Main principles of accounting inventory

The Polish Accounting Act requires each entity to make an inventory of the assets. The inventory is made by taking a physical inventory, by obtaining the balance confirmation from the bank or clients (e.g. receivables), or by verification consisting in comparing the accounting records with relevant documents and verifying the value of these components (e.g. land , disputed receivables or tax liabilities). Below we present the main principles of the inventory of individual assets.  

Inventory of stocks  

In the event that your company has inventories on the balance-sheet, it is necessary to carry out a stock inventory. This inventory shall be carried out in the form of a physical inventory in relation to: 

• Own stocks, 
• Stocks owned by other entities. 

As a general rule, the inventory must be taken on the last day of the financial year. 

Inventory of fixed assets 

Fixed assets owned by your company are also subject to inventory. Inventory of fixed assets is carried out in the form of a physical inventory in relation to:  

Real estate classified as fixed assets and investments, as well as other fixed assets located on guarded premises and machinery and equipment included in fixed assets under construction – once every 4 years at any time, 

Fixed assets located on unguarded premises – in the last quarter of the financial year, by the 15th day of the following year,  

Machinery and equipment located on unguarded premises and forming part of fixed assets under construction – in the last quarter of the financial year, by the 15th day of the following year.   

Inventory of cash in hand 

If your company has cash (cash equivalents) in hand, it is necessary to carry out an inventory. It is carried out on the last day of each financial year in the form of a physical inventory. The inventory covers cash assets in domestic and foreign currencies and foreign currencies.

Confirmation of balances with banks 

According to the regulations in force, if you have money in your bank, you should receive a corresponding confirmation of the bank balance from your bank. 

Confirmation of balances of amounts receivable  

In accordance with the Polish Accounting Act, any entity that reports trade receivables is required to reconcile them by means of a balance confirmation sent to customers.  

Confirmation of balances of amounts due (liabilities)   

In accordance with the applicable regulations, it is not necessary to confirm the liability balances. In line with usual practice, the entity’s liabilities should be reconciled by receiving a balance confirmation from your suppliers (on their side it is the receivables that need to be confirmed).    

Options deadlines for the Inventory  

Entities whose financial year coincides with the calendar year – the stock-taking of certain assets can start earlier. Although the basic deadline under the Accounting Act is the last day of the financial year – in the vast majority of cases it is 31 December – the inventory of certain assets may be started as early as October and completed by 15 January of the following year. 

In this interval (01 October – 15 January ), the inventory of all assets can already be started by means of a physical inventory or confirmation of balances. 

 Exclusions include: 

• Cash assets,
• securities,  
• work in progress and materials, goods and finished goods, the value of which at the date of purchase or manufacture is charged directly to expenses. 

Settlement of inventory differences  

We would like to emphasize that the conduct and results of the inventory should be properly documented and linked with the entries in the books of accounts. Disclosed in the course of the inventory differences between the actual state and the state shown in the books of accounts should be explained and accounted for in the books of accounts. 

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