The Accounting Act lays down the rules of accounting and preparing financial statements.
Business units keep accounts in accordance with double-entry rules.
Accounting ledgers should be kept with due care and diligence, making sure that they are accurate, systematic and verifiable.
All economic events that take place during a given period should be recorded in the accounts for this reporting period. All events should be entered in the accounting ledgers in accordance with the accounting documents that confirm that the transactions actually took place. The accounting ledgers of a given entity should include all revenue and related costs for a given financial year irrespective of their payment date.
Accounting ledgers include:
- journal (containing a chronological list of events that occurred in a given reporting period);
- general ledger (its accounts contain systematic entries of events; according to the double-entry rule, they should also contain events recorded in the journal);
- subsidiary ledgers (contain entries that expand on the entries contained in the general ledger accounts);
- trial balance of the general ledger and of subsidiary ledgers (trial balance of the general ledger is prepared at the end of each reporting period, at least at the end of each month, on the basis of entries in general ledger accounts);
- list of assets and liabilities (inventory) (as confirmed by a stocktaking of all assets and liabilities, prepared by entities which previously did not keep accounting ledgers in the manner set out in legislation; in other entities the trial balance of the general ledger and of subsidiary ledgers prepared at the closing date of the accounting books is tantamount to inventory).
Audits and publications
The purpose of an audit of financial statements is to provide a written opinion of an auditor together with a report on the statement’s compliance with the accounting rules (policy) applied and to state whether it gives a reliable and credible view of the economic and financial standing of the audited entity and its financial result.
Annual consolidated financial statements of capital groups and annual financial statements of entities that continue business operations have to be audited and published. The latter include:
- banks, insurance and reinsurance companies;
- entities operating on the basis of the regulations on securities trading and investment funds;
- entities that operate on the basis of the regulations on the organisation and functioning of pension funds, and joint stock companies, excluding companies which are in the process of formation on the balance sheet day;
- other entities that in the preceding financial year, for which the financial statements were prepared, met at least two of the following criteria:
- average annual full time equivalent amounted to at least 50 people;
- total balance sheet assets at the end of the financial year were the PLN equivalent of at least EUR 2.5 million;
- net revenue on sales of goods and products and on financial operations for the financial year were the PLN equivalent of at least EUR 5 million.
The audit requirement also applies to the financial statements of acquiring companies and of newly formed companies – prepared for the financial year in which the merger took place – as well as annual financial statements of entities that are prepared in accordance with International Accounting Standards.
Annual joint financial statements of investment funds with separated sub-funds as well as individual annual financial statements of sub-funds are subject to audit and publication.
On the last day of each financial year entities carry out stocktaking of:
- cash (excluding cash held in bank accounts), securities in the form of tangible assets, current tangible assets, fixed assets and real estate classified as investment, as well as plant and machinery which is part of fixed assets under construction. These items are subject to stocktaking, valuation of quantities, comparison of values with the data in the accounting books, as well as explanation and settlement of any differences;
- financial assets in bank accounts or held by other entities, including securities in the dematerialised form, receivables, including loans granted, or own assets entrusted to partners. These are subject to confirmation by banks and contractors that the state of these assets shown in the entities’ accounts is correct, as well as explanations and settlement of any differences;
- fixed assets access to which is significantly hindered, land and property rights, disputed receivables and bad debts, debts of companies at risk in banks, payables and receivables from persons who do not keep accounting books, public law receivables and payables, as well as assets and liabilities not listed in section 1 and 2 as well as those listed in section 1 and 2, if their stocktaking or settlement was not possible. This is carried out by a comparison of data in the accounting books with relevant documents, and a verification of the value of these assets.
Inventory stocktaking also includes assets which are owned by other entities, and were given to the entity for sale, storage, processing or use. These entities should be informed about the results of the stocktaking.
The deadline and frequency of stocktaking is considered to be met if the stocktaking of:
- assets (excluding cash, securities, semi-finished products and ready goods, products and materials, where a manager within the entity has selected a subsidiary account method that involves writing-off the value of materials and goods on the day of their purchase, or ready products at the time they are produced; it involves determining the state of these assets and their valuation, as well as the adjustment of costs by the value of this state no later than on the balance sheet day) commences no earlier than three months before the end of a financial year and is completed by the 15th day of the next year;
- stocks of materials, goods, ready and semi-finished goods in secured storage and included in qualitative and quantitative records is carried out once in two years;
- real estate included in fixed assets and investments as well as other fixed assets, plant and machinery which is part of fixed assets under construction and which is kept in secured storage is carried out once in four years;
- stocks of goods and materials (packaging) included in qualitative records in retail sales outlets of a business unit is carried out once a year;
- stocks of wood in units involved in forestry activities is carried out once a year.
The stocktaking also takes place on the day a business unit ceases operation and on the day preceding the date a business unit goes bankrupt or into liquidation.
Financial reporting Financial statements are prepared on the day of closing the accounting books and on any other day for which a balance sheet is drawn up, using rules of valuation of assets and liabilities and establishing the financial result respectively.
Financial statements consist of:
- balance sheet,
- profit and loss account,
- additional information, including an introduction to the financial statement and additional information and explanations.
In addition, financial statements of entities subject to auditing include:
- statement of changes in equity,
- cash flow statement.
An entity that fails to meet two of the following three criteria in the financial year for which it is preparing financial statements as well as in the year preceding that financial year:
- average annual full time equivalent of no more than 50 people;
- total balance sheet assets at the end of the financial year did not exceed PLN equivalent of EUR 2 million;
- net revenue on sales of goods and products and on financial operations for the financial year did not exceed PLN equivalent of EUR 4 million.
can prepare a simplified financial statement, providing information as set out in Roman letters and numerals in Annex 1 to the Accounting Act. Accordingly, additional information is prepared in a simplified form.
Storage and submission of documents; audit, announcement and publication
Approved annual financial statements are permanently stored.
Other data sets are stored for at least:
- accounting books: 5 years;
- payslips or their equivalent: for a period during which access to this information is required in accordance with the retirement and disability benefit regulations; for 50 years from the time that the insured stops working for a given employer; and in accordance with tax regulations, but for no less than 5 years;
- accounting documents confirming receipts from retail sales: until the day the financial statement for a given financial year is approved, but not prior to the day that the persons to whom the assets included in retail sales were entrusted are appraised;
- accounting documents regarding long-term investments, loans, credits, sales agreements and claims pursued in civil, criminal or tax proceedings: for 5 years from the beginning of the year that follows the financial year in which operations, transactions and proceedings are finalised, paid, settled or become outdated;
- documentation of the method of accounting: for no less than 5 years from the date it becomes invalid;
- documents regarding warranties and complaints: for 1 year from the expiry of a warranty or the settlement of a complaint;
- stocktaking records: 5 years;
- other accounting records and documents: 5 years.
The period of storage of these data sets is calculated from the beginning of the year that follows the financial year to which the given data sets refer.
The entity’s manager submits the following documents to the appropriate court register:
- annual financial statements;
- an opinion from an auditor if the statement was subject to audit;
- a copy of a resolution or a decision made by an approval body on the approval of the annual financial statements, the distribution of profit and the coverage of loss;
- a report on operations (in case of limited companies, limited joint-stock partnerships, mutual insurance companies, mutual reinsurance companies, co-operatives and state companies)
within 15 days from the date of approval of the annual financial statements.
A manager of an entity preparing simplified financial statements, instead of an auditor’s opinion informs the court register about the type of opinion and states if it contains additional explanations.
In addition, a manager of an entity subject to audit is required to submit the following documents for publication:
- an introduction to the financial statements, as part of additional information,
- a balance sheet,
- a profit and loss account,
- a statement of changes in equity, and
- a cash flow statement for the financial year.
Within 15 days from their approval together with an auditor's report and a copy of a resolution or a decision of an approval body on the approval of an annual financial statement, the distribution of profit and the coverage of loss.
These documents are published in the Polish Official Journal "Monitor Polski B" and in case of co-operatives in the "Monitor Spółdzielczy".
Polish Chamber of Commerce
Additionally, the Office of Economic Innovation at Polish Chamber of Commerce created a number of tools (software) available online via a dedicated portal. One of the website modules (eFirma - eCompany) provides tools supporting accounting of financial operations at a company.