Selecting an auditor to audit financial statements in Poland

Any entity may commission an auditor to audit its financial statements. For some companies, this is a statutory obligation, and the selection of a statutory auditor should be made before the inventory period begins. This is particularly important in the case of entities that have high value assets in the form of fixed assets or stocks. 

Which entities have to be audited by a certified auditor?

The following entities are subject to obligatory auditing of their annual financial statements by a certified auditor:

• banks and insurance companies,
• entities operating on the basis of regulations relating to trading in securities and management of investment funds,
• entities operating on the basis of regulations regarding the organization and operation of pension funds,
• joint-stock companies, except for companies that remain in organization as at the balance sheet date,
• other entities that in the previous financial year for which the financial statements were prepared, have met at least two of the following conditions:
  • average annual employment in full-time equivalents was at least 50 people,
  • the total assets of the balance sheet at the end of the financial year had a value in Polish currency equal to at least EUR 2,500,000,
  • net revenues from the sale of goods and products as well as financial operations for the financial year had a value in Polish currency equal to at least EUR 5,000,000.

Mandatory audit of financial statements also applies to acquiring companies and newly established companies - statements should be prepared for the financial year in which the merger was made.

When should an auditor be appointed?

The appointment of an entity that will audit the financial statements and the signing of an appropriate audit contract with such entity, should take place within a period that will allow the statutory auditor to participate in the inventory of significant assets.

Who chooses the auditor?

The selection of the statutory auditor is made by the body that approves the entity's financial statements - except when the articles of association, statute or other binding regulations provide otherwise. In the case of partnerships and limited partnerships, the statutory auditor is always chosen by the general meeting of shareholders.

What should the contract for auditing financial statements contain?

After agreeing on all conditions related to the conducting of the audit, the authorized entity concludes a contract with the head of the entity to perform the audit of the financial statements. The contract should clearly state the duties of the audited entity as well as the authorized entity, including, in particular the need to:

• inform about the dates of physical inventories for the purpose of their observation by a statutory auditor,
• submit the schedule for the closure of accounting books and preparation of financial statements,
• provide necessary information related to matters being prepared for legal proceedings and being in the course of such proceedings,
• determine the authority to which the opinion and report is to be submitted,
• determine the number of copies of the report,
• specify additional subjects of the audit, if they were not specified in a separate agreement,
• specify how the audit is spread over time,
• to pay attention to the existing risk of non-detection of any abuses made in a given unit or irregularities in the books.

How often can the statutory auditor be changed?

The Accounting Act does not contain any provisions relating to the frequency of the change of the statutory auditor or the authorized entity. The Act on Statutory Auditors, in turn, provides for the rotation of statutory auditors in public interest entities but not of authorized entities. The key statutory auditor may not perform activities related to financial audits in the same unit for more than five years and must wait at a further two years before recommencing such activities following the end of that five year period.

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