Chief accounting principles in Poland

Proper accounting and bookkeeping are fundamental to any company. They present financial information in the way that is to allow company managers make decisions concerning the future of the enterprise. It is extremely important to have accounting books maintained by professionals. Companies need to conduct proper bookkeeping and comply with certain legal obligations related to bookkeeping.

Bookkeeping records need to be verifiable and reliable. In order to assure that, one needs to adhere to certain universal accounting principles. They lay the foundations for the more detailed provisions stipulated in the Accounting Act and other legal acts and regulations governing financial record-keeping in Poland.

The key accounting principles are the following:

• The accrual rule – it states that costs and revenue shall be recorded on the accrual basis, i.e. as they happen, and not when the payments are actually made;

• The matching rule – related to the accrual rule; it states that the books should include all revenues in a given period together with relevant expenses;

• The prudence rule – it states that one should not overestimate the revenues and underestimate the costs; in other words, you should always be a pessimist;

• The going concern rule – it states that in the foreseeable future the entity will continue functioning as usual and has no intention to go into liquidation or curb its activity;

• The consistency rule – it states an entity should stick to the adopted accounting solutions so that financial data in different periods are comparable;

• The substance over form rule – it states that operations should be recorded in accordance with the impact they have (their substance) and not their form;

• The materiality rule – it states that financial information should be presented in such a way it gives accurate image of an entity’s financial situation; simplifications are allowed only if they do not distort the information’s clarity and reliability.

Any accounting books and any financial statement regarding companies registered and operating in Poland should be reliable, understandable and comparable.