What is a financial statement?
A financial statement is a document whose task is to present the financial situation of a company – so it should contain information about the company’s assets, income and assets. The data collected in the financial statements relate to a specific period (usually a fiscal year). Proper financial statements should be prepared according to the principle of a true and fair view (the books are to be kept honestly and the data true), but this is not the only principle to be followed.
Financial statements – who prepares them?
Financial statements must be submitted to the National Court Register by all entities in the KRS Register of Entrepreneurs. Enterprises that do not belong to the census report to the Head of the National Tax Administration.
How to file a financial report?
The document should be sent online, using the eKRS system on the Ministry of Justice website (if the company belongs to the KRS) or in the e-Financial Statements application (other taxpayers). The submission of the document must be confirmed with a trusted profile or electronic signature.
Important!
The report must be submitted within three months of the balance sheet date. This means that the 2022 report had to be submitted by March 31, 2023.
What rules should be followed when preparing financial statements?
The Accounting Law mentions seven principles according to which financial statements should be prepared. Here they are:
- reliability,
- comparability,
- timeliness,
- continuity,
- verifiability,
- completeness,
- comprehensibility.
What data does the financial report contain?
In order for the report to serve its purpose, it must not lack any key data. So if you plan to prepare such a document, keep in mind the elements we list below.
Introductory information
The content of this section of the document is defined by Accounting Act , actually Appendix 1 to the same. The introduction must include:
- The name of the enterprise and the address of its headquarters,
- The designation of the period to which the report relates,
- document date,
- unambiguous information on whether the annual financial statements contain aggregate data – this situation occurs when an enterprise consists of multiple business units, each of which prepares its own financial statements,
- information on whether the company assumes the continuation of business operations – if necessary (keeping in mind the principle of faithful and reliable picture), the report should also include information on whether the continuation of business operations of the preparer is threatened, and if so, what circumstances affect the emergence of such a threat,
- information on the principles and methods used in the preparation of the financial statements – including methods for valuing assets or measuring the financial result.
Above we have listed preliminary information – the kind that is required for the document to be valid. The core of the financial statements, however, are two other elements: the balance sheet and the income statement.
What does the balance sheet contain?
The balance sheet of a company is called a complete list of the company’s assets, liabilities, long-term investments and other resources – it should be prepared as of the opening and closing date of the fiscal year. What should the balance sheet contain?
- Inventory of assets (including fixed assets, real estate and intangible assets),
- Inventory of liabilities (among others: capital, own shares, profits and losses, profit write-offs),
- inventory of long-term investments (financial assets and other assets not used by the entity),
- inventory short-term receivables (including loans granted and advances paid),
- inventory of accruals (deferred tax assets, costs of works, renovations or organizations that are just in progress or included in the company’s plans),
- inventory (including materials, products, goods ready for sale or in any stage of production, as well as advance payments),
- statement of cash flows.
Important!
The balance sheet in the financial statements should be prepared in Polish and use the PLN currency. It is permissible to round figures to the nearest thousand.
Profit and loss account
A complete statement that includes the company’s revenues, derived from the sale of goods and services and from financial operations. The account must also include all deductible expenses, profits made and losses incurred during the tax year.
The finished report on the entity’s activities must be approved – usually by the person responsible for keeping the company’s books and/or the person in charge of the entity. Both the head of the unit and the accountant should sign with their own hands. Approval of the financial statements is one of the conditions for proper submission of the document.
Important!
According to the Accounting Law (Article 52(2)), the financial statements should be signed by the hand of one of the listed persons.
If the management is multi-member, the signature must be affixed by all persons in charge of the unit. If this is not possible, the signature of one person will suffice – but in such a case it is necessary for the rest of the management to declare that the financial statements meet the statutory requirements.
Penalties and sanctions for failure to submit the report
The obligation to file financial reports is taken seriously, and if an entity fails to send the document on time, those responsible for filing the report risk one or more of the penalties listed below:
- restriction of liberty (up to 24 months),
- A fine (in the amount of 10 to 720 daily rates),
- coercive proceedings (summons to file a report within 7 days of receiving the summons, under penalty of a fine or dissolution of the company),
- Dissolution of the company and deletion from the National Court Register,
- probation supervision.
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