17 may 2005, baku

17 May 2005, Baku 17 May 2005, Baku

Private Sector Private Sector Accounting and Auditing Reform Accounting and Auditing Reform

and its Importance in the Transition and its Importance in the Transition toto a Market Economy a Market Economy

The Polish Experience The Polish Experience

* Source of information: National Bank of Poland

Ministry of Finance

Andrzej Jacaszek Undersecretary of State, Ministry of Finance

POLAND - basic figuresPOLAND - basic figures

Population - 38.5 million

GDP real growth rate - 5.9 %

GDP per capita - 11,100 USD

Capitalisation of Warsaw Stock Exchange - 94 billion USD - largest in CEE

SME - ca 3.5 million


There was no capital market There was a monobank – a one-tier banking system In the command economy, accounting was treated

rather as book-keeping Financial control instead of auditing Simplified financial reporting requirements Simplified aggregation of subordinate companies’

financial statements

Initial conditions - 1989Initial conditions - 1989


A&A ReformA&A Reform - - first stagefirst stage

Transition process from a command to a market driven economy

1989 - collapse of communism, introduction of free market economy 1991 - adoption of the Ordinance of the Minister of Finance on

Accounting - first Polish accounting regulations in a market economy (complete change in the attitude to the accounting regime - introduction of accrual accounting, going concern, historical cost, materiality, prudence, consistency )

Clear distinction between tax and accounting requirements

- adoption of the Act on auditing and the publication of financial statements as well as on auditors and their self-regulation

foundation of the National Chamber of Statutory Auditors setting professional standards for auditing

prescribing practical requirements and ethics principles


A&A ReformA&A Reform - - second stagesecond stage

1994 - adoption of the Act on Accounting based on EU Fourth and Seventh Accounting Directives

covers commercial and non profit entities

modern regulations perceived as investors-friendly

- adoption of the Act on Auditors and their Self-Governing Body - based on EU Eighth Directive

2000 - modernisation of the Act on Accounting towards International Accounting Standards (IAS)

2001 - ROSC Accounting & Auditing

useful diagnostic tool of summarising countries’ observance of internationally recognised standards


A&A ReformA&A Reform - - third stagethird stage

2004 - Poland’s accession to the European Union (1st May) Poland’s membership in the EU entailed the obligation

to apply IAS to consolidated financial reporting by companies listed on the stock exchange

full transposition of the Accounting Directives

2004 - amendment of the Act on Accounting - direct implementation of IAS/IFRS


Application of Application of IAS/IFRS in Polish law

The scope of entities applying IAS/IFRS beyond the minimal requirement of the EC Regulation 1606/2002:

mandatory basis: consolidated accounts of listed companies and banks

permissive basis: annual accounts of above mentioned entities annual and consolidated accounts of companies within the capital group

postponement until 2007: companies whose debt securities only are admitted on a regulated market

Shareholders’ decision on application of ISA/IFRS Definition of IAS Interaction between IAS/IFRS and Act on Accounting - fallback to

Act on Accounting


Auditing - current regulationsAuditing - current regulations

Approval of persons responsible for carrying out the statutory audits of accounting documents - consistent with current EU regulations

Auditing standards based on International Standards on Auditing (ISA)

Code of Ethics based on IFAC’s Code


Auditing - future regulationsAuditing - future regulations

Proposal for a Directive on statutory audit

currently under discussion in the European Parliament

Objectives ensuring the credibility and reliability of audited financial statements reinforcing the statutory audit improving co-operation between oversight bodies in the EU

New elements public oversight over the audit profession adopting ISA under the comitology procedure quality assurance mandatory rotation of auditors/audit firms audit committees independence and professional ethics

liability of the statutory auditor


Without sound accounting and auditing it wasn't possible to:

develop capital market

attract foreign investments

strengthen the credibility of SMEs’ reporting

ensure the security of market transactions

Co-operation with the World Bank as an important factor of the reform ROSC Accounting & Auditing update

World Bank grant for A&A reform

A&A and the modern A&A and the modern market economymarket economy


PolicyPolicy statementstatement

Creating reliable, transparent, safe and open for investment

economy in Poland

17 may 2005, baku

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