What is the accounting policy?
It organizes, systematizes, and simplifies the work of both accountants and the company as a whole-these are two of the most important reasons for creating a clear accounting policy
A definition of what this accounting policy is can be found in the Accounting Act, more precisely in Article 3(1) point.11. Sometimes treated only as a unnecessary obligation or another document needed for an audit by the auditor or other control bodies In fact, accounting policy is an essential part of the ledgers. The document must specify which principles have been selected by the entity and will be applied in a manner that ensures the quality of the financial statements.
Every company should, and indeed is required to, update its accounting policies when changes occur. The document should be accurate and reliable. This is to present as clear a picture as possible reflecting the assets and financial position of the entities.
The right to do so is created by the provisions of Article 8(2) of the Accounting Law, which states that regardless of the date of the decision, an entity may, with effect from the first day of the fiscal year, change the accounting principles applied until then to others provided for in the law.
The decision to change accounting principles can be made at any time, but its effects must be applied to the entire fiscal year, as there can be no situation in which two of the same economic events go through the accounting process differently due to a change in accounting principles in the tact of the fiscal year.
Accounting policy is a business component required of any company regardless of its size. Each entity that keeps ledgers is required to have documentation describing in Polish the financial principles it has adopted.. This follows from Article 10 (1) of the Accounting Act.
The obligation to prepare accounting policies applies, among others, to entities with headquarters or place of management in the territory of the Republic of Poland, including:
Accounting policy is introduced:
To make the accounting policy clear, some arrangements can be developed in the form of annexes to the resolution.
The accounting policy document should include necessary elements such as:
Practice often demonstrates that many companies do not have documentation in place describing their accounting policies, which can lead to negative consequences.
If the head of an entity (e.g., members of the board of directors of a limited liability company) fails to prepare an accounting policy in writing, he or she is subject to a fine or imprisonment for up to 2 years, or both. The most real form of penalty, however, is a financial penalty, often much higher than the fee for the office or law firm that handles the preparation of such documents.
Having an accounting policy is important not only for the entity itself, but also for the auditor, who, based on the documentation of the accounting policy, assesses the correctness of the bookkeeping, and also pays attention to the continuity of the accounting principles adopted. This is particularly important when comparing statements over the years. An expert auditor additionally verifies that the accounting principles adopted are reflected in practice and are applied by the entity.
Author: Izabela Chudzik, Accountant at MDDP Outsourcing.