1. Audit of financial statements

The purpose of the audit is to increase the trust of the intended users to financial statements. This is achieved due to an opinion of a statutory auditor expressed in the financial statements on whether the financial statements were prepared, in all materials aspects, in accordance with the applicable financial reporting framework assumptions and if they give a fair and reliable presentation in accordance with the framework assumptions.

Following an audit performed in accordance with national auditing standards, a statutory auditor prepares a written audit report.

A report on audit of financial statements includes in particular:

• auditor's opinion on whether the financial statements fairly and reliably present the property situation, the financial standing and the profit/loss in accordance with the applicable accounting and financial reporting rules and with the adopted accounting principles (policy);
• auditor's opinion on whether the financial statements comply with the applicable laws and the articles of association in terms of both form and content;
• opinion on whether the financial statements were prepared based on properly kept books;
• opinion on whether the management report was prepared in accordance with the law and whether it is consistent with the information disclosed in the annual financial statements.
• statement on whether any material distortions have been identified in the management report versus the knowledge gained about the company and its environment during the audit, and specification of every such material distortion

2. Review of financial statements

Review of financial statements is a financial auditing activity which is performed in accordance with the National Standard on Review Engagements 2400 or 2410 and which is designed to give the statutory auditor limited certainty, obtained mainly through his or her questions and analytical procedures, as to whether the company’s half-yearly financial statements as a whole include any materials nonconformities which would make it possible to draw a conclusion on whether the statutory auditor has noticed anything that would lead him or her to think that the company’s half-yearly financial statements were not prepared in all materials aspects in accordance with the applicable financial reporting framework assumptions, and to prepare a report concluding the review of the half-yearly financial statements as a whole.

As a result of the review, the statutory auditor issues a report of an independent statutory auditor on review of the half-yearly financial statements, which report includes especially a conclusion on whether the statutory auditor has noticed anything which would lead him or her to think that the half-yearly financial statements of the fund or company were not in all material aspects prepared in accordance with the applicable financial reporting framework assumptions; the report is drawn up in line with the requirements of the National Standard on Review Engagements 2400 or 2410.

Other financial audit activities include assurance services specified by the applicable laws other than audit and review of financial statements, reserved for a statutory auditor. The services are designed to demonstrate high or moderate credibility of financial and non-financial information, systems, processes as well as aspects of behaviour or attitudes of organisations based on evidence which has been obtained during relevant procedures and serves as the basis for an assessment prepared in accordance with pre-defined criteria for issues covered by such services.

Other financial audit activities performed by Mac Auditor for companies and commercial law partnerships include in particular:

• audits of the accounting and operations of limited liability companies in accordance with Article 223 of the Polish Companies Code of 15 September 2000

• audits carried out at the moment of founding a Polish joint-stock company or increasing the share capital in accordance with Article 312(1) of the Polish Companies Code
• audits of the reports of founders of a Polish limited joint-stock partnership in accordance with Articles 312(1) and 126(1)(2) of the Polish Companies Code
• audits of business conversion plans in accordance with Articles 559(1) of the Polish Companies Code
• audits of EU projects and programmes insofar as they are reserved exclusively for statutory auditors

Other accounting and financial reporting services provided by Mac Auditor’s Audit Department include in particular:

• accounting and financial reporting training, focused especially on accounting of investment funds, fair value measurement of assets and liabilities and accounting of financial instruments in accordance with the International Financial Reporting Standards (IAS/IFRS)
• measurement of assets and liabilities, including deposits of investment funds, for financial reporting purposes
• other services connected with accounting and financial reporting, including support for audit committees in their supervision over reporting and auditing

The purpose of the audit is to increase the trust of the intended users to financial statements. This is achieved due to an opinion of a statutory auditor expressed in the financial statements on whether the financial statements were prepared, in all materials aspects, in accordance with the applicable financial reporting framework assumptions and if they give a fair and reliable presentation in accordance with the framework assumptions.

Following an audit performed in accordance with national financial auditing standards, a statutory auditor prepares a written audit report.

A report on audit of financial statements includes in particular:

• auditor's opinion on whether the financial statements fairly and reliably present the property situation, the financial standing and the profit/loss in accordance with the applicable accounting and financial reporting rules and with the adopted accounting principles (policy);
• auditor's opinion on whether the financial statements comply with the applicable laws and the articles of association in terms of both form and content;
• opinion on whether the financial statements were prepared based on properly kept books;
• opinion on whether the management report was prepared in accordance with the law and whether it is consistent with the information disclosed in the annual financial statements.
• statement on whether any material distortions have been identified in the management report versus the knowledge gained about the company and its environment during the audit, and specification of every such material distortion

Audit of financial statements may be carried out either as statutory audit, i.e. audit of annual consolidated financial statements of a group or audit of annual financial statements required under Article 64 of the Polish Accounting Act of 29 September 1994 or other legal acts or European Union legislation, or as voluntary audit, i.e. audit requested based on a decision of the audited company.

Review of financial statements is a way simpler and quicker than audit of financial statements to obtain a guarantee that the company’s financial data reflect its actual standing. It is a financial auditing activity which is performed in accordance with the National Standard on Review Engagements 2400 or 2410 and which is designed to give the statutory auditor limited certainty, obtained mainly through his or her questions and analytical procedures, as to whether the company’s half-yearly financial statements as a whole include any materials nonconformities which would make it possible to draw a conclusion on whether the statutory auditor has noticed anything that would lead him or her to think that the company’s half-yearly financial statements were not prepared in all materials aspects in accordance with the applicable financial reporting framework assumptions, and to prepare a report concluding the review of the half-yearly financial statements as a whole. As a result of a review, the statutory auditor issues a report of an independent statutory auditor on review of financial statements.

Why order a review service?

• for a bank, business partners, the supervisory board – to give them more certainty that the company operates properly and is credible
• for an owner who delegates company management – to gain more certainty that the company’s assets are in good hands
• for the managing person – to gain an external independent perspective of an expert who examines hundreds of other companies on a daily basis and skilfully identifies any tax, accounting and legal risks
• unlike audit of financial statements, a review can be carried out at any point during the financial year
• a review is shorter and less burdensome for the company
• the price of a review is much lower than the price of a full audit of financial statements

What is the essence of the review service?

• reviews involve analysing financial data and reviewing the books
• the statutory auditor also obtains information from the management and employees of the company
• the statutory auditor does not identify any shortcomings of the company, focusing on risk areas instead
• the service ends with presentation of a report signed by the statutory auditor

1. 1. Other financial audit activities:

Other financial audit activities include assurance services specified by the applicable laws other than audit and review of financial statements, reserved for a statutory auditor. The services are designed to demonstrate high or moderate credibility of financial and non-financial information, systems, processes as well as aspects of behaviour or attitudes of organisations based on evidence which has been obtained during relevant procedures and serves as the basis for an assessment prepared in accordance with pre-defined criteria for issues covered by such services.

Other financial audit activities performed by Mac Auditor for financial institutions include in particular:

• assessing the risk management system for investment fund companies
• assessing the compliance of investment fund’s asset measurement methods and principles

2. 2. Risk management system assessment

A financial audit activity performed based on Article 48(2g) the Polish Act on Investment Funds and Management of Alternative Investment Funds of 27 May 2004. The service is provided in accordance with the National Standard on Assurance Engagements 3000 and concluded with a statement of a statutory auditor on whether the company’s risk management system matches the size and type of business, complies with the applicable laws, covers the full scope of the company’s activity and whether the adopted methods for risk measurement and monitoring and for determining full exposure or alternative investment fund exposure and the internal limit system adopted for every investment fund managed by the company are appropriate and consistent with the investment risk profile and the investment policy.

3. 3. Assessment of compliance of investment fund’s asset measurement methods and principles

A financial audit activity performed based on Article 22(1)(12) or Article 222(1) the Polish Act on Investment Funds and Management of Alternative Investment Funds of 27 May 2004. The service is provided in accordance with the requirements of the National Standard on Assurance Engagements 3000 and it is concluded with a statement issued by the auditing company on compliance of the methods and principles for measuring the fund’s assets described in the articles of association/prospectus of the investment fund with the legislation regarding the accounting of investment funds, as well as on the completeness of such principles and their compliance with the fund’s investment policy.

An assurance engagement is a service other than review and audit of financial statements designed to demonstrate high or moderate credibility of financial and non-financial information, systems, processes as well as aspects of behaviour or attitudes of organisations based on evidence which has been obtained during relevant procedures and serves as the basis for an assessment prepared in accordance with pre-defined criteria for issues covered by such services. Assurance engagements include services other than financial auditing and are performed in accordance with the National Standards on Assurance Engagements 3000.

Other attestation services provided by Mac Auditor include but are not limited to:

• assurance reports on audits in service organisations (ISAE 3402)
• checks of projected financial information
• assurance services which involve issuing a report on compilation of pro forma financials presented in the prospectus

Related services are services of performing agreed-upon procedures based on the agreed objective, scope of work and method, with their description and result later presented in the service report, or financial information compilation services designed to make use of accounting expertise in order to collect, classify and summarise financial information.

1. 1. Agreed-upon procedures:

The purpose of the service involving agreed-upon procedures is for a statutory auditor to perform audit-like activities within the scope as agreed between the statutory auditor, the company and any relevant third parties.

In the agreed-upon procedure service, the statutory auditor does not issue any assurance and does not formulate any conclusion or opinion but instead presents a report based on the facts established in respect of the financials. The report is not made public but is only accessed by the parties with whom the procedures were agreed upon. The decision on specific procedures is made by the company after a discussion with the statutory auditor, which allows the latter to focus on areas considered as the most important.

What is the service of reviewing selected information within agreed-upon procedures?

• the client and the statutory auditor agree on the rules of assessing and analysing selected information or a specific element of the company's work organisation
• depending on the audited area, the auditor analyses documents, interviews employees and observes material activities or assets, and performs any other activities required for the service,
• works are carried out in the way and at the time as agreed with the party ordering the service
• the service is concluded with submission of a report presenting a detailed description of the completed tasks
• a detailed scope of the report is each time agreed upon, depending on the needs and expectations of the client
• the report may include: a detailed analysis of the risks related to the audited area; the corrections to be made; recommendations of the statutory auditor regarding proposed improvements and upgrades

Agreed-upon procedure services are provided in accordance with the National Standard on Related Services 4400 and they include but are not limited to due diligence in finance and other thematic audits. In collaboration with its partners, Mac Auditor also provides comprehensive due diligence services in the legal and tax area.

1. 2. Compilation of financial statements:

The company manager may request the statutory auditor’s assistance in the preparation and presentation of the company's financial information. For users of financial information, the advantage of a compilation service conducted in accordance with the National Standard on Related Services 4410 arises from the application of professional accounting and financial reporting expertise of a statutory auditor and from observance of professional standards, including the applicable ethical requirements, as well as clear communication of the nature and scope of the statutory auditor’s involvement in the compiled financial information.

Other accounting and financial reporting services provided by Mac Auditor’s Audit Department include in particular:

• accounting and financial reporting training, related in particular to International Financial Reporting Standards (IAC/IFRS), fair value measurement of assets and liabilities, accounting of financial instruments
• developing the accounting policy (principles), the company chart of accounts
• supporting the implementation of the IAS/IFRS
• verifying the measurements of assets and liabilities for financial reporting purposes and verifying business valuations
• providing advice in the preparation of financial statements
• other services connected with accounting and financial reporting, including support for audit committees in their supervision over reporting and auditing