What Are the Consequences of Not Approving Financial Statements?

Unapproved Financial Statements: Profit Distribution and Loss Coverage

The first and most practical consequence of failing to approve the financial statements is that it blocks the ability to distribute profits or cover losses. Without approval, the approving body cannot — in line with Article 53(3) and (4) of the Polish Accounting Act — adopt resolutions relating to the company’s financial result.
In practice, this means that shareholders will not receive a dividend, equity movements will not be properly recognised and reclassified, and the business remains in a state of incomplete year-end closure.

Filing Unapproved Financial Statements with the National Court Register (KRS) and the Risk of Penalties

A second, often overlooked obligation is the requirement to file the financial statements with the National Court Register (KRS) even if they have not yet been approved. Under Article 69 of the Polish Accounting Act, where the financial statements are not approved within the statutory deadline, the entity is still required to submit the unapproved financial statements to the KRS together with the required accompanying documents.

Failure to meet this obligation may trigger enforcement proceedings under Article 24 of the Act on the National Court Register. This can result in financial penalties, and the registration court is entitled to impose fines repeatedly until the obligation is fulfilled. Management boards often underestimate this requirement, even though non-compliance constitutes a breach of statutory filing obligations.

Criminal Liability of the Entity’s Management (Article 79(4) of the Polish Accounting Act)

It is also important not to overlook the potential criminal liability arising under the Polish Accounting Act.

Under Article 79(4) of the Act, anyone who, in breach of the regulations, fails to file the financial statements with the competent registration court may be subject to a fine or a restriction of liberty. This liability rests with the entity’s management (the person responsible for managing the entity), regardless of the reasons why the financial statements have not been approved — including situations such as shareholder disputes or an inability to adopt the approval resolution.

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Tax Consequences of Unapproved Financial Statements

The tax consequences of unapproved financial statements do not take the form of a direct penalty, but they may have significant practical implications. Even if the financial statements have not been approved, the accounting books remain the basis for tax settlements. However, a lack of approval may be viewed by the tax authorities as a warning sign of potential irregularities.

In extreme cases, this may prompt the tax authorities to question the reliability of the accounting records under Article 193(1) of the Polish Tax Ordinance. It may also result in the tax base being estimated by the authorities or certain tax-deductible expenses being disputed. As a result, the company may need to correct its tax filings and may be charged late payment interest.

Failure to Approve Financial Statements: Reputational and Financial Risk

Failing to approve the financial statements also creates reputational and financial risk.

Banks, investment funds and leasing companies typically assess a business’s financial standing based on approved financial data. Presenting unapproved financial statements may be perceived as a sign of instability or corporate governance issues, which in practice can lead to financing being refused, credit limits being reduced, or additional security being required. Similarly, in commercial relationships, a lack of approval may be interpreted as an indication of internal disputes or difficulties in management and decision-making.

Are Unapproved Financial Statements Still an Accounting Document?

Although the lack of approval does not deprive the financial statements of their status as an accounting document — as, under the Polish Accounting Act, the key requirement is that they are signed by the entity’s management and the person responsible for maintaining the accounting records — without approval resolution,  the reporting process cannot be fully completed.

Summary: Why Approving the Financial Statements Is a Key Responsibility of the Management Board

In summary, failing to approve the financial statements is not merely a formal oversight — it is a real source of legal, tax and business risk. 

The obligations arising from the Polish Accounting Act, the Act on the National Court Register, and the Polish Tax Ordinance require entities and their management to take active steps to prepare, file and ensure the approval of the financial statements. Failure to do so may result in personal liability for management board members and have negative consequences for the company’s day-to-day operations and overall stability.