Recommendations on the operation of audit committees have been
issued by Poland's Financial Supervision Authority (KNF).
The recommendations are a statement of good practice based on
international standards, guidelines of international organisations
as well as knowledge and experience of audit companies.
The recommendations do not add to an audit committee's
statutory duties but are merely intended to facilitate the work of
its members. For example, they include a list of several dozen
example questions to which the audit committee should seek answers
as part of its supervisory process.
An audit committee's monitoring role has to cover four key
areas:
- financial reporting and accounting
- the efficiency of internal control, internal audit and risk management systems
- the performance of financial reviews
- the independence of external auditors and other bodies authorised to audit financial statements
Financial reporting and accounting
KNF recommends that this includes ensuring the reliability of
information and paying particular attention to the methods used
when settling significant or atypical transactions, especially if
there are several possible methods of recording them.
The efficiency of internal control, internal audit and risk
management systems
KNF emphasises the importance of effective supervision of internal
control systems and the approval of the following year's audit
plan. It also recommends that audit committees support the internal
audit function, highlighting the importance of ensuring that it
occupies the right place within the company's organisational
structure. The audit department should report directly to the audit
committee, and be subordinate to the president of the management
board with the organisation structure.
The performance of financial reviews
KNF recommends holding meetings with the external and internal
auditors without any management present to discuss the audit scope
and procedure and analysing unresolved comments and questions. They
should also discuss the need for cooperation with management
members as well as any problems in their dealings with them, such
as unjustified delays in giving consent to start an audit or in
handing over documents or information requested.
The independence of expert auditors and other bodies authorised to
audit financial statements
KNF recommends that the audit committee's duties should include
making recommendations to the relevant authorities about
organisations authorised to audit financial statements, conducting
financial reviews and approving all audit and non-audit services
provided by those authorised to audit financial statements and by
other organisations.
Since 6 December 2009, audit committees have been mandatory for
companies that are listed or conduct brokerage activities. In
companies with a supervisory board of 5 or fewer members, the
duties of the audit committee may be given to the supervisory board
by shareholders' resolution in general meeting or by
authorisation in the statutes.
By law, audit committees are required to:
- meet at least four times per (accounting) year
- operate in accordance with rules approved by the supervisory board or shareholders in general meeting, which should cover retention of members and scope of liability, amongst other things
- draft a report dealing with their risk assessment of the areas and processes being supervised, the actions undertaken and their results.
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 04/01/2011.