Audit in Poland – the most common issues in financial statement audits

Audit in Poland – the most common issues in financial statement audits

Audit in Poland (i.e., an audit of financial statements) has one overriding purpose: to increase users’ trust in the financial statements by providing the statutory auditor’s opinion based on reasonable assurance — not absolute certainty. In practice, a financial statement audit often reveals missing disclosures, classification errors, or valuation issues that may need to be corrected before the audit opinion is issued.

From a management perspective, audit findings rarely come from a single bookkeeping mistake. More often, they result from a combination of: low-quality source data, unclear or inconsistently applied accounting policies, limited information flow between departments, and starting the year-end close too late.

In this article, we discuss the most common issues identified during a company audit and explain how to prepare — so you can reduce audit risk, shorten timelines, and avoid last-minute stress on both sides.

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Financial statement audit in Poland: what auditors typically review

The audit scope depends on the size and profile of the company, as well as the reporting framework used (e.g., Polish GAAP under the Polish Accounting Act vs. International Financial Reporting Standards (IFRS)). In practice, auditors focus on areas where the risk of material misstatement is highest — especially:

• completeness and quality of supporting documentation
• recognition and valuation of key balance sheet items
• revenue and cost recognition (cut-off)
• provisions and accounting estimates
• disclosures in the notes to the financial statements
• internal controls that affect financial reporting

The most common bottlenecks are points where accounting depends on data outside the finance function — and that data is not standardised, closed, and reconciled on time.

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The most common issues in audits of financial statements

1) Missing disclosures and incomplete notes

Even if the numbers in the balance sheet and P&L are correct, the financial statements may still fail to present a true and fair view if required disclosures are missing. Typical issues include:

• incomplete description of accounting policies, or inconsistency between policy wording and actual practice
• missing disclosures on estimates and judgement areas (e.g., impairment, provisions, depreciation rates)
• incomplete related-party transaction disclosures
• insufficient disclosures on financial instruments, FX exposure, and interest rate risk

Practical takeaway: the notes are not “an appendix”—they are an integral part of the financial statements. Plan them with the same discipline as the year-end close.

2) Fixed assets and intangibles: depreciation, capitalisation, documentation

This is one of the most frequent areas of audit adjustments. Auditors regularly identify:

• depreciation rates not reviewed against the actual useful economic life
• incorrect split between day-to-day expense vs. capitalised cost (e.g., repair vs. improvement)
• outdated fixed asset / intangible asset registers
• missing formal approvals and documents confirming assets were put into use

In many organisations, the core issue is process ownership: investment and maintenance teams may not provide accounting with complete data on asset changes, shutdowns, disposals, or planned upgrades.

3) Impairment and deferred tax: estimates without evidence

This area requires strong process maturity. Adjustments appear when:

• the company does not assess impairment triggers for long-term assets,
• forecasts/budgets are inconsistent, lack formal approval, or are prepared “for the audit only”
• deferred tax assets are recognised without realistic evidence they will be utilized

Good practice: start impairment and deferred tax work early, and base assumptions on management-approved business plans.

4) Inventory counts and cut-off

In trading and manufacturing companies, the audit often heavily focuses on inventory. Typical issues include:

• incomplete or poorly documented physical inventory counts
• discrepancies between warehouse records and accounting
• cut-off errors around year-end sales and purchases
• missing write-downs when net realisable value is below cost

The key is aligning processes: warehouse, sales, and finance must operate with shared definitions and deadlines — especially at year-end.

5) Revenue: recognising sales too early and unclear rules

A common risk is “invoice-based” revenue recognition without sufficient analysis of whether recognition criteria are met (including transfer of control, benefits, and risks). The problem grows when:

• delivery/acceptance terms vary (customer warehouse, staged deliveries, quality acceptance)
• contracts include additional obligations (installation, service, penalties, conditional rebates)
• sales data is fragmented and not reconciled with logistics.

In practice, a clear revenue recognition policy and mapping transaction types to booking rules significantly reduces audit adjustments.

6) Financial instruments and FX exposure: not identified or not disclosed

In many companies, the risk is not only valuation — it’s identification. Auditors challenge cases where:

• hedging contracts/forward transactions are not booked or measured at the balance sheet date
• accounting is not informed about treasury activity
• disclosures in the notes are incomplete

A simple organisational fix is often overlooked: introduce a formal reporting obligation from treasury/finance-risk owners to the financial reporting team.

7) Provisions and accruals: omitted costs and liabilities

The most common issues include:

• no provisions for employee benefits (e.g., unused vacation) until the auditor flags it
• missing accruals for costs relating to the audited year (e.g., services invoiced later)
• interest on financial liabilities or contract-based fees not reflected

This is where the audit directly tests the quality of accrual accounting and matching.

8) Trade payables: completeness and correct period recognition

Auditors verify whether all liabilities relating to the audited period are recorded — even if documents arrive after the balance sheet date. Issues arise when:

• there is no procedure to capture late invoices relating to the audited year
• supplier reconciliations are performed selectively
• invoice approval takes too long

Good practice: periodic balance confirmations and a year-end list of open cost items agreed with operational teams

9) Cash flow statement and consistency across statements

In companies preparing a cash flow statement, common issues include:

• misclassification of cash flows (operating/investing/financing)
• inconsistencies between balance sheet, P&L, equity changes, and cash flow
• missing technical/logical reconciliations, making it hard to defend during the audit

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How to prepare for a financial statement audit in Poland: a practical action plan

1) Start with a schedule and clear owners

The most predictable audit is one supported by a year-end close plan with timelines and accountable owners for each area (inventory, fixed assets, revenue, provisions, taxes, disclosures).

2) Ensure complete documentation and one consistent repository

Auditors don’t need “more files”— they need complete, well-evidenced support, organised in a clear structure. What works well in practice:

• an audit request list (documents + reconciliations)
• consistent naming conventions and version control
• approval trails for key assumptions (budgets, impairment tests, provision calculations)

3) Run a pre-audit review

An internal review of key risk areas before fieldwork starts reduces last-stage corrections — especially for cut-off, provisions, inventory valuation, disclosures, and cross-statement consistency.

4) Fix cross-department information flow

Many corrections come from missing information rather than “wrong accounting.” Implement a simple rule: key business events must be reported to finance within a defined timeline and format (contracts, instruments, disputes, guarantees, investment decisions).

5) Treat the auditor as a quality partner — align on priorities

A well-managed financial audit process is one where:

• the company delivers reconciled data on agreed dates
• the auditor receives clear answers and evidence supporting management judgement
• both sides work off the same risk map and priorities

This approach reduces the risk of late-stage surprises, when changes are most disruptive.

If you want to make your audit in Poland more predictable, it’s worth strengthening your year-end close and reporting processes early — with the right support in place. Contact us.

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Summary: how to reduce audit adjustments next year

The most common issues identified in audits of financial statements relate to disclosures, asset valuation, revenue recognition, inventory, provisions, and completeness of liabilities. The shared root cause is usually process organisation and data quality, not isolated accounting errors.

If your goal is a smoother audit in Poland, focus on: a clear timetable, accountable owners, a pre-audit risk review, and consistent reporting procedures supported by mature accounting processes.

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If you have any further questions or require additional information, please contact your business relationship person or use the enquiry form on the HLB Poland website.

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