One of the most important changes is contract for the audit of financial statements for a period of 2 years.

Along with the Law on Certified Auditors in Poland, changes to the Accounting Law have also been introduced. According to Art. 66 sec. 5, in the case of a statutory audit, the first audit contract is concluded with an audit firm for a period of no less than two years with the possibility of renewal for additional two year periods.

When is a 2 year contract required?

According to the new regulations, the obligation to conclude a contract for 2 years is imposed on companies that meet the conditions set out in Article. 64 of the Accounting Act and decide to conclude a contract for the audit of financial statements with a new audit firm.

Therefore, only a change of the existing audit firm, (i.e. the signing of the first audit contract with a new audit firm), will require that acontract be signed for a minimum of two years with the possibility of renewal for further two year periods.

From when?

This regulation applies to audits of financial statements drawn up for financial years beginning after 16th June, 2016.

Are these changes beneficial from the point of view of the audited company?

The appointment of a certified auditor for two years may raise questions among the management of the audited entity. It is worth stressing here that an audit increases the credibility of the information contained in the financial statements, enables the detection of weaknesses in internal controls, provides insight into business risks as well as recommendations for improvements, and detects distortions (both as a result of fraud and those resulting from errors), which in turn allows for appropriate corrective measures to be taken. In the first year when the auditor is getting acquainted with the functioning of the business and the accompanying risks, all errors and weaknesses of internal controls may not be identified, therefore the conclusion of a contract for a period of 2 years will improve the quality of the audit. An auditor, as a trusted adviser with sufficient knowledge of the business, will be able to provide objective guidance and expert advice that is critical for the company's development and for maintaining compliance with applicable laws.