Polish Legal Regulations on Accounting

The Polish Accounting Act of 29 September 1994 (Journal of Laws 1994 No. 121, item 591, as amended) sets out the rules for keeping accounting records and the auditing of financial statements by statutory auditors in Poland.

The provisions of the Polish Accounting Act apply to civil law partnerships, commercial companies, and companies governed by Polish law that are tax residents, including those in the process of formation, as well as other legal persons (excluding the State Treasury and the National Bank of Poland) and unincorporated organisational units, excluding partnerships.

Natural persons conducting business activity in Poland, as well as civil law partnerships, registered partnerships, professional partnerships, and partnerships formed by natural persons, are subject to the Act if their net revenue from the sale of goods and services for the preceding financial year amounted to at least the equivalent of EUR 2,500,000 in Polish currency. Entities with lower income may voluntarily apply Polish accounting principles, provided they notify the tax office competent for income taxation.

The Act also applies to foreign legal persons, unincorporated organisational units, and natural persons who conduct business activity in Poland (personally, through an authorised person, or through employees) – with respect to such activity, regardless of income.

The Act sets out detailed rules for maintaining accounting books and defines key accounting concepts. Accounting records include files of accounting entries, totals, and balances, which constitute the journal, the general ledger, subsidiary ledgers, a summary (balance) of the general and subsidiary ledgers, and inventory (assets, liabilities, and equity).

Accounting books must be opened on the date business operations begin, then at the beginning of each subsequent financial year, and closed on the last day of the financial year or on the date the entity ceases operations. The financial year – also used for tax purposes – is usually the calendar year, or, if selected, a period of 12 consecutive calendar months. For the purposes of bookkeeping and financial reporting, the Polish Accounting Act also provides rules for the valuation of assets, liabilities, and equity, as well as for the determination of financial results.

Under the Polish Accounting Act, financial statements must be prepared as at the date of closing the accounting books, no later than three months from the balance sheet date (usually the last day of the financial year), and approved no later than six months from that date. If the financial year coincides with the calendar year, the deadline for preparing the financial statement is therefore 31 March.

The financial statement includes: the balance sheet, profit and loss account, introduction to the financial statements, and notes containing, among others, explanatory information. The following documents may also be included: the statement of changes in equity, the cash flow statement, and the annual report.

Auditing and publication of financial statements is mandatory in Poland for the following entities:

• related entities (including annual reports of capital groups),
• banks and insurance institutions,
• cooperative savings and credit unions,
• securities trading institutions,
• investment funds,
• pension funds,
• national payment institutions and electronic money institutions,
• joint-stock companies (except for companies in formation),
• other entities, if at least two of the following conditions were met in the financial year for which the report was prepared:
  • the average annual number of full-time employees was at least 50,
  • the total balance sheet assets at the end of the financial year were at least the equivalent of EUR 3,125,000 in Polish currency,
  • annual net revenue was at least the equivalent of EUR 6,250,000 in Polish currency.

The purpose of the audit is to obtain a statutory auditor’s opinion confirming whether the financial statements are correct, complete, and present a true and fair view of the entity’s assets, financial position, and financial performance.

Entities preparing their financial statements in accordance with International Accounting Standards (IAS) are required to comply with the Polish Accounting Act in all areas not regulated by those standards. The application of IAS is mandatory for consolidated financial statements of issuers whose securities are admitted to public trading, as well as for banks.

On a voluntary basis, IAS may be used for consolidated financial statements by issuers of securities intending to seek or awaiting admission to trading on an EEA regulated market and by members of a group if the parent company prepares its consolidated financial statements in accordance with IAS. The same categories of entities may optionally use IAS to prepare their own (individual) financial statements.

Natural persons, civil law partnerships, registered partnerships, and professional partnerships formed by natural persons, who are not obliged to maintain full accounting books under Polish law, keep simplified records of their business activity, including tax revenue and expense ledgers.