Corporate Governance

Corporate Governance

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.

Auditor

The procedure for appointment of the audit firm by Giełda Papierów Wartościowych w Warszawie S.A. is defined in its internal document: Audit Firm Selection Policy and Procedures, drafted in accordance with:

• Regulation 537/2014 on specific requirements regarding statutory audit of public-interest entities, and
• Act of 11 May 2017 on Auditors, Audit Firms, and Public Supervision.

The document defines the maximum period in which an audit firm or a member of its network may provide audits of financial statements. The period is five years. After the end of the period, the audit firm or a member of its network may not be selected to audit financial statements of GPW for a period of another 4 years.

The selection of an audit firm is a responsibility of the Exchange Supervisory Board. The selection of an auditor is opened with a resolution of the Exchange Supervisory Board concerning the selection of an auditor. Next, audit firms are invited to submit offers. The Exchange Supervisory Board selects the offer of an audit firm following a procedure which ensures independent and equitable selection of the best offer according to a number of criteria (including experience and position of the audit firm, knowledge of the financial market, audit services provided to public companies, price of the service). The Audit Committee is responsible for presenting a recommendation of an audit firm to audit financial statements to the Exchange Supervisory Board. As the body responsible for the selection of the auditor, the Exchange Supervisory Board passes a resolution appointing the auditor. The Exchange Management Board signs the contract with the audit firm.

The entity authorised to audit the separate financial statements of GPW and the consolidated financial statements of the GPW Group for the financial year ended 31 December 2019 and to review the interim financial statements of GPW and the GPW Group in the year ended 31 December 2019 was BDO PL spółka z ograniczoną odpowiedzialnością sp. k., with its seat in Warsaw at ul. Postępu 12, 02-676 Warsaw, entered by the National Chamber of Auditors in the list of entities authorised to audit financial statements, entry no. 3355.

Auditor’s fees for services provided to GPW Group (net) [PLN’000]

^*fee for services provided by KPMG Audyt Sp. z o. o. sp.k
^**the fee is only for professional audit and review of separate and consolidated financial statements of the parent entity for the year. Since 2019, the auditor reviews only the six-month financial statements of GPW and the GPW Group.

With respect to control and monitoring of the independence of the audit firm which audits the issuer’s financial statements, BDO submitted a written declaration concerning:

• all relations (including non-audit services) impacting the independence of audit;
• risks to continued independence caused by any relations; and
• security measures mitigating the risks.

BDO provided no non-audit services and no prohibited services to GPW or its subsidiaries in 2019.

The terms and conditions of the auditor’s non-audit services are defined in the “Policy of Buying Non-audit Services from the Auditor and Companies of Its Network”.

The audit firm which audits financial statements of GPW and consolidated financial statements of the GPW Group and members of its network cannot provide directly or indirectly any prohibited services to entities of the GPW Group. Such services cannot be provided in the following periods:

• from the start of the audited period to the issuance of the audit report; and
• in the financial year directly preceding the audited period – with respect to design and implementation of internal control procedures or risk management procedures related to the preparation or controlling of financial information or the preparation and implementation of technological systems for financial information.

Allowed services may only be provided where their scope is unrelated to the tax policy and the Audit Committee performs a threat assessment and an analysis of independence.

Fees for allowed services, which are not statutory audit services, are capped. Where the audit firm which reviews and audits financial statements of GPW and consolidated financial statements of the GPW Group provides such services to GPW or entities controlled by GPW at least in three successive financial years, the total fee for such services is capped at 70% of the average fee paid to the auditor in the last three successive financial years for statutory audits of financial statements of GPW and the GPW Group.