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Good to know Statutory auditor – what kind of profession is that?

Statutory auditor – what kind of profession is that?

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​by ​​​​​​​​​​​​​​Marcin Kapera

20​ September 2024


Statutory auditor is a public trust profession. This prestigious job involves great responsibility and it takes a lot of time and effort to become one. What are the duties of a statutory auditor?​


TABLE OF CONTENT​


What kind of profession is that?​​


Pursuant to the Statutory Auditors Act [1a], the following persons may pursue the profession of a statutory auditor:

  • a natural person running business operations on his/her own behalf and account,
  • a partner in an audit firm,
  • a person in an employment relationship with an audit firm.


statutory auditor


Additionally, to work as a statutory auditor you need to be entered in the register of statutory auditors [1b]. In order to be entered in the said register, you need to:

  • enjoy full public rights and have full capacity to perform acts in law,
  • be of good repute,
  • not be sentenced with a legally binding sentence for a deliberate crime or a deliberate tax offence,
  • complete higher education in the Republic of Poland or graduate from a foreign university with a degree deemed equivalent in the Republic of Poland, and be fluent in Polish in speaking and writing,
  • obtain confirmation from the Examination Board after having completed:
  1. a one-year accounting practice in an EU Member State, and at least two-year internship in an audit firm registered in an EU Member State, under the supervision of a statutory auditor or a statutory auditor registered in an EU Member State, or
  2. a three-year internship in an audit firm registered in an EU Member State under the supervision of a statutory auditor or a statutory auditor registered in an EU Member State,
  • pass the examinations for the statutory auditor candidates and the diploma examination before the Board;
  • take an oath.

What are the duties and responsibilities of a statutory auditor?​


The statutory auditor is required to act in line with the oath. Furthermore, they must constantly raise professional qualifications and comply with national standards on auditing, principles of professional ethics and resolutions of the bodies of the Polish Chamber of Statutory Auditors.

The statutory auditor conducts, above all, audits of financial statements. They check whether they contain material misstatements, paying attention to compliance with the Accounting Act and accounting policies, as well as with the applicable laws and provisions of the company's constitution. In the end, the auditor issues an opinion as to whether the financial statements give a true and fair view of the company's net worth, financial position and profit(loss).

In addition to financial audits, a statutory auditor may conduct an audit​ at a company to investigate its financial position and point out risks that may arise in the future.

Due to their extensive knowledge of accounting and finance, statutory auditors may also provide tax and accounting advice​.

What kind of opinions are issued by statutory auditors?​


An auditor's opinion contains conclusions from the audit of the financial statements. Types of auditor’s opinion:

  • unqualified – if the financial statements have been prepared in accordance with the laws and any breaches or deficiencies are not material to the reliability of the financial statements,
  • qualified – if there are circumstances that prevent the auditor from obtaining reasonable assurance on some components of the financial statements but do not affect the reliability of the statements as a whole,
  • adverse – if the conditions for an unqualified or qualified opinion are not met, but there are no grounds for disclaimer of opinion.​


auditor’s opinion


The statutory auditors may issue a disclaimer of opinion if they have not obtained sufficient evidence to express an authoritative opinion on the financial statements as a whole.

When are entities subject to audit by a statutory auditor?​​


The Accounting Act [2] makes the following entities subject to the audit requirement:

  1. national banks, branches of credit institutions, branches of foreign banks, credit unions, insurance companies, re-insurance companies, main branches and branches of insurance companies, main branches and branches of re-insurance companies and branches of foreign investment companies,
  2. entities operating on the basis of regulations on trading in securities, regulations on investment funds and on the management of alternative investment funds and regulations on alternative investment companies,
  3. entities operating on the basis of regulations on the organisation and operation of retirement pension funds,
  4. domestic payment institutions and electronic money institutions,
  5. joint-stock companies, except for companies in organisation as at the balance sheet date,
  6. other entities which in the prior financial year for which the financial statements were prepared met at least two of the following conditions:
  • the annual average number of employees in full-time equivalents was at least 50,
  • the total assets as at the end of the financial year were at least the Polish zloty equivalent of 2.5 million euro,
  • the net revenue from the sales of merchandise and finished goods and the financial transactions for the financial year was at least the Polish zloty equivalent of 5 million euro.

The audit requirement also applies to:

  • financial statements of acquiring companies and newly-formed companies, prepared for the financial year in which a business combination took place,
  • annual financial statements prepared in accordance with the IAS,
  • annual financial statements of investment funds maintaining separate sub-funds,
  • separate annual financial statements of sub-funds.

Also entities keeping books of account which, for tax purposes, have chosen to apply the accounting method to account for foreign exchange gains (losses) are required to have their financial statements audited.

Who appoints the statutory auditor and when?​​


The decision to appoint the auditor is made by the body approving the entity’s financial statements – unless the company’s constitutional documents or other binding regulations provide otherwise. This cannot be done by the manager of the entity subject to the audit requirement. It is, however, the entity’s manager who concludes a contract with the statutory auditor (audit firm).

The regulations do not specify the exact deadline for appointing the statutory auditor. However, please bear in mind the deadlines related to the financial statements. The audit should be conducted before approving the financial statements – i.e. within 6 months of the balance sheet date. It is therefore a good idea to select the auditor in sufficient advance to let him/her comfortably conduct audit between January and June – in the case of an accounting year ending on 31 December.

Summary​

Statutory auditors play a key role in ensuring reliability and accuracy of the financial statements of business entities and at the same time protecting business dealings. 

Statutory auditors are obliged to constantly expand their knowledge and raise professional qualifications, comply with high standards of ethics, independence and professional privilege. 

Through their work, statutory auditors actively contribute to the protection of investors and other stakeholders to whom financial data and information presented by entities in their financial statements are relevant.  


Legislation:
[1] Act on Statutory Auditors, Audit Firms and Public Oversight of 11 May 2017
   [a] Article 3(2)
   [b] Article 4
[2] Accounting Act of 29 September 1994, Article 64 (1)

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Marcin Kapera

Auditor (Poland)

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