What is an Accounting Audit?

What is an Accounting Audit?
Jakub Chajdas

Jakub Chajdas

Partner / Attorney-at-law

Accounting audit is a crucial element ensuring transparency and reliability within a company. This article explains what an accounting audit entails, for whom it is mandatory and when it should be performed. We will also address frequently asked questions about accounting audits.

What is an Accounting Audit?

The Act of 29 September 1994 on Accounting defines the rules of accounting audit.

It involves a comprehensive and detailed review of books and accounting procedures. Its main goal is the evaluation and analysis of documentation and financial condition of the company.

Accounting audit involves various activities which include:

  • Analysis of credibility and solvency,
  • Audit of accounting records,
  • Review of financial statements,
  • Verification of personnel and payroll-related matters,
  • Grouping and redefining business operations in accounts,
  • Valuation of assets and liabilities.

Other tasks performed by specialized audit firms include financial advisory services. Especially those related to accounting operations and financial control. It may also involve conducting internal training in this area.

accounting audit

Who has the Obligation to Undergo an Accounting Audit?

The Accounting Act specifies entities for which accounting audits are mandatory.

Among them there are:

  • National banks, branches of credit institutions, branches of foreign banks, insurance companies, reinsurance companies, main branches and branches of insurance companies, main branches and branches of reinsurance companies, and branches of foreign investment firms,
  • Cooperative savings and credit unions,
  • Entities operating under securities trading regulations, regulations on providing crowdfunding services for business ventures, and regulations on investment funds and alternative investment fund management,
  • Entities acting under regulations on the organisation and operation of pension funds,
  • National payment institutions and electronic money institutions,
  • Joint-stock companies, except for companies under organisation as of the balance sheet date.

Accounting audits are also mandatory for other entities. Namely, the ones that, in the preceding financial year met at least two of the following conditions:

  • The average annual employment on a full-time equivalent basis was at least 50 persons,
  • The balance sheet total at the end of the financial year amounted to the equivalent of at least 2 500 000 euros in PLN,
  • Net revenues from goods, products, and financial operations for the fiscal year exceeded equivalent of 5 000 000 euros in PLN.

The key data determining whether a specific entity requires an accounting audit is from the previous financial year.

accounting audit

Accounting Audit – When it Should be Performed?

Audit should be completed on time to ensure timely approval of financial statements.

As per regulations, there are 6 months from the end of the financial year for the approval of financial statements. In most entities, the financial year corresponds to the calendar year. So, usually, financial statements should be approved by 30 June. Further, you must file the statements with the appropriate registry court. You should do it within 15 days of approval.

It’s essential to remember that a professional accounting audit requires time. This is why it is not worth delaying the submission of the report for examination by an expert auditor.

What are the Benefits of Accounting Audit?

Among the most significant benefits of accounting audit, there are:

  • Verification of documentation status and the possibility to correct defects,
  • Improving the organization’s image as a trusted entity for clients and business partners,
  • Development of more efficient mechanisms and procedures for better financial planning,
  • Identification and elimination of inaccuracies in the company’s settlements,
  • Ensuring compliance with the law.
accounting audit

Accounting Audit – Summary

Regardless of whether you run a small business or a large corporation, regular accounting audits are beneficial. They help to identify errors and prevent abuses. It also ensures that your company complies with regulations and standards.

If you want to learn more or have questions about accounting audits, our experts are ready to help you. Contact our law firm for more information!

FAQ – Questions and Answers about Accounting Audit

What is an Accounting Audit?

Accounting audit is an independent review and evaluation of a company’s financial statements. It ensures their compliance with accounting standards and legal regulations.

What are the main stages of accounting audit?

The main stages of accounting audit include planning, collecting evidence, analyzing and evaluating financial documentation. Then the auditor reports the results. Auditors conduct internal control tests, examine financial documents, and interview staff.

What are the benefits of conducting an accounting audit?

Accounting audits help detect errors or abuses. It ensures compliance with regulations and increases investors’ confidence. Moreover, it improves internal control and identifies areas for improvement in financial processes.

How often should have accounting audit in your company?

The frequency of accounting audits depends on the size and type of the company. Typically, they happen once a year. Companies listed on the stock exchange often have an obligation to conduct annual audits. Smaller companies may conduct audits less frequently or on demand.

Who can conduct accounting audits?

Accounting audits are usually conducted by certified auditors or audit firms. They are independent of the audited organization. It is important for the auditor to have qualifications and experience in the industry in which the company operates.

How to choose the right auditor for my company?

When choosing an auditor, consider their experience, references, and specialization in the industry. It’s good to talk to other clients of the auditor and check their reputation. It’s important that the auditor is independent and has a meticulous approach.

How much does an accounting audit cost?

The cost of an accounting audit depends on various factors. For example the size of the company, the complexity of financial processes, and the auditor’s experience. Prices may vary, but it’s worth obtaining several quotes from different audit firms. This way you can get the best price and quality of service.

Is accounting audit mandatory for every company?

Accounting audits are mandatory for some companies. Especially those listed on the stock exchange or those achieving significant turnover. Small companies or sole proprietorships may not have a legal obligation to conduct audits. Yet, they may choose to do so voluntarily. This gives additional assurance about their financial situation.

What documents are necessary to conduct an accounting audit?

Documents required for an accounting audit include financial statements, invoices, contracts, tax documents, payroll registers, leasing agreements, and other relevant financial documents. The auditor often provides a list of required documents before starting the audit.

What happens after completing an accounting audit?

After completing an accounting audit, the auditor prepares a report with the results. This report includes information about any irregularities, errors, or areas requiring improvement. Based on this report, the company can introduce changes to financial processes if necessary.

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