A financial statement is a document containing essential financial and accounting information about a company’s annual operations. Financial statements are prepared by entities that maintain full accounting records and are subject to the Accounting Act. This obligation does not apply to all entrepreneurs or commercial law companies, although, as a rule, they are required to prepare financial statements.
The day on which the financial statement is prepared is referred to as the balance sheet date. Entrepreneurs are required to prepare the financial statement within three months from the balance sheet date. For entities whose financial year coincides with the calendar year, the deadline for preparing the statement is March 31 of the given year.
Financial statements must be prepared exclusively in electronic form. They must be signed by authorized individuals using a qualified electronic signature, a trusted signature, or a personal signature.
You can read more about preparing and signing financial statements in our article: Closing the Financial Year – 3 Things to Do Before March 31
The annual financial statement must be approved by the approving body no later than six months from the balance sheet date, i.e., by June 30 if the financial year matches the calendar year.
Depending on the legal status of the entity, the approving body for financial statements is:
- in general partnerships, professional partnerships, limited partnerships, and civil law partnerships – the partners;
- in limited joint-stock partnerships – the general meeting of partners;
- in limited liability companies – the general meeting of shareholders;
- in joint-stock companies – the general meeting of shareholders;
- in state-owned enterprises – the founding authority;
- in cooperatives – the general meeting of members.
By approving the financial statement, the entity’s owners confirm its accuracy. For entities obliged to undergo annual audits of their financial statements, approval must take place after obtaining the auditor’s opinion.
Together with the approval of the financial statement, the approving body should also adopt resolutions regarding the allocation of profit or coverage of loss, the review and approval of the financial statement for the previous financial year, the review and approval of the management board’s report on the company’s activities (as a rule), and the discharge of board members for the performance of their duties. Failure by the General Meeting of Shareholders to approve the financial statement prevents the allocation of profit or coverage of the company’s loss.
Failure to submit the financial statement to the National Court Register (KRS) may result in the following sanctions:
- imposition of a fine on the head of the entity,
- restriction of liberty for the head of the entity for a period ranging from one month to two years,
- enforcement proceedings conducted by the registration court,
- dissolution and removal of the company from the KRS,
- appointment of a court-appointed custodian for the company.
Companies that fail to submit their statements on time are summoned by the National Court Register to submit them within 7 days of receiving the notification, under threat of penalties or dissolution of the company. Additionally, failure to submit the financial statement or audit report to the appropriate tax authority on time is subject to a fine for a tax offense.