Financial statements are a fundamental source of information about the financial condition of a company. The audit of financial statements by a certified auditor may be voluntary for some entities, but it is also mandatory for companies that meet certain statutory conditions.
The purpose of the audit
The purpose of the audit is to verify whether the financial statements present a true and fair view of the entity’s financial position and financial performance. During the audit, the auditor verifies whether the financial statements have been prepared in accordance with the provisions of the Accounting Act and the accounting policy adopted by the entity.
Entities subject to mandatory audit
The Polish Accounting Act stipulates that the annual consolidated financial statements of capital groups and the annual financial statements of the following entities continuing their operations are subject to audit:
- domestic banks, branches of foreign banks, insurers and branches of foreign investment firms,
- entities operating under the provisions on securities trading, investment funds, pension funds,
- domestic payment institutions and electronic money institutions,
- joint-stock companies,
- other entities (primarily limited liability companies, general partnerships, limited partnerships, civil law partnerships and sole proprietorships) that meet the statutory conditions, the scope of which has been modified as a result of the amendment to the Accounting Act.
Thus, under the previous wording of the Act, which is still in force for financial statements prepared for the 2024 financial year, other entities are required to have their financial statements audited if at least one of the following conditions is met:
- the total assets on the balance sheet at the end of the financial year were equivalent to at least EUR 2,500,000 (PLN 10,870,000) in Polish currency,
- net revenues from the sale of goods and products and financial operations for the financial year amounted to at least EUR 5,000,000 (PLN 21,740,000) in Polish currency,
- the average annual employment, calculated as full-time equivalents, was at least 50 persons.
For the financial year beginning after 31 December 2024, the newly introduced thresholds apply, subject to the principle of meeting at least two of the following conditions:
- total balance sheet assets at the end of the financial year – EUR 3,125,000,
- net revenue from the sale of goods and products for the financial year – EUR 6,250,000,
- average annual employment calculated as full-time equivalents – 50 persons.
It is worth noting that revenues from financial operations are no longer included in the revenue category.
Other entities subject to mandatory audit
The financial statements of acquiring companies and newly established companies prepared for the financial year in which the merger took place are also subject to audit.
In addition, the annual financial statements of entities prepared in accordance with IAS, the annual combined financial statements of investment funds with separate sub-funds and the annual separate financial statements of sub-funds are subject to mandatory audit.
Entities that keep accounting books and have chosen the balance sheet method of determining exchange rate differences for tax purposes are also required to have their financial statements audited. This requirement does not stem from the Accounting Act, but from the provisions of the Income Tax Act.
Selection of a certified auditor
The audit of the financial statements is carried out by an auditor who is a certified auditor. When performing a financial audit, a certified auditor is required to comply with the rules of professional ethics for certified auditors, including, in particular, honesty, objectivity, professional competence and due diligence, as well as confidentiality. The auditor must be impartial and independent of the audited entity.
The entity’s financial statements approval body selects the auditing firm to audit the financial statements, unless the entity’s articles of association, agreement or other binding legal provisions provide otherwise. The entity’s manager may not make such a selection.
The head of the entity shall conclude an agreement with the audit firm for the audit of the financial statements within a time limit that allows the audit firm to participate in the inventory of significant assets.
The first contract for the audit of the financial statements shall be concluded with the audit firm for a period of not less than two years, with the possibility of extension for further periods of at least two years. The costs of auditing the financial statements shall be borne by the audited entity.
Powers and duties of the auditor
The manager of the audited entity shall provide the auditor conducting the audit of the financial statements with access to the accounting books and documents forming the basis for the entries made therein and any other documents, as well as provide comprehensive information, explanations and statements necessary to prepare the audit report.
The auditor is entitled to obtain information related to the course of the audit from the contractors of the audited entity, including banks and its legal advisers, with the authorisation of the manager of the audited entity.
Penalties for failure to audit financial statements
The manager of the entity, who acts as the management board, is responsible for the correct preparation of the financial statements and the performance of the mandatory audit.
Persons who fail to comply with the obligation to have the financial statements audited by a certified auditor are liable to a fine or restriction of liberty. The rules and amounts of penalties are specified in the provisions of the Criminal Code, and the court determines them on the basis of the circumstances of the specific case.
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