The Act sets out rules governing the preparation, publication and audit of financial statements, the maintenance of accounting records and the selection of accounting policies. PAR comprises the Accounting Act and secondary government regulations (decrees), which companies should comply with when preparing their financial statements. It is obvious from the Amended Act that IASs were drawn upon on a much wider scale, although not always consistently. The amendments comprise over 100 alterations and new solutions, some of which are more farreaching than EU directives. The long period of 'vacatio legis' was introduced to give the preparers of financial statements enough time to meet the Amended Act's requirements. Earlier adoption is possible, but not obligatory, in relation to leasing and long-term contract provisions. Most of its provisions will apply to financial statements prepared for accounting periods commencing on or after 1 January 2002. Parliament passed material amendments to the Accounting Act (the 'Amended Act') in 2000. In addition, the models on which the Act was based, ie, EU directives and IAS, had also undergone thorough review and change during the period from 1994 to 1999. A widening divergence between financial statements audited by the major international audit firms and those audited by others, pressure from the Polish Securities and Exchange Commission and the development of a modernised Polish Commercial Code finally forced the Ministry of Finance to update the law. Compliance with the EU directives did much to support the development of a real capital market and the inflow of foreign investment.ĭespite the improvements the 1994 Act brought, its shortcomings made it inevitable that, in the rapidly developing Polish economy, it would be overtaken by events such as privatisation, foreign investment, growing merger and acquisition activity among Polish corporations and the increasing sophistication of business. The last point, to a certain extent, signified a breakthrough in the separation of financial accounting from tax accounting. Major 1994 Act improvements to Polish Accounting Regulations (PAR) included the introduction of non-merger consolidation rules, deferred tax and the requirement to make provision for costs and losses regardless of their tax-deductibility. Rigorous application of the 1994 Accounting Act did, however, improve transparency and the reporting of transactions' economic substance. The finance ministry was unfortunately not willing to support either compliance with IAS or even the much less ambitious adoption of IAS solutions for many of the locally deficient areas such as leasing, contract accounting or merger accounting. The Act was drafted principally to achieve Polish accounting compliance with the EU Fourth and Seventh Directives. It was very narrow in scope and, because of its secondary legislative rank, was subject to much inconsistent interpretation by the Ministry of Finance (in contrast to primary legislation, which may only be interpreted by the courts or parliament).įollowing three years of conflict in which the international accounting firms pushed the interpretive boundaries out and the authorities struggled with the interpretations that those firms were applying, a new primary Act was drafted in 1994 with the assistance of PricewaterhouseCoopers, and this became law on 1 January 1995. In 1991, new accounting legislation was passed in the form of a decree of the minister of finance. The process of constructing a market economy in Poland, begun at the end of 1989, has had a significant impact on the development of accounting regulations.
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