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Thirty years auditing in Poland – reform and transformation

By Marzena Richter ACA, Staniszewski & Richter, Polish registered auditor
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In the spring of 1990, I read an article in the member’s magazine of the Institute of Chartered Accountants in England & Wales (ICAEW) while working in my training firm’s offices in the Channel Islands. Entitled ‘Poland needs auditors’, it was written by my fellow compatriot and ICAEW member Andrzej Kinast. Little did I realise this article was sowing the seeds of my future career!

The chance to work in Poland came unexpectedly that autumn. Arriving five minutes late for a tax lecture at Accountancy Training Centre in Shepherd’s Bush, London, I had to take the only seat free – opposite the tutor’s desk! One of the students I sat next to was David James, a fluent Polish-speaking chartered accountant who also developed his career in CEE but mainly in Poland. David struck up a conversation with me – “Oh your first name is Polish! “ he exclaimed as I filled in my mock exam script. The student to my other side on hearing about my Polish roots took my telephone number as his firm had recently opened an office in Warsaw. I found myself with a new job in January 1991 working in Poland on a fly-in basis. Poland was hot topic at that time, and despite other opportunities I felt the professionalism and the approach to clients suited me so I took the proposal without hesitation.

At our offices located in the Marriot tower, I met my new colleagues who eagerly were awaiting each new arrival and were themselves recent recruits; Jan Czerniawski, Olga Grygier and Alex Staniszewski – all ICAEW members. Also, on my first day in Warsaw to my great surprise I was introduced to the president of the Polish Chamber of Auditors (PIBR), Jerzy Sablik – my firm being very proud that it had recruited so many UK-trained auditors who were fluent Polish speakers.

In fact, I shortly met nearly all the Polish-speaking UK chartered accountants including Antoni Reczek and Joe Smoczynski, thanks to a series of conferences organised by the British Know-How Fund both in Poland and in the UK in the early 1990s. The purpose of the conferences was to create an interface with senior members of the PIBR and Ministry of Finance officials, thereby delivering immediate know-how regarding international accounting and auditing standards.

I soon realised that I was involved in something much greater than just earning a living or building a career. This was a mission to reform and transform the Polish economy and financial system. The Big Question that I found engaging and appealing regarding Poland and indeed the whole of CEE was –  how were these financially ruined countries going to transform from communism to a free market economy? Working in a transitioning economy was a massive challenge! Indeed, I became involved in several projects such as the development of the first series of ACCA English tax exams as tax examiners with Alex Staniszewski and with Jan Czerniawski a tutor for the ACCA. Together with Andrzej Kinast and Joe Smoczynski, we developed a blueprint for international cooperation agreements with the Polish auditing body, the first being with the ICAEW. In more recent years I have become more involved with the British Polish Chamber of Commerce as a Board member.

Differences between UK and Polish auditing professions

The contrast between the UK and Polish auditing professions could not be starker than in the ‘90s. These differences were not entirely due to a country reforming from communism to a free-market economy but also resulting from differences between the Anglo-Saxon law and European law.

Different economic and financial systems

Each legal system underpins the economic and financial system. Characteristically, Anglo-Saxon countries have a high concentration of capital traded on stock exchanges for which accounting and auditing standards have been developed. European economies with smaller stock exchanges but more bank finance have implemented the same standards through directives, statutory law and regulations.

Different roles

There was and still is in the Polish profession a high emphasis on legal form over economic substance, written laws and tax regulations which create a strict regulatory environment within the civil code framework. In contrast, the ACA qualification concentrates on M&A, group accounting and consolidation, investment analysis, capital markets, tax advisory, interpretation of financial reports, commercial judgement and business advisory skills.

In the UK the role of the ACA is widely diversified. Most of the membership are not audit practitioners and ACAs obtain the qualification to improve career opportunities within commerce, finance, industry. It is perceived as a business qualification and not solely an audit qualification. A measure of success of the ACA is the number of blue-chip listed PLCs with group finance directors/CEOs possessing the qualification.

In Poland initially PIBR members were entirely associated with audit. PIBR members are valued for their knowledge on reporting, accounting, taxation, accounting systems, internal control and compliance with regulations. Due to recent onerous regulatory requirements, PIBR members have now moved into more commercial work, thus significantly reducing the number of members in practice.

Different legal systems

Continental European clients’ perception of Polish auditors is similar since for historical reasons codified laws are derived from French and German sources.

The two qualifications, the ACA and the Polish equivalent have developed in two entirely different legal systems: common law in the UK and the civil law in Poland. The leap for the professional from the common law system to civil code is enormous whereas a German auditor working in Poland would find many similarities and underlying concepts to be familiar. As a partner in international networks, I often notice the preference for advancing staff qualified in both systems.

Civil law is based on written law which is regimented, prescriptive, lacks flexibility, is subject to interpretation, becomes easily outdated, observes no rule of precedence and is dependent on valid execution.

Standards initially developed in England in the 1970s were designed to overcome the inflexibility of statutory law. English company law defaults to standards thus reducing legislation leaving the implementation and development to the relevant standard setting bodies.

Robust economy

Eastern Europe’s transformation to reintegrate itself into the post second world war structures of the European Union has been similar. Former Eastern Bloc countries have been guided by acquis communautaire in the pre-EU accession phase and become subject to EU Directives on accession. CEE countries have shared a common objective in the implementation of international accounting and auditing standards into the local legal framework and to ensure high standards of training and education amongst its members. The implementation of these standards has been crucial to the provision of foreign investment and financing as well as the growth of Polish capital. Poland has succeeded in implementing these standards over the last 30 years. The Polish economy is the CEE’s regional economic leader with strong continuous growth. The robust economy continues to withstand additional burdens such as the cost of the pandemic, financing the war in Ukraine, and the sudden influx of Ukrainian refugees as well as subsidising inflationary energy costs for consumers.

Digital revolution

The pandemic accelerated digitalisation universally. The Polish Chamber of Auditors prior to the pandemic had already introduced new e- tools for members in line with the previous decade’s massive shift into e-documentation, e-signatures and e-filing. PIBR has succeeded in building an e-community with its members through frequent online and live conferences and lectures. E-learning and e-education has become very popular in Poland, although traditional courses have returned post- pandemic.

Highly qualified professionals

The Polish Chamber of Auditors now has many members qualified with global educational organisations such as the Association of Chartered Certified Accountants (ACCA) and the Chartered Institute of Management Accountants (CIMA). This high quality represents the investment in training and education made by both Polish and International firms. These certificates amongst others were introduced into Poland in order to bridge skills and knowledge gaps mentioned earlier as differences between UK and Polish auditors.

Auditors themselves both as individuals and as firms in Poland have also been subjected to increased regulation. During the pandemic the self-regulating part of the Polish Chamber of Auditors was restructured into the new Polish oversight body; PANA (Panstwowa Agencja Nadzoru Audytowego).

Challenges for the future

The Russian invasion of Ukraine has created political and economic instability in the CEE region and we look forward to its speedy resolution. No doubt Ukrainians temporarily resident in Poland will want to return home in peace and freedom to help in rebuilding their country.

The war in the Ukraine has exposed worldwide the shift from fossil fuels to environmentally friendly renewable sources as being far less advanced than assumed. Despite global conferences and targets set such as net zero at least three-quarters of the world supply of energy still remains in the fossil fuel category. Governments are now not only seeking alternative sources of fossil fuels but also rapidly reworking policies for investing in renewable energy sources.

Climate change and ESG challenge

Energy inflation resulting from fossil fuels is now rapidly driving investment into environmental renewables! Energy derived from renewables can have a massive impact in the reduction of environmental risks. Therefore Environmental, Social and Governance (ESG) concerns are being discussed in the media and in boardrooms. The challenge, for finance professionals, is to identify the key information they need to know, and to understand how important ESG issues are represented in the financial statements and underlying systems. The impact will be on disclosures, both qualitative and quantitative, but there will also be changes to the numerical reporting as well.

ESG and Accounting Standards, IFRS and ISSB

International investors with global investment portfolios are increasingly calling for high quality, transparent, reliable and comparable reporting by companies on climate and other environmental, social and governance (ESG) matters.

In November 2021, the IFRS (International Financial Reporting Standards) announced the creation of a new standard-setting board—the International Sustainability Standards Board (ISSB)—to help meet this demand. The intention is for the ISSB to deliver a comprehensive global baseline of sustainability-related disclosure standards that provide investors and other capital market participants with information about companies’ sustainability-related risks.

ESG and Regulators, the EU and Auditors

ESG is being driven through stock-exchange regulators and through the worldwide umbrella organisation IOSCO (International Organisation of Security Commissions). Changes to financial reporting will affect ratings and comparability. For example, the US Securities and Exchange Commission has introduced climate-change disclosure rules. The EU has implemented the Corporate Sustainability Reporting Directive (CSRD) which applies to listed and large companies. The International Auditing and Assurance Standards Board (IAASB) has responded to the International Sustainability Standards Board (ISSB) and noted the importance of reliable, high-quality, globally consistent sustainability reporting that investors and regulators are able to trust. In short, a tidal wave of new standards and regulations is expected for ESG!

The Polish economy has been successfully transformed into a world-class economy. Thirty years later the impact of the global economy, instability in CEE, climate change risks, energy restructuring now result in a whole new set of massive challenges for finance professionals!


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