Jacek Gdański Accounting Department Establishing a Public Oversight System of the Audit Profession in Poland Jacek Gdański Accounting Department Ministry of Finance 15 March 2006, Vienna

are of tentative character and are subject of ongoing consultation The views presented are of tentative character and are subject of ongoing consultation Jacek Gdański Ministry of Finance, Accounting Department

Audit profession in Poland National Chamber of Statutory Auditors [NCSA] (acts on the basis of the Act of 13th October 1994 on Auditors and their Self-Governing Body) Audit in figures:* Individual auditors entitled to carry out audit – 3 935 Audit firms entitled to carry out audit – 2 032 Number of conducted audits and reviews – 21 121 Entities to be audited – less than 10% companies falling under the scope of the 4th Directive are subject to statutory audit * As at 31 December 2004 (source: the NCSA) Jacek Gdański Ministry of Finance, Accounting Department

Stakeholders of the current oversight system in Poland Civil Court of Warsaw resolves disputes between Ministry of Finance and the NCSA National Chamber of Statutory Auditors National Supervisory Committee Administrative Court appeals concerning registration and deregistration of auditors National Assembly of Statutory Auditors quality assurance supreme body meetings held every 4 years National Disciplinary Court National Council of Statutory Auditors Ministry of Finance approves the statute of the NCSA appeals to the Regional Court against resolutions of the bodies of the NCSA, which violate the law or its statute applies for particular matters to be examined by the bodies of the NCSA disciplinary actions managing body Jacek Gdański Ministry of Finance, Accounting Department

Ministry of Finance, Accounting Department Challenges Ensuring transparency of the system Finding an appropriate organisational form that will enable to implement provisions of the 8th Directive effectively and timely Organizing appropriate division of tasks between the oversight body and the profession Setting-up an efficient funding system and limiting the costs of introduction and functioning of the new system to what is strictly necessary Fitting the new system into the legislative framework Jacek Gdański Ministry of Finance, Accounting Department

Tentative assumptions Establishing a new single body (board) bearing ultimate responsibility for the oversight system Composing the board of independent members provided by wide range of stakeholders Applying solution based on the existing models of the oversight in the financial sector Taking advantage of experience and expertise of other countries and external advice Jacek Gdański Ministry of Finance, Accounting Department

Stakeholders of the improved oversight system in Poland Ministry of Finance District Court of Warsaw Auditing Oversight Board Public finance entity Administrative Court National Chamber of Statutory Auditors Jacek Gdański Ministry of Finance, Accounting Department

Ministry of Finance, Accounting Department Auditing Oversight Board The ultimate responsibility for:  the approval and registration of statutory auditors and audit firms,  the adoption of standards on ethics, internal quality control of audit firms and auditing, and  continuous education, quality assurance and investigative and disciplinary systems Office Secretariat Executive Office The bodies of the National Chamber of Statutory Auditors: 1) National Assembly of Statutory Auditors:  elects members of the NCSA’ bodies  approves the statute of the NCSA  approves the activity programme and financial management procedures of the NCSA  approves the principles of professional ethics for statutory auditors  sets the principles of obligatory continuous professional development of statutory auditors  reviews and approves the reports of the NCSA’ bodies and formally grants the approval of the activities of each body for the period under review  sets the principles of setting the membership fees for statutory auditors  sets the principles of setting the payments for entry onto the list and annual fees for supervision 2) The National Council of Statutory Auditors:  implements resolutions of the National Assembly of Statutory Auditors  represents the NCSA before state and local bodies, academic institutions, economic and social organisations as well as international professional organisations  sets professional standards for statutory auditors  sets, after having consulted the Examinations Committee:  qualification requirements as well as programmes and rules of conducting professional exams for statutory auditors  the conditions of recognizing university or equivalent exams in the subjects included in the process of qualifying as a statutory auditor  takes resolutions concerning entries onto the register and the list  grants of the diplomas and certificates (IDs) to statutory auditors 3) The National Supervisory Committee:  supervises and controls whether:  auditors properly perform their profession  auditors comply with procedures of carrying out audits (reviews) of financial statements 4) The National Disciplinary Spokesman and the National Disciplinary Court:  initiates disciplinary actions and adjudicates on disciplinary responsibility of statutory auditors Jacek Gdański Ministry of Finance, Accounting Department

Ministry of Finance, Accounting Department Timetable Planned entry into force of the 8th Directive I/II quarter of the year 2006 Finalizing draft law implementing the provisions of the 8th Directive* III quarter of the year 2006 Consultations on draft law on the inter-governmental level and with social partners IV quarter of the year 2006/ I quarter of the year 2007 Adoption of the draft law by the Council of Ministers and submitting the draft law to the Parliament I – II quarter of the year 2007 * Taking into consideration the findings of the report prepared under the World Bank grant project Jacek Gdański Ministry of Finance, Accounting Department

Thank you for your attention Jacek Gdański Ministry of Finance, Accounting Department