Scholarly record

INFORMATION SCOPE OF FINANCIAL STATEMENTS OF SMALL ENTITIES IN POLAND IN LIGHT OF ACCOUNTING PRINCIPLES

M. Strojek-Filus, D. Adamek-Hyska, K. Tkocz-Wolny, A. Wszelaki

Abstract

Background: As part of the changes introduced in 2015, a new category of financial statements for small businesses has been identified in Polish accounting regulations. Most of the solutions introduced are mandatory or optional simplifications in relation to the full scope of the financial statements. Against this background, the question arises whether the report using all possible simplifications for this category of entities still meets the accounting principles and qualitative characteristics of financial statements. The purpose of the paper is to analyze and evaluate the type and extent of disclosure of financial information in reports prepared by small entities from the point of view of accounting principles. Results: Generally, the authors positively evaluate the changes introduced to financial reporting for small entities. However, they emphasize that in many cases the use of all possible simplifications by management may violate accounting principles, especially the principle of true and fair view. At the same time, the exemption of these entities from the obligation to submit the annual report for an audit conducted by a statutory auditor may encourage fraud or manipulation of financial data in accounting records and financial statements. Conclusion: According to the authors of the paper, more detailed conditions should be introduced for the use of certain simplifications for small entities in the field of financial statements. The authors also postulate extending the audit requirement by the annual financial statements drawn up by these entities. This category of entities is the largest group of entities in the Polish economy. Any distortions that occur on a larger scale in the financial statements of small entities can significantly disrupt the process of creating correct micro and macroeconomic information. Method: The paper uses critical analysis of the literature and qualitative analysis of legal acts regulating accounting in Poland. The synthesis method was used to formulate the final conclusions.

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