Corporate Governance

Internal control system and risk management in the process of preparing financial statements

The preparation of financial statements is governed by:

• the International Financial Reporting Standards;
• the Accountancy Act of 29 September 1994;
• the Act on Auditors, Audit Firms, and Public Supervision;
• the Articles of Association of the Warsaw Stock Exchange;
• the Accounting Rules of the Warsaw Stock Exchange and the accounting rules of the subsidiaries;
• internal accounting procedures.

The preparation of financial statements is subject to the internal control system and the risk management system, which ensures fair and true financial reporting in compliance with laws and internal regulations.

The internal control system in the preparation of financial statements includes:

• controls exercised by all employees as part of their responsibilities;

• functional controls exercised as part of responsibilities of supervision of organisational units;

• checks of GPW’s compliance with laws and internal regulations.

Risk management in the preparation of financial statements involves the identification and assessment of risks, as well as the development and implementation of measures which mitigate or eliminate risks. In particular, GPW on an on-going basis monitors amendments of laws and regulations applicable to the preparation of financial statements, updates the Company’s internal regulations and harmonises its IT systems.

The Company’s Financial Reporting Section is responsible for enforcing internal and external regulations. The Financial Reporting Section is responsible for preparing financial statements under substantive supervision of and in co-ordination with the Chief Accountant and the Director of the Financial Department. The Company keeps its books of account using computer technology. The Company uses a financial and accounting system implemented in August 2011, which includes embedded mechanisms protecting against destruction, modification or concealment of records. Controls are carried out at the stage of entering accounting records. In addition, financial and accounting processes are subject to audits conducted by the Internal Audit Department in accordance with the annual audit plan approved by the Exchange Supervisory Board following a positive opinion of the Audit Committee.

Until the end of 2018, the Company’s auditor controlled financial statements every quarter. Quarterly financial statements for Q1 and Q3 as well as financial statements for six months were reviewed by the auditor while the annual financial statements were audited. As of 2019, according to regulations and market practice, the consolidated and separate financial statements were examined by the Company’s auditor every 6 months: the H1 report was reviewed and the annual report was audited.

The Company’s Management Board and the members of the Exchange Supervisory Board are required to ensure that financial statements and activity reports comply with the requirements defined in the Accountancy Act of 29 September 1994. GPW’s Audit Committee, which is part of its Supervisory Board, controls the financial reporting process. Within its powers, the Audit Committee monitors the financial reporting process, financial audit functions, and the independence of the auditor. GPW’s auditor is appointed by the Exchange Supervisory Board by recommendation of the Audit Committee from among renowned audit companies. Auditors of subsidiaries are appointed by their Supervisory Boards. The Audit Committee also monitors the effectiveness of the internal control, internal audit, and risk management systems. The responsibilities of the Exchange Supervisory Board include assessment of the Exchange Management Board’s reports on the activity of the Company and the GPW Group, as well as yearly separate and consolidated financial statements, and presentation of a written report on the results of the assessment to the General Meeting.

In the opinion of the Company, the division of tasks related to the preparation of financial statements in the Company, review of financial statements by the auditor, monitoring of the preparation and review of financial statements by the Audit Committee, and assessment of financial statements by the Exchange Supervisory Board ensure that information presented in financial statements is true and fair.