Approving the financial statements is a key part of closing the financial year for every entity required to keep accounting books (full accounting). The procedure requires you to know the relevant deadlines and to identify the body authorised to approve the statements, which depends on the legal form of the business. The process completes the accounting cycle and allows the entity to move on to the next financial year.
Keeping and closing the accounting books
The accrual and periodisation principle in accounting requires business activity to be recorded systematically in defined periods. These periods are called accounting periods and are bounded by specific reporting dates. The financial year is the basic accounting cycle for entities that operate on a continuous basis.
Accounting books must be opened at the beginning of each financial year and closed at its end. This means keeping separate accounting records for each financial year, which ensures transparency and comparability of financial data between periods. Opening the books, closing the year and preparing the statements are standard stages of our accounting services.
Accounting books must be permanently marked with the full or abbreviated name of the entity, the name of the type of accounting book and the name of the processing software. They must also be clearly marked with the financial year, the reporting period and the date of preparation (Article 13 section 4 of the Accounting Act)
Proper bookkeeping also requires the books to be stored carefully in an established order. This protects the integrity of accounting data and allows efficient inspection and verification of entries in the future.
Closing the financial year is a comprehensive settlement process that covers a number of accounting and tax procedures. The key elements of this process are:
- Valuing assets and liabilities at the balance sheet date in line with the prudence principle
- Carrying out a stocktake (inventory) to reconcile balances with the actual state of balance sheet items
- Reconciling subsidiary (analytical) accounts with general ledger (synthetic) accounts
- Preparing the financial statements on the basis of the closed books
- Approval of the financial statements by the competent body
Accounting books are closed as at the last day of the financial year, but no later than within 3 months of that day, in accordance with Article 12 section 2 point 1 of the Accounting Act. This gives entities flexibility in planning year-end closing work
After the financial statements are approved, the distribution of the financial result must be recorded in the following year. Account 820 "Settlement of the financial result" (Rozliczenie wyniku finansowego) is used for this purpose, allowing the financial result to be correctly carried forward to the next accounting period.
What financial statements are
Financial statements are a comprehensive document presenting the financial position of a business in a given financial year. Their basic purpose is to give a true and fair view of the entity in a reliable and transparent way.
The reporting period is the period for which financial statements are prepared under the procedures set out in the Accounting Act. All business events occurring in that period must be entered in the accounting books as appropriate accounting entries.
Financial statements are prepared as at the day the accounting books are closed under Article 12 section 2, or as at another balance sheet date, in accordance with Article 45 section 1 of the Accounting Act. This keeps the closing of the books and the preparation of the statements in step
The financial statements consist of the following elements:
- Balance sheet presenting assets and liabilities at the balance sheet date
- Profit and loss account showing the financial result for the reporting period
- Notes containing an introduction to the financial statements
- Additional information and explanations supplementing the figures (the second part of the notes)
Entities other than micro and small entities also prepare a statement of changes in equity and a cash flow statement (Article 45 section 3 of the Accounting Act). A management report (report on the entity's activities) is also attached to the financial statements where this obligation arises from the Act or other regulations. This document provides additional information on the entity's operational and strategic activity.
Since 1 October 2018, financial statements have been prepared only in electronic form and signed with a qualified electronic signature, a trusted signature (podpis zaufany) or a personal signature (podpis osobisty) (Article 45 section 1f). Entities entered in the register of entrepreneurs of the KRS (National Court Register) prepare them in the logical structure published by the Ministry of Finance (Article 45 section 1g). This standardises the filing process and makes the statements easier to process
The electronic form of the financial statements requires specific technical standards and data formats. Entities must adapt their accounting systems to generate statements in the required electronic format.
Procedure for approving the financial statements
Approval of the financial statements is a mandatory part of closing the financial year. In certain cases, approval must be preceded by an audit carried out by a statutory auditor.
Under Article 64 section 1 of the Accounting Act, the annual consolidated financial statements of capital groups and the annual financial statements of certain categories of entities continuing their activity are subject to audit.
The audit obligation applies to the following entities:
- Domestic banks, branches of credit institutions and branches of foreign banks
- Insurance and reinsurance undertakings and their main branches and branches
- Branches of foreign investment firms
- Cooperative savings and credit unions (SKOK)
- Entities operating under the regulations on trading in securities
- Entities providing crowdfunding services for business ventures
- Entities operating under the regulations on investment funds and the management of alternative investment funds
- Entities operating under the regulations on the organisation and operation of pension funds
- Domestic payment institutions and electronic money institutions
- Joint-stock companies (spółka akcyjna), except companies that are still in organisation on the balance sheet date
Other entities are subject to the audit obligation if, in the preceding financial year, they met at least two of the three size criteria. These criteria concern employment, total balance sheet assets and net revenue from sales
The size criteria for other entities (in the wording applied from the audit of statements for 2025, assessed on the basis of 2024 data) are:
| Criterion | Threshold | Legal basis |
|---|---|---|
| Average annual employment | At least 50 people | Art. 64 sec. 1 pt 4 (a) of the Accounting Act |
| Total balance sheet assets | At least EUR 3,125,000 | Art. 64 sec. 1 pt 4 (b) of the Accounting Act |
| Net revenue from sales | At least EUR 6,250,000 | Art. 64 sec. 1 pt 4 (c) of the Accounting Act |
The deadlines for approving financial statements are strictly defined by law. Under Article 53 section 1 of the Accounting Act, the annual financial statements of an entity must be approved by the approving body no later than 6 months after the balance sheet date. Statements subject to audit are approved only after the audit by the statutory auditor (Article 53 section 1a).
If the financial year is the same as the calendar year, the annual financial statements should be approved by 30 June of the following year. The Act does not provide for extending this deadline – statements not approved on time must be filed with the KRS within 15 days after the deadline, and filed again together with the resolution once approved (Article 69 section 2)
Missing the approval deadline may lead to legal and financial sanctions. In addition, a delay in approval affects the ability to distribute the financial result and to adopt other resolutions related to the results of the business.
Bodies that approve financial statements
The competent approving body depends on the legal form of the business. Under Article 3 section 1 point 7 of the Accounting Act, the approving body is the body authorised to approve the financial statements under the applicable law, the articles of association, an agreement or by virtue of ownership.
For partnerships (except the limited joint-stock partnership, spółka komandytowo-akcyjna) and for civil-law partnerships (spółka cywilna), the approving body is the partners, acting in accordance with the rules set out in the partnership agreement.
Approving bodies by legal form:
- Joint-stock company (spółka akcyjna): ordinary general meeting of shareholders (Article 395 § 2 point 1 of the Commercial Companies Code, KSH)
- Limited liability company (sp. z o.o.): ordinary shareholders' meeting (Article 228 point 1 and Article 231 § 2 point 1 KSH)
- Limited joint-stock partnership (spółka komandytowo-akcyjna): general meeting (Article 146 § 1 point 1 KSH)
- Limited partnership (spółka komandytowa): partners acting in accordance with the partnership agreement
- Professional partnership (spółka partnerska): partners in accordance with the partnership agreement
- General partnership (spółka jawna): all partners
- Civil-law partnership (spółka cywilna): partners in accordance with the partnership agreement
- Individual running a business: the owner
- Cooperative: general meeting of members
- State-owned enterprise: the workers' council of the enterprise or, where there is none, the founding body
- Independent public healthcare institution (SPZOZ): the founding body
- State banks: the supervisory board
The regulations also cover special situations: entities in bankruptcy and in restructuring proceedings with an appointed administrator are not subject to the approval obligation under Article 53 section 1 (with the exceptions in Article 53 section 2a), and in companies in liquidation the liquidators submit the statements to the shareholders' meeting or the general meeting
Approval can take different forms depending on the type of approving body:
- A resolution of the approving body in companies and cooperatives
- A decision of the founding body in public entities
- A declaration of intent in the case of individuals running a business
- Minutes of the partners' meeting in partnerships
Effects of approving the financial statements
Approval of the financial statements has a number of legal and accounting effects. Above all, it allows the financial year to be formally closed and the procedures for the new reporting period to begin.
Once the financial statements are approved, a resolution on the distribution of the financial result can be adopted. If there is a net profit, the entity can decide to allocate it to supplementary capital, pay a dividend or use it for other statutory purposes.
The distribution of the financial result is recorded in the year following the approval of the financial statements using account 820 Settlement of the financial result. This ensures that the result is correctly carried forward to the next accounting period
Approval of the financial statements also matters for reporting obligations towards public authorities. The 15-day deadline for filing the statements with the KRS runs from the date of approval (Article 69 section 1 of the Accounting Act), and CIT (corporate income tax) payers that are not in the KRS register of entrepreneurs send them to the head of KAS (National Revenue Administration) within the same period (Article 27 section 2 of the CIT Act). The annual CIT return, however, is filed by its own deadline, regardless of approval.
In addition, approval of the financial statements is a prerequisite for:
- Distributing profit among shareholders or covering a loss (Article 53 sections 3–4 of the Accounting Act)
- Allocating profit to supplementary or reserve capital in the profit distribution resolution
- The final closing of the accounting books for the financial year (Article 12 section 4)
- Filing the complete set of documents with the KRS together with the approval resolution (Article 69 section 1)
- Sending the statements to the head of KAS by CIT payers outside the KRS register of entrepreneurs (Article 27 section 2 of the CIT Act)
Practical example: A limited liability company closed the 2025 financial year with a net profit of PLN 150,000. The financial statements were approved by the shareholders' meeting in May 2026. Only after this approval could the shareholders adopt a resolution on the distribution of profit, allocating PLN 50,000 to supplementary capital and the remaining amount to a dividend paid in proportion to their shares.
Failure to approve the financial statements on time does not release the entity from the obligation to file them with the KRS (Article 69 section 2). Failure to file the statements with the register is punishable by a fine or restriction of liberty (Article 79 point 4 of the Accounting Act), the registry court calls on the entity to file the documents under threat of a fine (Article 24 of the KRS Act), and where, despite a call, no financial statements have been filed for 2 consecutive financial years, it initiates proceedings of its own motion to dissolve the entity without liquidation (Article 25a section 1 point 4), which may end with deletion from the register.
Special cases of approval
Some situations require special approval procedures. This applies, among others, to entities in a particular legal or organisational status.
In companies in liquidation, the approving body does not change: the liquidators prepare the opening liquidation balance sheet and, after the end of each financial year, submit the financial statements to the shareholders' meeting or the general meeting, which approves them (Articles 281 and 467 KSH). How the document itself is prepared, whatever the approving body, is explained in how to prepare financial statements step by step.
Entities that start operating during the financial year prepare financial statements for a shorter period, from the start of operations to the end of the financial year. If operations started in the second half of the financial year, the books and statements for that period may be combined with the books and statements for the following year (Article 3 section 1 point 9 of the Accounting Act). Such statements must also be approved by the competent body
Special rules also apply to capital groups, which must prepare consolidated financial statements in addition to separate financial statements. Consolidated statements must be approved by the approving body of the parent entity.
In the case of a merger or division of companies, the approval procedures may require coordination between the approving bodies of the different entities involved in the reorganisation.
Companies in organisation keep books from the day of the first event with property or financial effects (Article 12 section 1 point 1 of the Accounting Act), and a joint-stock company in organisation is not subject to the audit obligation (Article 64 section 1 point 3). After registration, the company prepares and approves financial statements for the period from the start of operations to the end of the first financial year.
