Extended deadline for drafting and approving financial statements for 2020

Extended deadline for drafting and approving financial statements for 2020

An important notice has appeared on the Ministry of Finance website regarding extending the deadline for drafting and approving financial statements for the preceding financial year. The postulates brought by entrepreneurs and accountants alike have been met with understanding and acknowledgement by the Ministry. However, one ought to note that the change will not be equally beneficial for every entity.

The current epidemiological situation in Poland, brought about by COVID-19, has caused a number of difficulties for entrepreneurs pursuing business operations and many problems complying with statutory obligations to which companies are subject. Therefore, drafting and approving financial statements in a timely fashion may prove very problematic, if not impossible. The Ministry of Finance has observed that introducing certain favourable solutions is in order.

Karolina Łasowska, Associate at Squire Patton Boggs

The original position of the Ministry of Finance was for the changes to affect non-profit organizations only. All the remainder entities, for which the financial year ends on 31 December 2020, were obliged to draft their financial statements by the end of March. The requirement to meet this deadline was due to the fact that the financial statements alone are a key source of information both for lenders and for business partners, seeing as they are oftentimes the most important factor to be considered when making major business decisions. According to the Ministry, in matters of accounting and bookkeeping, business enterprises increasingly more often avail themselves of electronic solutions, therefore it should not be problematic for them to meet the statutory deadlines. Such position, however, was opposed by accountants, accounting firms and auditors, who petitioned the Ministry to extend the deadlines.

Ministry’s original position

The Ministry of Finance prepared a draft regulation of 12 March 2021 amending the regulation on determining different deadlines for complying with the obligations pertaining to records keeping and drafting, approving, publishing and submitting financial statements and information to appropriate registers, units or authorities. Such solution was partially welcomed by the accounting and bookkeeping circles. It was ultimately decided to extend the deadlines for both drafting and approving financial statements for 2020. The change, however, did not apply to all business entities, as the new solutions could only be used by public benefit organizations and trade unions not pursuing business operations, employers associations, chambers of commerce, social and professional farmers organizations, local government organizations and artisans economic self-government organizations.

Justyna Świnka, Lawyer at Squire Patton Boggs

Pursuant to the draft amendment, the deadline for drafting financial statements, i.e. 31 March 2021, was extended by one month, i.e. to 30 April 2021. The same applies to approving financial statements, as the deadline for doing so was extended by one month, i.e. to 30 July 2021.

The aforementioned change was intended to apply to the financial year ending after 29 September 2020, though no later than on 30 April 2021. What is being referred to is the situation when the performance deadline did not lapse before 31 March 2021. Therefore, for instance, the ultimate deadline for drafting financial statements will be 30 April 2021 (rather than 31 March 2021).

Marcin Wnukowski, Partner at Squire Patton Boggs
Ultimately accepted deadline for drafting and approving financial statements for 2020 – more favourable solutions

On 29 March 2021, the final wording of the regulation on amending both drafting and approving financial statements was announced. This will be particularly warmly welcomed by commercial corporations, seeing as the draft author has decided to extend the deadline by as long as 3 months. The solution is much more favourable than the original idea, i.e. a one month extension. In practice this means that if a company’s financial year corresponds to the calendar year, then:

– the deadline for drafting its financial statements will have lapsed on 30 June;

– the deadline for approving its financial statements will have lapsed on 30 September;

Extending the deadlines, albeit less favourable – only by one month – also applies to public sector entities having legal personality.


Author:

Marcin Wnukowski, Partner at Squire Patton Boggs

Karolina Łasowska, Associate at Squire Patton Boggs

Justyna Świnka, Lawyer at Squire Patton Boggs

Last Updated on April 9, 2021 by Karolina Ampulska

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