statutory auditor, Audit Partner at RSM Poland
More than once did I wonder what is the actual meaning of auditing services in Poland. And I came to the conclusion that this meaning is still “greatly underestimated”.
An audit of a financial statement is so much more than just a verification for correctness. I believe a financial audit is, most of all, an opportunity to identify the organisation's “weak points”, allowing management to minimise existing though not always realised risks.
Don't follow in Amber Gold's footsteps
The economic crisis has significantly undermined investors' confidence in the quality of company financial statements. Investors are having their doubts whether financial reviews are to be trusted, considering that a given company would show profits in one year, and only a few months later suffered unbelievable losses with the scope of business unchanged. This would often lead to consequences as severe as bankruptcy. A good example is the Amber Gold case. In 2012 the company had published its financial results and showed a net profit of more than 50 million zlotys in 2011, while the court announced its liquidation bankruptcy already in September of the following year. I hope that the financial statement had not been audited, as the media informed, by a statutory auditor, otherwise I would have strong doubts about the work quality of such a company, and rightly so. On the other hand though I find it hard to believe as an auditor that the management of Amber Gold could possibly be that irresponsible. In my opinion it would have been enough to engage an auditing company with relevant experience and field-specific market knowledge to prevent the tragedy of thousands of people who had lost all their deposited savings. I shall not, of course, assume (or perhaps I don't want to assume) intentional action on the side of the management...
An audit is not a “necessary evil”
And so, managers are now facing quite a challenge to regain investors' trust through proper quality, transparency and credibility of financial statements. The role of the auditor is of key significance here. It is time to scrap the belief that auditing services are a “necessary evil” resulting from the provisions of the Act on Accountancy. I firmly advise entrepreneurs to make use of the knowledge, experience and skills offered by auditing companies that are not only well versed in the law, but are confident to point out shortcomings in the studied financial statements and contest way-over-the-top wishful thinking for the very purpose of constant quality improvement of their clients' financial statements.
Your auditor, your partner – for better or worse
We know all too well that running a business in Poland can be challenging. People running companies are forced to face not only economic changes and competition, but also very complex and frequently changing tax law regulations. Cooperating with audit and advisory firms that provide comprehensive services, meaning that besides performing audits they are ready to support you in the field of taxes and the law of broadly-understood financial advisory, will most importantly give you quick access to specialised knowledge and offer optimal and practical solutions. The role of the auditor is to identify client needs, design a solution and jointly put it to use, always keeping in mind the client's assumed business objective. However, do keep in mind that for an audit to bring you such added value, it must be well adjusted to the nature of the your market field, which in turn requires significant experience in cooperating with your company. Auditing companies in Poland are usually appointed to provide services for a year, three years at most. Such rotation does not allow to make full use of the potential generated from cooperating with an auditor. Only long-term cooperation and considering your auditor a business partner rather than an inspector will benefit in the future with improved service quality, transfer of knowledge and opportunities to identify financial, tax and legal risks as well as finding relevant solutions.