The last point, to a certain extent, signified a breakthrough in the separation of financial accounting from tax accounting. Major 1994 Act improvements to Polish Accounting Regulations (PAR) included the introduction of non-merger consolidation rules, deferred tax and the requirement to make provision for costs and losses regardless of their tax-deductibility.
Rigorous application of the 1994 Accounting Act did, however, improve transparency and the reporting of transactions' economic substance. The finance ministry was unfortunately not willing to support either compliance with IAS or even the much less ambitious adoption of IAS solutions for many of the locally deficient areas such as leasing, contract accounting or merger accounting. The Act was drafted principally to achieve Polish accounting compliance with the EU Fourth and Seventh Directives.
It was very narrow in scope and, because of its secondary legislative rank, was subject to much inconsistent interpretation by the Ministry of Finance (in contrast to primary legislation, which may only be interpreted by the courts or parliament).įollowing three years of conflict in which the international accounting firms pushed the interpretive boundaries out and the authorities struggled with the interpretations that those firms were applying, a new primary Act was drafted in 1994 with the assistance of PricewaterhouseCoopers, and this became law on 1 January 1995. In 1991, new accounting legislation was passed in the form of a decree of the minister of finance.
The process of constructing a market economy in Poland, begun at the end of 1989, has had a significant impact on the development of accounting regulations.