What will the New Year bring?

With crude oil prices at record lows, the Polish currency regaining streinght and with reasonable growth forecasts will 2015 be a good year for the Polish economy?

The Russian economy in meltdown and the Ukraine facing an uncertain future it would appear that the eyes of Western investors are once more turning to Poland as the country enters the last phase of significant EU contributions to the economy. The new financing round is more specifically targeted and should generate significant growth opportunities for business. On the horizon there are two elections, first presidential in the spring which the current incumbent should win easily and then in the autumn parliamentary elections where although PiS is likely to gain most votes the PO and PSL coalition should gain a working majority. Clearly there is a need for a credible opposition with the capacity to govern rather than being an eternal gadfly on the back of the nation. Will such an opposition emerge is however a moot point as the last several attempts resulted in a once only electoral breakthrough above 5% and were followed by the total collapse of support. But with little alternative available alternatives on the economic policy front and at best irrelevant populist posturing there is actually probably no space for an effective opposition. Such is the modern world linked and voter apathy best described by the French word ennui.

2015

In the words of a former US President “the economy stupid…”.

The real key issue will be how soon European banks in general and Polish banks in particular start once again financing business investment. Or just maybe the old behemoths need to be encouraged to fail and a return to an old style seperation of retail and investment banking reintroduced. And when will banks learn that property values are not predestined to be on a continious upward turn. Maybe adding property inflation indicators to central bank measures of inflation might reintroduce some stability?

The truth is that Polish banks, having in the main part avoided the previous property bubble, are better placed to start financing real growth which is all to do with current and future consumption and not asset financing. As with all assets if no one can afford inflated property related costs and share values unrelated to future performance then we have the perfect recipe for the next crash.

Make business and grow (in Poland). From the accounting point of view

In Poland the accounting principles and audit requirements are set out in the Law on Accounting.

The above regulations do not differ considerably from International Financial Reporting Standards (IFRS) and in the situations not regulated by the Law these standards can be applied. Moreover, entities as well as subsidiaries of entities quoted on a recognised EU stock exchange can prepare their financial statements in accordance with IFRS.

Statutory financial statements consist of: a balance sheet, profit and loss account, additional information, comprising of an introduction to the financial statements and additional information and explanations. Entities subject to obligatory audit are also required to prepare a statement of changes in equity (own funds) and cash flow statements.

The financial statements for the year must be accompanied by a management report on activity.

The accounting records, the financial statements and the management report must be prepared in Polish and in the Polish currency.

The financial statements should be prepared within 3 months from the balance sheet date and signed by all the members of the Management Board and the person in charge of maintaining the accounting records. The financial statements must be approved by an authorised body (usually the Annual General Meeting of Shareholders) not later than 6 months from the balance sheet date.

Within 15 days from the approval of the annual financial statements, the Management Board is obliged to present the documents for court registration purposes, together with an auditor’s opinion (if the requirement of an obligatory audit is applicable), a copy of the shareholders’ resolution approving the financial statements and resolving on allocation of profits/ loss coverage, and the management report on activity.

The approved annual financial statements must be kept in the archives permanently, whereas the accounting records, inventory documentation and other source documents must be stored for 5 years.

Audit Requirements

Annual financial statements of banks, insurance agencies, investment and pension funds and joint stock companies are subject to an obligatory audit and must be published.

The audit requirement also applies to the financial statements of other entities where in the year preceding the reporting year to which the financial statements relate, two of the following three conditions are met:

a) mid year employment level of 50 or more,

b) balance sheet totals of assets and liabilities as at the year-end were at least EUR 2,5 million,

c) turnover net of VAT (revenues from sales of goods and products and financial operations) exceeding EUR 5 million.