Accounting and Socio-economic changes in Poland

I. Table of Contents

II.  Table of Figures  2

1.  Introduction  3

2.  The economic situation in Poland  3

2.1  Poland under socialism  3

2.2  Poland in transition  3

2.3  The current situation and future prospects  4

3.  The change in accounting  5

3.1  Accounting under socialism  5

3.2  Accounting in transition  6

3.3  The new accounting and future development  7

4.  The Auditing Profession  7

5.  Conclusion  8

III.  Appendix  9

IV.  Table of Literature  10

IV.a  Books  10

IV.b  Journals and Newspapers  10

IV.c  Websites  11

II.  Table of Figures  

  Figure 1 : Economic Data of Poland  4

  Figure 2 : reasons for issuing qualified reports 1992 1996  9

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1. Introduction

“Accounting is not a science: It has been developed to serve a purpose”. A statement that might be controversially discussed nowadays since the collapse of the socialism, growing globalisation and the convergence of international financial markets have forced national accounting systems to change during the last decades. This paper will examine the validity of this statement in particular on the example of the recent development in Poland. First it will briefly introduce the social and economic environment in Poland under socialism, its transition to a market economy and the current situation and future prospects. Second, the economic and social development of Poland will be related to changes in the polish system of accounting and financial reporting. A short view on the development of the accounting profession will be given. Finally, a conclusion will compare the given statement with the polish situation and give proof for its validity.

2. The economic situation in Poland

2.1 Poland under socialism

After World War II Poland introduced a planned economy urged by the Russian paradigm. Private property was restricted to agriculture, manufacturing and few business services. In the late 70 ^th Poland went into serious economic struggles emerging from a high level of public debt from reinforcing the industrial sector. Poland had to face sustainable inflation problems which finally lead to the breakdown of the communistic regime (Roberts et al, 1998b). It was replaced by a coalition government under leadership of the trade union movement „Solidarnosc“ in 1989.

2.2 Poland in transition

In December of that year, the new government started several reform programmes in order to establish a social market economy. The package included a convertible

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currency, the free trade of goods and the privatizing of most governmental companies (Economic Analysis for Eastern Europe [online], 1999).

Restructuring rapidly rose the level of unemployment, but increasing production, shrinking levels of unemployment, reduced inflation and a sustainable growth of purchasing power, indicate that Poland is on his way out of the crisis.

As a member of the WTO, OECD, and NATO - and soon of the EU - Poland’s goal is to raise its living standard closer to the EU’s average. The government’s role in the economy is to reduce the budget deficit and to eliminate it by the year 2003 (European Commission for Enlargement [online], 2001).

2.3 The current situation and future prospects

Market reform has brought about the economic growth and stability necessary for foreign investors to operate successfully in the Polish market.

Figure 1: Economic Data of Poland sources: economagic/ onvista

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