FINANCE
POLISH AUDITORS UNDER NEW SUPERVISION President of the National Council of Statutory Auditors BARBARA MISTERSKA-DRAGAN talks to “Polish Market’s” Jerzy Mosoń.
The Ministry of Finance has introduced new supervision mechanisms over statutory auditors. Has this been long overdue? First of all, I have to say that nobody expected it. A new Act on Statutory Auditors entered into force in 2017. It imposed quite restrictive obligations on local government, auditing companies and statutory auditors, including a five year rotation of auditors, and tightened rules of cooperation with public interest entities. In 2017, a model of direct supervision of the Audit Supervision Commission (ASC) over auditing companies and statutory auditors conducting statutory audits of financial statements of public interest entities, was introduced. Only some supervisory powers remained with local government, including control tasks other than statutory audits at public interest entities. We had not yet managed to settle well in the new circumstances, when the idea of establishing the Polish Audit Supervision Agency (PASA) appeared. In the new supervision model, the Agency will carry out all controls of attestation and related services, to determine whether they have been performed in accordance with national standards of professional conduct. It will also keep records of auditing companies. PM
Was indirect supervision enough? From our point of view, former local government supervision mechanisms did not pose a risk to the security of business transactions. It is difficult to say whether this new regulation is needed, because we PM
have not yet managed to assess operations under the current law. In 2017, we started applying new standards, including auditing standards, and now fresh changes come along. The justification given is that the new act is meant to improve the quality of the audit, increase the independence of auditing companies and harmonise the principles of auditing all auditing companies. There are a lot of small and micro auditing companies in local government, most often they are single self-employed lawyers, who until now were not under the direct supervision of the ASC. In our opinion, which we presented both in Parliament and at the Ministry of Finance, the catalogue of companies controlled by PASA should be expanded, but these small audit companies should remain under existing supervision. Local government bodies are directly in touch with the auditors, they can act preventively. But about 90% of Polish companies are SMEs, so shouldn’t these smaller firms be audited, too? From our point of view, they should be under the protection of local government to give them the opportunity to develop and improve the quality of services. Meanwhile, the supervision fee under the new law is to go up to 4% of revenue, up from 1.5% in the case of public interest entities. Especially when it comes to SMEs, this will be passed on to the customer, all the more so that the fee covers all services of auditing companies rendered in accordance with national professional standards. So not only the auditing of financial PM
statements, but also attestation and related services will be covered, too. Now the fee will also cover revenue obtained from other attestation services performed not just by statutory auditors, such as the assessment of restructuring and merger plans, and related services. This cost increase will undoubtedly push prices up. We must now get ready to implement the new regulations. The only thing we have managed to achieve in Parliament is the extension of the period of adjustment of auditing companies to the requirements of the amended act by four months. As local government, we want to help these companies and prepare best practice solutions for them. Do the new regulations effectively curb the role of local government? It is a great challenge for us, both in terms of subject matter and finances. Our tasks are aimed at standardising services, because the high quality of our services increases the financial security of companies. PM
You have recently become the president of the National Council of Statutory Auditors? What are your goals? As the president of the Council my motto is: quality, prestige and consolidation of the profession. I believe that entrepreneurs need us. After all, we assess management systems, we pay attention to risks, and with the help of an independent expert, we help companies to gain an outside perspective. This is what interests me the most in my profession, in which we are facing new challenges and experiences. • PM
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