Running a company in the form of a limited liability company in Poland entails the obligation to prepare the financial statements for the financial year. The obligation to prepare the financial statement, its elements and main principles are analysed by Paweł Dyrduł, associate lawyer from Polish law firm KG Legal Kiełtyka Gładkowski Professional Partnership with its registered office in Krakow.
Limited liability company
Limited liability company (Ltd.) is one of the legal forms provided for conducting business activity in Poland. It is a share-holding company and therefore has legal personality. The establishment, operation and liquidation of this company are governed by the provisions of the Act of 15 September 2000 Commercial Companies Code. It is regulated in articles from 151 to 300 inclusive.
Obligation to prepare the financial statement
The legislator in the Act of 29 September 1994 Accounting Act imposed on Ltd companies the obligation to prepare the financial statements on the closing date of the accounting books (last day of the accounting year), which is usually the last day of the calendar year. Such a financial statement has to be approved by the Management Board no later than 6 months from the balance sheet date (Article 53 of the Accounting Act ), namely by 30 June.
The Accounting Act in Art. 45.2 contains a closed catalogue which lists the individual components of the entity’s financial statements. They are:
Additional mandatory elements
If a company reaches or exceeds two of the values which are specified in the Polish Accounting Act (article 64.1.4.), it may have to be also obliged to include a cash flow in its financial statement (a document which shows cash flows in the company) and the statement of changes in home equity (it shows changes in home equity which took place between the last and the current accounting year). These values are:
Upon reaching or exceeding two of the three of the specified values, in addition to completing the financial statement with additional items, it will be subject to mandatory auditing by the statutory auditor.
Report of company’s activities
In addition to the components of the financial statements of the limited liability company, the Management Board of the company is obliged by article 49 of the Polish Accounting Act to prepare a report on the company’s activities. This report is annexed to the financial statement. It should include in particular:
The theory of accounting and finance has developed two basic principles that should be distinguished by all the financial statements of business entities. They are:
Apart from the aforementioned rules, there are also drawn up the characteristics of the entity’s fair financial statement. These characteristics are: