Amendment to the Accounting Act will unify the process of submitting financial statements

Amendment to the Accounting Act will unify the process of submitting financial statements

Amendment to the Accounting Act will unify the process of submitting financial statements
On 24 August 2021, the government adopted a draft bill amending the Accounting Act and the Act on Statutory Auditors, Audit Firms and Public Supervision. 

The bill is to adapt the existing regulations on financial reporting and auditing to current technological developments. The new solutions are to, inter alia, standardise the format of the issuers' financial statements, which will facilitate the analysis of the statements and increase their usefulness. Moreover, the draft provides for the option to have financial statements signed by a single member of a multi-member body under certain conditions.

The adopted amendments to the draft are in line with the "Regulation 2019/815" of the European Union, which is aimed at unifying the electronic reporting format in order to facilitate the availability and comparability of financial statements for issuers. Therefore, the amendment to the provisions in this regard will ensure the possibility of using modern IT tools so that entities can more easily meet their obligations to keep accounts and prepare financial statements, while also facilitating their verification.

The proposed amendments to the Act on Statutory Auditors are however expected to improve communication between the Polish Agency for Audit Oversight and audit firms.

Amendment to the Accounting Act - the most important solutions of the draft bill:

  1. For issuers - the obligation to use a single XHTML format, to prepare financial statements and the management reports only in one electronic format. There will be a need to tag these reports using the Inline XBRL tagging language within specific timeframes. First, the core elements of the consolidated financial statements will be tagged in accordance with XBRL. Next (according to Annex II of Regulation 2019/815) - after 1 January 2022 - the additional information to the financial statements will also be subject to tagging.

  2. For other entities preparing financial statements in accordance with IFRSs - an obligation to prepare separate and consolidated financial statements and management reports in XHTML format or another searchable format. A searchable format is a record format that can be opened and read with freely available software designed for reading or editing documents in that format.

  3. The option for the financial statements and the management report to be signed by only one member of a multi-member board, provided that he has obtained declarations from the other members that the financial statements meet the requirements of the Act, or refusal to make such declarations. A general principle is introduced according to which the signing of the financial statements constitutes confirmation that the statements meet the requirements of the Act.

    The refusal to make a declaration is equivalent to a refusal to sign the financial statements and requires reasons to be given in writing. A statement that the financial statements meet the requirements of the Act and a refusal to make such a statement shall be attached to the financial statements.

    The approved annual financial statements, the refusal to sign and the declaration or refusal to declare, if any, shall be archived for a period of at least 5 years starting from the beginning of the year following the financial year in which the financial statements were approved.

  4. For statutory auditors and audit firms - the introduction, inter alia, of the need to include in the audit report an additional opinion stating whether the audited consolidated financial statements of issuers and other entities as defined in "Regulation 2019/815" of 17 December 2018 have been tagged in accordance with the requirements of this regulation.

  5. Introduction of the option of not preparing consolidated financial statements by Alternative Investment Companies.

  6. Additional regulations for audit firms will include, inter alia:
  • the clarification of the situation in which professional secrecy of auditors is not breached,
  • the clarification for the provisions on remote inspections of audit firms by the Polish Agency for Audit Oversight using electronic means of communication and the lack of possibility for the audit firm to withdraw its consent during the inspection,
  • the clarification and extension of the provisions on holding remote meetings and adopting resolutions via the circular procedure
  • the clarification for the provisions on the audit

The draft bill has now been approved by the Council of Ministers.

The solutions presented above, which are a part of the amendments to the Accounting Act, are to come into force within 14 days of their announcement in the Journal of Laws.

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Małgorzata Dobrowolska
Małgorzata Dobrowolska
Partner, Director in Accounting Department