Auditing of financial statements only with audited audit firms

Once the audit obligation has been established, it is time to select the audit firm to carry out the audit. Many companies offer their services in this respect, even though they are not entitled to do so. It is therefore worth verifying whether the person offering the audit is a statutory auditor and is pursuing a profession.

Entities required to audit financial statements for 2021

Article 64(1) Act dated 29 September 1994 on accounting (i.e. Journal of Laws of 2021, item 217, hereinafter referred to as: the Accounting Act) specifies the entities required to submit to the audit of the consolidated annual accounts of the groups and the annual accounts. Such an obligation shall lie with those continuing:

National banks, branches of credit institutions, branches of foreign banks, insurance undertakings, reinsurance undertakings, major branches and branches of insurance undertakings, major branches and branches of reinsurance undertakings and branches of foreign investment firms,

cooperative savings and credit registers,

units listed under Article 2(2b) Accounting Act[1] and those operating under the provisions on securities trading and investment funds and alternative investment fund management (IFIs),

entities operating under the rules on the organisation and functioning of pension funds,

national payment institutions and electronic money institutions,

stock companies (the ones that are at the balance sheet date in the organisation are excluded from the obligation).

Obligation to examine annual reports 2021 also have units that in 2020 met two to three conditions:

• average annual employment (full-time) was at least 50 persons,
• the sum of the balance sheet assets at the end of the financial year was equivalent in Polish currency at least 2,500,000 EUR (after the average exchange rate of the National Bank of Poland of the euro on 31 December 2020, i.e. 4.6148 - 11,537,000 PLN),

net revenue from the sale of goods and products and financial operations for the financial year was at least equivalent in Polish currency 5,000,000 EUR (after the average exchange rate of the National Bank of Poland of the euro on 31 December 2020, i.e. 4.6148 - 23,074,000 PLN).

The study will also include:

• the accounts of the acquiring companies and the newly bound companies drawn up for the financial year in which the merger took place,
• financial statements of units drawn up in accordance with International Accounting Standards (IAS),
• annual combined financial statements of investment funds with separate sub-funds,
• Annual sub-fund unit reports,
• accounting entities which, for tax purposes, have chosen a balance sheet method for determining exchange rate differences[2].

What elements should be highlighted before selecting an audit firm?

The selection of an audit firm to examine the financial statements is an important decision. In order to entrust this task to the relevant persons, it is appropriate to First, verify data on the expert review. This can be done easily using the website of the Polish Chamber of Expert Auditors (PIBR).

Page www.pibr.org.pl a specific person may be sought in the statutory auditor's register. It is important to check whether such a person is on this list and whether he is currently in the profession. In addition, it should be borne in mind that any audit contracts are concluded with audit firms and not directly with the auditor.

Selection of audit firm

The audit agreement should be signed by the head of the unit. This must be done at such a time as to enable financial auditors to participate in the inventory of assets. It's worth remembering that first an audit agreement shall be concluded with the audit firm for a period not less than two years. This is the case with the statutory audit. He's regulating it. Article 2(1) Act dated 11 May 2017 on statutory auditors, audit firms and public oversight (i.e. Journal of Laws of 2020, item 1415 as amended).

In case of an obligation to conduct an audit of the financial statements (but not only) we encourage you to read our offer and contact us.

Russell Bedford Poland Audit Sp. z o.o.

office@russellbedford.pl

T: 22,276 61 80

[1] Article 2(2b) Accounting Act:

The provisions of the Act shall also apply, irrespective of the volume of revenue, to alternative investment companies within the meaning of the provisions on investment funds and the management of alternative investment funds, including those entitled to use the name "EuVECA" or "EuSEF".