.37 points) and Rule of Law (1.21 points). The findings contribute to a better understanding of the institutional prerequisites for the development of forensic accounting, identify the key institutional challenges faced by the Western Balkan countries, and provide recommendations for strengthening institutional frameworks that support more effective financial investigations and the fight against financial fraud and corruption.