An accounting policy is a fundamental document for every entity that keeps accounting books (full accounting) under the Polish Accounting Act (ustawa o rachunkowości, UoR). This key document sets out the financial rules and bookkeeping procedures that must be applied in the organisation consistently and in line with the law. A well-prepared accounting policy not only ensures legal compliance but is also a practical tool that supports the day-to-day work of the accounting department. We keep accounting books in line with the adopted policy for clients who use our bookkeeping services.
The importance of an accounting policy goes far beyond meeting formal statutory requirements. The document acts as the internal accounting rulebook, ensuring a uniform approach to recording business transactions, valuing assets and preparing financial statements. With clearly defined rules, everyone involved in the accounting process can make consistent decisions, which makes financial information reliable and comparable.
The accounting policy must be drawn up in Polish and contain all the elements required by Article 10 of the Accounting Act. The document should be updated regularly whenever the law changes or the way the entity runs its business changes
Entities required to prepare an accounting policy
The obligation to prepare an accounting policy does not apply to all businesses; it is defined precisely by the Accounting Act. The key criterion is keeping accounting books under that Act, which automatically creates the obligation to prepare a document setting out the financial rules.
The first group of entities required to prepare an accounting policy is commercial companies, both partnerships and capital companies, including those in organisation – except general partnerships of natural persons (spółka jawna) and professional partnerships (spółka partnerska), for which the revenue threshold described below is decisive. The obligation also covers civil-law partnerships (spółka cywilna; civil-law partnerships of natural persons – likewise only once they exceed that threshold) and other legal persons, except the State Treasury and the National Bank of Poland. The entity must have its registered office or place of management in the Republic of Poland.
Capital companies (sp. z o.o. – limited liability companies, simple joint-stock companies and joint-stock companies) as well as limited partnerships and limited joint-stock partnerships must prepare an accounting policy regardless of their revenue. General partnerships of natural persons and professional partnerships have this obligation only once they exceed the revenue threshold described below
The second category covers natural persons, civil-law partnerships of natural persons, general partnerships of natural persons and professional partnerships, but only where their net revenue from the sale of goods and products for the previous financial year was at least the equivalent of EUR 2,500,000 in Polish currency (threshold raised from 1 January 2025; previously EUR 2,000,000). This revenue threshold is an important criterion that decides whether the Accounting Act applies.
The third group is organisational units operating under special legislation. This includes entities operating under the Banking Law, securities trading regulations, investment fund regulations, insurance and reinsurance regulations, regulations on cooperative savings and credit unions, or regulations on the organisation and operation of pension funds. For these entities the obligation to prepare an accounting policy arises regardless of their revenue.
A further category is organisational units without legal personality, except the companies and partnerships listed above. This group includes various entities that conduct business activity but do not have the status of a legal person. The Act also applies to, among others, municipalities, districts, voivodeships, budgetary units and establishments, and branches and representative offices of foreign entrepreneurs.
- Commercial companies with their registered office in Poland (general partnerships of natural persons and professional partnerships – once they exceed the threshold)
- Natural persons with net revenue for the previous year of at least EUR 2.5 million
- Financial entities subject to special legislation
- Civil-law partnerships of natural persons that exceed the revenue threshold
- Organisational units without legal personality
Mandatory elements of an accounting policy
Article 10 of the Accounting Act sets out precisely the elements that must be included in every entity's accounting policy. These requirements leave no room for interpretation and must be fully reflected in the document for it to meet legal and practical needs.
The first mandatory element is defining the financial year and the reporting periods within it. The financial year may be the same as the calendar year or cover another twelve-month period, and this must be clearly defined in the accounting policy. It is equally important to define the reporting periods precisely, which usually are calendar months or quarters.
An entity's financial year may differ from the calendar year, but as a rule it lasts twelve consecutive full calendar months. Exceptions: an entity that started its activity in the second half of the financial year may combine its books for that period with the books for the following year, and the first financial year after a change should be longer than 12 months. The financial year and any change to it are set out in the articles of association or the agreement under which the entity was established
The second key element is the methods of valuing assets and liabilities and of determining the financial result. This part of the accounting policy is fundamental to the reliability of financial statements, because it sets out the specific rules under which individual assets and capital items of the entity will be valued. It must contain detailed valuation procedures for fixed assets, inventories, receivables, liabilities and other balance sheet items.
The third and most extensive element is the way the accounting books are kept. This part of the accounting policy must contain a range of detailed information that ensures the accounting system works properly in the organisation.
Chart of accounts
The entity's chart of accounts (zakładowy plan kont) is the foundation of every entity's accounting system. It must contain a complete list of general ledger accounts used to record all business transactions. The chart of accounts should be adapted to the specific nature of the entity's business and cover all types of transactions it carries out.
Equally important are the adopted rules for classifying business events, which determine how individual transactions are assigned to the relevant accounts. These rules must be clear and consistent so that business events are interpreted correctly by the different people involved in the accounting process.
The chart of accounts must be adapted to the specific nature of the entity's business and contain all the accounts needed to record business transactions correctly. It should provide for analytical (subsidiary) accounts that allow detailed control and analysis of individual assets
List of accounting books and the IT system
The accounting policy must contain a complete list of the accounting books kept by the entity. Where the books are kept electronically, which is standard today, it is necessary to specify the list of data sets that make up the accounting books on computer data carriers. The list should precisely describe the data structure, the links between individual data sets and their functions in the organisation of the accounting books as a whole. Whether you have to keep such books at all is decided by the threshold for keeping accounting books.
The description of the IT system used to keep the accounting books is particularly important. It must contain a list of the programs, procedures or functions used in the system, together with a description of the algorithms and technical parameters. It is also necessary to set out the software rules for data protection, in particular the methods of securing access to the data and to the system that processes it.
The description of the IT system must state the software version and the date it was first put into use. This information is key for inspections and for the audit of the financial statements, because it identifies the period in which specific technological solutions were used in the entity
- Defining the financial year and reporting periods
- Choosing the methods of valuing assets and liabilities
- Preparing the chart of accounts
- Drawing up the list of accounting books
- Describing the accounting IT system
- Defining the system for protecting accounting data
Inventory valuation and cost flow methods
Choosing the right method of valuing inventory outflows is one of the most important elements of an accounting policy, because it directly affects the entity's financial result and the value of inventory shown in the balance sheet. The Accounting Act provides for four basic methods, from which an entity can choose depending on the nature of its business.
The FIFO (first in, first out) method assumes that outflows of assets are valued successively at the prices of the items the entity acquired or produced earliest. This method is particularly useful for fast-moving goods or goods with a limited shelf life. In periods of inflation, FIFO leads to a higher reported financial result, because the cost of outflows is measured at lower historical prices.
The opposite of FIFO is LIFO (last in, first out), under which outflows of assets are valued successively at the prices of the items the entity acquired or produced most recently. In periods of inflation this method leads to a lower reported financial result, because the cost of outflows is measured at higher, current purchase prices.
The choice between FIFO and LIFO has a significant effect on the financial result and on the value of inventory in the balance sheet. When prices fluctuate, this decision can significantly affect the entity's financial ratios and the amount of income tax
The weighted average method values inventory outflows at a weighted average price, calculated on the basis of the quantity and value of all items available in a given period. This method smooths out price fluctuations and is often chosen by entities that want to avoid large swings in the cost of goods sold.
The fourth available method is specific identification of prices of those assets that relate to clearly defined projects, regardless of when they were purchased or produced. This method is used mainly for expensive, individual assets that can be clearly identified and allocated to specific projects or orders.
A manufacturer of made-to-order furniture uses specific identification for exotic wood used in exclusive projects. Each batch of wood is labelled and allocated to a specific order, which allows the cost of each product to be calculated precisely and ensures an appropriate profit margin.
| Valuation method | Characteristics | Effect on result in inflation | Use |
|---|---|---|---|
| FIFO | First in, first out | Higher financial result | Fast-moving goods |
| LIFO | Last in, first out | Lower financial result | Building materials |
| Weighted average | Averaging of all prices | Stable financial result | Fuels, raw materials |
| Specific identification | Individual tracking | Actual cost | Luxury goods |
Operating costs – account group 4 and account group 5
Organising the recording of operating costs is a key element of an accounting policy and determines how information is presented in the profit and loss account. Although this obligation does not follow directly from the wording of the Accounting Act, accounting practice requires the rules for recording and allocating costs to be clearly set out in the entity's accounting policy.
Entities can choose from three basic cost recording models. The first model involves recording costs only in account group 4, which covers costs by nature and their allocation. In this system all costs are classified by their economic nature, regardless of where they arise or what function they serve in the organisation.
The second model provides for recording costs only in account group 5, which covers costs by type of activity and their allocation. This system allows costs to be grouped by function in the organisation, such as selling costs, general administrative costs or costs of core activity.
The choice of cost recording system directly affects the mandatory variant of the profit and loss account that the entity must use in its financial statements. The decision should take into account the information needs of the management board and the requirements of users of the financial statements
The third and most comprehensive model involves recording costs in both account group 4 and account group 5. In this system costs are recorded by nature in group 4 and then allocated by function in group 5. This model offers the widest analytical possibilities but requires more accounting work.
Variants of the profit and loss account
The choice of cost recording system determines the mandatory variant of the profit and loss account that the entity must use. The comparative (nature of expense) variant is mandatory for entities that record operating costs only in account group 4. This variant presents costs by economic nature, such as depreciation, materials consumed, salaries or external services.
The cost of sales (functional) variant is mandatory for entities that record operating costs only in account group 5. In this variant costs are presented by the function they serve in the organisation, which allows a better analysis of the efficiency of individual areas of activity.
Entities that record costs in both group 4 and group 5 may choose between the comparative and the cost of sales variant of the profit and loss account. This flexibility allows the presentation to be adapted to the information needs of different groups of users of the financial statements
- Group 4 covers costs by economic nature
- Group 5 groups costs by function in the organisation
- The comparative P&L variant requires recording in group 4
- The cost of sales P&L variant is used with group 5
- The mixed system offers the greatest analytical flexibility
Valuation of foreign currency transactions
Doing business internationally requires clear rules for valuing transactions carried out in foreign currencies. The accounting policy must regulate these matters in detail, especially the valuation of outflows of cash from foreign currency accounts, which directly affects the entity's financial result.
Under Article 30 section 2 of the Accounting Act, business transactions expressed in foreign currencies are recognised in the accounting books on the day they are carried out at the appropriate exchange rate. For the sale or purchase of currencies and the payment of receivables or liabilities, the rate actually applied on that day, resulting from the nature of the transaction, is used.
In other cases, including the payment of receivables or liabilities where using the actual rate is not appropriate, and for other transactions, the average rate announced for the currency by the National Bank of Poland (NBP) on the day preceding the transaction is used.
Pay particular attention to cases where a payment in a foreign currency is received on a foreign currency account without any actual currency exchange. In such cases there is no rate actually applied, so the receipt of the receivable is valued at the NBP average rate from the day preceding receipt
Methods of valuing currency outflows
For outflows of cash in a foreign currency where there is no actual currency exchange, the rules allow two basic approaches. The first uses the NBP average rate from the day preceding the transaction, just as for currency inflows.
The second approach, provided for in the Accounting Act (Article 35 section 8 in conjunction with Article 34 section 4 points 1–3), allows the historical rate to be used, i.e. the rate at which the currency was translated when it was received on the foreign currency account. This solution reflects the actual cost of currency transactions more precisely.
If the entity chooses the historical rate method, it can value currency outflows using one of three methods: FIFO, LIFO or weighted average rates. The chosen method should be clearly set out in the accounting policy and applied consistently.
An importer with a euro account received a payment of EUR 50,000 from a foreign customer at an NBP rate of PLN 4.25. A week later it paid a liability of EUR 30,000 when the NBP rate was PLN 4.30. Using the historical rate method and FIFO, the outflow will be valued at PLN 4.25. No exchange difference resulting from the NBP rate of PLN 4.30 arises on the currency outflow itself – an exchange difference is determined only on settlement of the liability, as the difference between the rate of PLN 4.25 and the rate at which the liability was recognised in the books.
| Type of currency transaction | Rate to use | Legal basis | Practical notes |
|---|---|---|---|
| Sale/purchase of currency | Actual rate | Article 30 section 2 UoR | Rate from the exchange agreement |
| Inflow to a currency account | NBP average rate | Article 30 section 2 UoR | From the preceding day |
| Outflow from a currency account | NBP average or historical rate | Article 30 section 2 and Article 35 section 8 UoR | Method chosen in the policy |
| Other transactions | NBP average rate | Article 30 section 2 UoR | Uniform rule |
Accounting data protection system
The last mandatory element of an accounting policy is defining the system used to protect data and data sets, including accounting vouchers, accounting books and other documents on which the entries are based. This element is particularly important in an age of widespread digitisation of accounting processes and growing cyber threats.
The accounting data protection system must ensure the integrity, availability and confidentiality of financial information throughout the mandatory retention period. The accounting policy should describe in detail the procedures for creating backups, the methods of controlling access to data and the rules for responding to security incidents.
Particular attention should be paid to protection against unauthorised access to accounting data. The system should include mechanisms for user authentication, authorisation of access to individual functions and logging of all operations performed in the accounting system.
The accounting data protection system must take into account the requirements of the GDPR (RODO) on personal data protection, especially for employee and counterparty data. The accounting policy should set out procedures that ensure compliance with these rules
Where the accounting books are kept electronically, the protection system must ensure that accounting entries are durable and unalterable. This means using technical solutions that prevent unauthorised modification of historical data and make it possible to restore information in the event of a system failure.
The accounting policy should also set out archiving procedures for accounting data and how their availability is ensured for the retention period required by law. It is particularly important to specify the data storage formats and the procedures for migrating to new IT systems. The issue comes up especially when moving from the KPiR to full accounting, as businesses often change software at the same time.
- Defining procedures for creating data backups
- Implementing a system of access control and user permissions
- Providing authentication and authorisation mechanisms
- Creating a system for logging operations in the accounting books
- Developing procedures for responding to security incidents
- Implementing a system for archiving and long-term storage
Updating and implementing the accounting policy
An accounting policy is not a static document – it needs regular updates in response to changes in the law, the development of the entity's business and the evolution of the technology it uses. The update process should be formally regulated and carried out with due care.
Changes in the law are the most common reason why an accounting policy has to be updated. Every amendment to the Accounting Act, its implementing regulations or accounting standards may require the entity's internal procedures to be adjusted. This process should be carried out systematically, taking into account the dates on which new rules come into force.
Equally important are changes in the entity's business, which may require the adopted accounting rules to be modified. Launching new business lines, changing the organisational structure, implementing new IT systems or expanding into foreign markets are examples of situations that require the accounting policy to be updated.
Every change to the accounting policy must be properly documented and justified. The entity should keep a register of all modifications with the dates they were introduced and a description of the reasons for the changes. This information is essential during inspections and the audit of the financial statements
Implementing a new or updated accounting policy requires particular attention. Everyone involved in the accounting process must be informed of the changes and trained in the new procedures. It is key to ensure that all staff in the finance and accounting department apply the new rules consistently.
It is also worth considering a review of the accounting policy by independent experts, especially for entities with a complex business structure. Such a review may reveal potential areas for improvement and ensure that the document is in line with best market practice.
- Monitoring changes in the law and accounting standards
- Analysing the impact of business changes on accounting procedures
- Documenting and justifying the modifications introduced
- Training staff in new accounting procedures
- Carrying out periodic reviews of the document's completeness
