Audit Obligation and Selecting the Auditing Company: Key Aspects

The obligation to audit financial statements in Poland refers to numerous entities, including joint-stock companies, public interest entities (such as banks or insurance companies), as well as those entities that meet specific financial and organizational criteria. Such audit is conducted by an auditing company (auditor) that has proper qualifications and independence to provide such services.

When does the audit of financial statements become obligatory?

According to the provisions of the Polish Accounting Act, a financial statement must be audited by an auditor in the following situations:

1. Public interest entities: This includes banks, insurance companies, investment funds and other financial institutions.
2. Joint-stock companies: Every joint-stock company is obligated to audit its financial statements, except for joint-stock companies in the process of formation.
3. Other entities that meet the criteria: Refers to entities that in the previous financial year employed at least 50 people, had a total balance sheet assets of at least EUR 2.5 million or net revenue from sales of products and services for a value of at least EUR 5 million.

The goal of the audit obligation is to ensure the reliability and credibility of the financial information presented by the entity, which is crucial for the stakeholders such as investors, lenders and supervisory authorities.

NOTE! Currently, there are ongoing works on the amendment of the Polish Accounting Act aimed at increasing the thresholds for the obligatory audit of financial statements. As of the date of publication of this article, the works on the amendment are carried out in the Polish Sejm but it is highly probable that the regulations will come into force in 2025.

Selecting the auditing company – How to do it?

1. Adopting a resolution: the auditing company is selected based on a resolution of the approving body or the supervisory board. The head of the entity cannot choose the auditing company on their own. His or her role is limited to the conclusion of the agreement based on the adopted resolution. In case of entities with an Audit Committee, the auditing company is recommended by such the Audit Committee.
2. Rotation system: in case of public interest entities, the auditing company must be changed at least every 10 years and the key statutory auditor – every 5 years. In the case of other entities, the rotation rule applies only to the key statutory auditor who must be changed every 10 years.
3. Qualifications and licenses: the auditing company must be registered in the Polish Agency for Audit Oversight.

Auditor’s rights

Auditors have a wide array of rights that allow them to effectively conduct the audit:

• Access to documents: They can review the accounting ledgers and demand access to all the necessary documentation and information.
• Inspection and presence during the inventory: Auditors can conduct inspections at the company’s premises and participate in the estate stocktaking.
• Contact with personnel and contractors: The auditor has the right to speak to the management board, employees and key people in the entity. He or she can also request information from contractors, banks and legal advisers, upon the approval of the head of the entity.
• Use of expert reports: If needed, the auditor can use the services of specialists, such as property appraisers, to obtain the required expert reports.
• Obligation to inform the supervisory bodies: In case of reveling significant irregularities, the auditor is obligated to inform relevant authorities, such as the Polish Financial Supervision Authority.

The selection criteria for an auditing company

The choice of the auditing company should be thoughtful and based on the following criteria:

1. Experience and qualifications: check whether the company has experience in auditing entities with a business profile similar to yours. Also pay attention to the competence of the team of auditors.
2. Reputation: opinions of previous customers and the reputation on the market might be an indicator of the quality of services.
3. Scope of services: auditing companies often offer additional services, such as tax consultancy or risk assessment. However, such services should not interfere with the principle of auditor’s independence.
4. Audit cost: it is worthwhile to compare the costs proposed by various companies, but not at the expense of the quality of the service.
5. Compliance with regulations: make sure that the company meets the requirements regarding independence and rotation.

Signing an agreement with the auditing company

The agreement with an auditing company should be concluded in advance to allow the auditor participate in the stocktaking of important assets. The agreement must include details regarding the cooperation, such as:

• The scope of the audit and the work schedule.
• Costs of the audit and payment conditions.
• Obligations of both parties, clauses regarding confidentiality and the rules for termination of the agreement.

The agreement must be transparent and secure the interests of both parties.

Choosing the right auditing company and the proper preparation of the agreement are of key importance to ensure the reliability and independent character of the audit. As a result, the entity’s financial statement will be credible and in line with the applicable regulations.

author: Julia Leszczyńska, Accounting Assistant, MDDP Outsourcing Katowice

We invite you to read the remaining articles in the ‘Financial Report 2025’ series:

1. Schedule of Works on the Financial Statement: The Key to Effective Reporting
2. Determining the Form of Financial Reporting: Key Aspects
3. Audit Obligation and Selecting the Auditing Company: Key Aspects
4. Inventory of Assets and Liabilities and Their Valuation
5. Valuation of Assets and Liabilities on the Balance Sheet Date
6. Preparation and Signing of the Annual Financial Statement: A Step-by-Step Guide
7. Consolidation of Financial Statements: Key Rules and Requirements
8. E-Statements: A Guide to Electronic Reporting of Financial Statements
9. Sending a Financial Statement After the Deadline: Consequences and Procedures

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