Summary (30 seconds):
The 2025 Accounting Act amendment raised entity size thresholds. Some companies changed category — which directly affects reporting obligations and available simplifications. A company that became a small entity may drop the cash flow statement and statement of changes in equity. A company that became large has new obligations. Accounting policy must reflect the current category — failure to update is a formal error.
The 2025 Accounting Act amendment raised entity size thresholds. Some companies changed category — which directly affects reporting obligations and available simplifications. A company that became a small entity may drop the cash flow statement and statement of changes in equity. A company that became large has new obligations. Accounting policy must reflect the current category — failure to update is a formal error.
Check your entity category
| Category | Total assets | Net revenues | Headcount |
|---|---|---|---|
| Micro | ≤ EUR 1.5m | ≤ EUR 3m | ≤ 10 persons |
| Small | ≤ EUR 7.5m | ≤ EUR 15m | ≤ 50 persons |
| Medium | ≤ EUR 25m | ≤ EUR 50m | ≤ 250 persons |
| Large | > EUR 25m or | > EUR 50m or | > 250 persons |
Thresholds converted to PLN at the NBP rate. Category determined on prior-year data — meeting at least 2 of the 3 criteria above the "small" threshold means the next higher category applies.
What a category change means
| Financial statement component | Micro/Small | Medium/Large |
|---|---|---|
| Cash flow statement | Optional | Mandatory |
| Statement of changes in equity | Optional | Mandatory |
| Management commentary | Simplified or none | Full |
| Deferred income tax | Optional (small) | Mandatory |
| Financial instrument measurement | Simplified | Full effective interest method |
| Note disclosures | Limited | Full |
Simplifications for small entities — what you can gain
If your company became a small entity under the new 2025 thresholds — you may use several simplifications that must be recorded in accounting policy:
- No cash flow statement — saves time at year-end close
- No statement of changes in equity — simplified reporting
- Simplified financial instrument measurement — at nominal value instead of effective interest rate
- No deferred income tax — if not material for a faithful presentation
- Simplified notes — fewer mandatory disclosures
Important: Using a simplification requires a formal decision by the approving body (shareholders' meeting) and recording it in accounting policy. Simply not meeting the thresholds is not enough — the decision must be formalised.
Accounting policy errors after a category change
- No policy update — the company changed category but accounting policy still references the old category and old simplifications.
- Using simplifications without a formal resolution — the company simply does not prepare a cash flow statement without documenting this decision in the policy and a board resolution.
- Notes not aligned with the new category — the company became a large entity but notes are at the level of a small entity.
- No annual review — accounting policy should be reviewed every year or at every material change.
From my practice: The most common error is an accounting policy drafted when the company was incorporated and never updated. After 5–10 years of growth the company has a completely different scale and category, but documents its accounting using micro-entity rules. Auditors ask about every discrepancy between policy and practice.
FAQ
Frequently asked questions
Must I check my entity category every year?▾
Yes. Entity category is determined every year on prior-year data. For a rapidly growing company it may change every 2–3 years.
Does a change in accounting policy require retrospective restatement of historical data?▾
Depends on the type of change. A category-related change (e.g. adding a cash flow statement) does not require restatement of historical data. A change in measurement policy (e.g. from cost to fair value) typically requires retrospective recognition.
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