Approval of the financial statement - the most important issues
Approval of the annual financial statement can undoubtedly be considered as the finalization of works on the closure of the financial year. Pursuant to Art. 53 of the Polish Accounting Act, the annual financial statement should be approved not later than within 6 months from the balance sheet date, which means by 30 June, provided that the financial year is the same as the calendar year. Due to the upcoming deadlines for the approval of financial statements, we have prepared a list of the most important aspects.
Deadlines for preparation and approval of financial statements for 2023
All entities that keep accounting ledgers are obligated to close them as of the day which ends the financial year and then draw up a financial statement as of that date. According to the Polish Accounting Act, the financial statement must be drawn up not later than within three months from the balance sheet date and signed by relevant authorized persons.
Pursuant to Art. 53 section 1 of the Accounting Act, once it is drawn up and signed, the financial statement must be approved by the approving body not later than within 6 months from the balance sheet date.
The reporting deadlines for companies the financial year of which is the same as the calendar year
- 31 March 2024 – preparation of the financial statement
- 30 June 2024 – approval of the financial statement
- 15 July 2024 – submission of the financial statement to the competent court register
Components that must accompany the financial statement
- Resolution on approval of the financial statement – serves as the confirmation of the relevant bodies of the entity that the financial statement is in line with the applicable regulations.
- Report on activities – required from many entities e.g., limited liability companies, joint-stock companies or limited joint-stock companies, as well as certain general partnerships and limited partnerships. It summarizes the company’s operations in the passing year.
- Resolution on distribution of profit or covering of losses – the document that specifies the method of distribution of profits or covering of losses for a particular financial year.
- Auditor’s opinion – if the financial report is subject to an audit, it must be accompanied with the report on such audit prepared by the auditor.
What does approval of the financial statement involve?
The financial statement should be signed electronically by the person responsible for bookkeeping (e.g. the chief accountant) and the head or management board of the entity. If the financial statement of a particular entity is subject to an audit, it might be subject to changes by the time of approval. The financial statement must be signed with a qualified electronic signature, certified signature or personal signature (Art. 45 section 1f of the Polish Accounting Act).
Then, the financial statement must be approved by the approving body authorized at that particular entity (e.g. meeting of partners in a limited liability company).
The next stage is the electronic submission of the approved statement to the court register, along with resolutions and other components of the statement. It must take place within 15 days from the date of approval of the financial statement (Art. 69 section 1 of the Polish Accounting Act). Should the financial statement not be approved within 6 months from the balance sheet date, it must be submitted in the court register twice i.e., within 15 days after that deadline and also within 15 days after its approval.
Failure to submit the financial statement is subject, among others, to: a fine or penalty of restriction of liberty that might be imposed on the head of the entity.
By whom and how it is approved
According to the Polish Accounting Act, the approving body is the body that is authorized to approve financial statements of the entity according to the applicable regulations of law, statute, articles of association or by way of ownership right.
It should be highlighted that the approval of a financial statement does not need to be drawn up electronically and, therefore, does not require electronic signatures. The approving persons may draw up and sign it in a traditional, printed form.
| Company type | Legal form | Approved by |
| limited company | limited liability company | general meeting of partners |
| limited company | joint-stock company | general meeting of shareholders |
| partnership | limited joint-stock partnership | general meeting
|
| partnership | general partnership, limited liability partnership, limited partnership, civil partnership | partners (namely: limited partners, partners, associated partners) |
Closing of accounts
Upon the approval of the financial statement – the approving body adopts a resolution on distribution of profit or covering of losses. For the date of the meeting of partners, it is necessary to reclassify the financial result from account 860 to account 820 (settlement of the financial result) in the accounting ledgers.
Profit – debit side 860 (financial result) / credit side 820 (settlement of the financial result)
Loss – debit side 820 (settlement of the financial result) / Ma 860 (financial result)
Next, depending on the provisions of the resolution, we carry out further reclassifications from “account 820 settlement of the financial result” e.g., with allocation of the profit to reserve capital
Debit side 820 (settlement of the financial result) / Credit side 803 (Reserve capital)
Storage of financial statements
Approved annual financial statements must be stored for a period of at least 5 years, starting from the beginning of the year following the financial year in which the financial statement was approved.
Author: Izabela Chudzik – Senior Accountant at the MDDP Outsourcing office in Warsaw
