According to Art. 64 par. 1 of the Accounting Law is subject to audit of the annual consolidated financial statements of capital groups and the annual financial statements of continuing entities, among others. from the financial sector (including banks, insurance companies, reinsurance companies, SKOKs, pension funds, national payment institutions and electronic money institutions), as well as joint-stock companies, with the exception of companies in organization as of the balance sheet date. These entities must have their reports audited by law, without regard to additional conditions.

The situation is different for other entities (primarily limited liability companies, general partnerships, partnerships, limited partnerships, civil partnerships, and enterprises of individuals) that have met at least two of the following conditions in the preceding fiscal year for which financial statements are prepared (for 2023 statements, 2022 data is included):

• average annual FTE employment was at least 50 people,
• total assets of the balance sheet at the end of the fiscal year were the equivalent in Polish currency of at least €2,500,000,
• net revenues from sales of goods and products and financial operations for the fiscal year were the equivalent in the Polish currency of at least EUR 5,000,000.

As shown in Table No. 252/A/NBP/2022 of December 30, 2022, the average exchange rate of the euro at the end of 2022 was PLN 4.6899. Therefore, the equivalent in zlotys of the limits specified in the aforementioned provision, expressed in euros, using this exchange rate – is, respectively, for total assets – PLN 11,724,750 and for net sales of goods and products and financial operations – PLN 23,449,500.

Audit of financial statements – what it consists of

The audit of the financial statements should be understood as a series of activities and procedures carried out by the auditor to verify that the prepared financial statements correctly present the financial position, assets and financial result of the entity in accordance with the requirements of the Accounting Act.

Stages of financial statement audit

Preliminary work:

• An examination of the entity’s record-keeping system, which includes the method of economic recording, the system of internal control and the accuracy of the books of account,
• chart of accounts analysis
• A report on the correctness of the procedures used, which relate to the method of determining and recording the goods and services tax
• Control of the legal basis of operations and inventory of assets.

Essential Works:

• report on the correctness of the valuation of assets and liabilities as of the balance sheet date
• determination of the financial result for the financial year
• Establish the criterion of reality and completeness of the information that is included in the financial statements
• examination of the correctness of the preparation of additional information

The end result of the auditor’s work is the issuance of an audit opinion and report, which he provides to the approver of the annual financial statements. The opinion expressed by the auditor should, in particular, state whether the audited financial statements have been prepared on the basis of properly kept books of account and whether they are consistent in form and content with the entity’s applicable laws, statutes or contracts.

In the opinion, the auditor should report on any failure by the entity to comply with its obligations to file with the competent court registry and to publish financial statements for the year or years preceding the fiscal year. In addition, he should point out the serious threats to the entity’s going concern identified during the audit. The auditor should also indicate whether, in light of the knowledge of the entity and its environment obtained in the course of the audit, he has found materially erroneous information in the management report, and if so, indicate what these errors consist of.

The auditor’s report includes, among other things: a general description of the entity, a statement of obtaining from the entity the requested information, explanations, statements, an assessment of the correctness of the accounting system used, a characterization of the items or group of items of the financial statements, if, in the opinion of the auditor, they need to be discussed,- a presentation of the asset and financial situation and the financial result of the entity, with an indication of the phenomena that, compared to previous reporting periods, materially adversely affect this situation, and in particular threaten the entity’s going concern.

Selection of an auditor – what to pay attention to

Certainly, as part of the selection, it is worth comparing several offers and not to be guided solely by price. The audit should be performed by experienced experts based on the latest knowledge and changes in regulations. In the current situation, with the fragmentation of the audit firm market, audits, although based on these standards, can look very different. It is also important to check the expert’s experience in a particular industry. It is also worth verifying whether we will be dealing directly with an expert or only with employees with much less experience.