12 questions to:

Ewa Sowińska

Ewa, thank you very much for agreeing to take part in ESG 12on12. Your CV is impressive and the list of roles you have held is enormous. Let’s start with the topics related to your 25+ year career as a statutory auditor, i.e. issues related to the letter G – corporate governance. It is best to start at the beginning – why do capital market participants need a statutory auditor? What is his or her role?

The statutory auditor is primarily there to give the Financial Statements (FS) the credibility that is necessary and particularly important in the process of deciding whether to cooperate, invest in a particular company. We verify that the FS present a true and fair view of the company’s assets and financial position, as well as its financial result and cash flows for the financial year, in accordance with the provisions of the Accounting Act and the adopted accounting principles (policy). We verify compliance in form and content with the company’s applicable laws and its articles of association and whether it has been prepared on the basis of properly maintained books.

As experts, we share responsibility with management and supervisory boards. We also share our knowledge and experience. We increase confidence in companies and enhance the security of business transactions.

What is creative accounting to you? Do you see it in the reports of listed companies? My perception is that there is a lot of it and that its scale is increasing.

The word CREATIVITY has a positive ring to it, but when we add the word ACCOUNTING to it, we often do not see it in a positive light. Unfortunately, there are still management boards who do not have the courage to face reality and try to show the effect of the company’s performance in a given year by force, so that people, corporate bodies or institutions assessing them think that it is better than in reality and that the objectives that were the basis for receiving additional remunerations have been achieved.

However, there are also such companies which, in a so-called 'fat’ year – when profits are very high – create provisions for the following years, in order – when the situation is more difficult – to release these and show an increase in results year on year. There are still some investors who see profit maximisation as the sole objective of the company, sometimes at the expense of employees, climate and social aspects. In my opinion, short-sightedness is responsible for this – evaluating the work of the management board through the prism of financial result in the short term, instead of an evaluation that depends on the growth of the company’s value in the long term. In my opinion, ESG criteria need to be added to the evaluation of management board performance.

One activity is creative accounting and the other is fraud in financial statements, from which we all lose. Why do you think they happen all the time? Can you point to one culprit? Is it a more complicated problem?

This is a difficult question. There are many guilty and responsible parties as well as causes. One of them is the lack of strategies implemented based on ESG criteria. They are the short-sightedness already mentioned and greed. The causes can also be found in limited engagement of the business environment. Supervisory board members are also often responsible, especially those who do not exercise adequate control over the FS preparation process. And yet, according to Article 4a of the Accounting Act, they are obliged to ensure that the separate financial statements, the consolidated financial statements, the management report on operations and the management report on group operations meet the requirements of the Act. In addition, the members of the company’s supervisory board are jointly and severally liable with the management to the company for damage caused by an act or omission.

Negligence is often due to a lack of courage in thinking and acting, a lack of competence and independence of the board.

In my opinion, lack of women on corporate management and supervisory boards is also not insignificant.

As a statutory auditor, what advice would you give to those reading the financial statements of listed companies?

First of all, I encourage to read and ask questions. What should be important to the reader is the audit report and the key audit areas identified by the auditor. Particular attention should be paid to what the auditor’s opinion is – unqualified or modified and those areas that were the basis for a disclaimer or emphasis of opinion.

The whole FS should be read – the balance sheet and income statement are only part of the report, just numbers. The meaning of these figures should be described in the other parts of the FS. Particularly important is the note on going concern assumptions, contingent liabilities, related party transactions, events after the balance sheet date.

I believe that today the non-financial statements – either in the form of as a separate report or as part of the management report on operations – are extremely important. And I particularly encourage you to read this section.

For the outside world, the auditor creates an audit report for the annual reports in which he or she expresses an opinion. It may be unqualified or qualified. Please explain to us the difference?

In the audit report, we express an opinion on the Financial Statements. We verify that it presents a true and fair view of the company’s assets, financial position, financial result and cash flows for the financial year. We verify that it complies in form and content with the applicable legal regulations and the company’s articles of association and that it has been prepared on the basis of properly kept accounts.

A clean opinion, i.e. an unmodified opinion, is issued when we can say YES to all the criteria listed.

However, if there are areas where the auditor and the company’s management board have a difference of opinion and the amounts and issues are material, the auditor formulates a qualified opinion. A caveat may also arise where the company, in the opinion of the auditor, does not have full documentation to support the board’s position in relation to an area. Such a disclaimer does not explicitly say that the amounts or information are incorrect. It merely indicates that the auditor cannot confirm certain amounts or information in the absence of adequate audit evidence that, in the auditor’s opinion, is necessary.

One can also sometimes find emphasis of opinion with which the auditor wants to draw the attention of the reader of the FS to certain information, notes in the SF that are important – e.g. going concern assumptions, information about key events after the balance sheet date, about the non-fulfilment of certain obligations related to FS from previous years (publication of the FS, mandatory audit), and about the fact that material items of the FS are subject to estimates and that the company operates in such an industry that these estimates change dynamically.

There is also an adverse opinion. The auditor issues an adverse opinion if the misstatements and factual inconsistencies or gaps in the financial statements distort the overall picture of the company to such an extent that the statements are likely to be misleading. In short, this is the case if the answers next to the areas I have previously mentioned are: NO.

Another type of opinion is a disclaimer of audit opinion. A non-standard audit opinion stating that, due to severe limitations in the scope of audit of the financial statements, the auditor is unable to express an opinion on the fairness of the statements and/or their compliance with accounting standards. A disclaimer of opinion is quite rare, as auditors are unlikely to proceed with an audit without reasonable assurance that they will be able to complete it. Sometimes, however, circumstances arise during the course of the audit that make it impossible to complete it.

How important is ethics and independence in the work of an auditor? Is it easy to resist pressure from management boards, particularly those who want to increase profits or reduce debt on the balance sheet at all cost?

Ethics and independence are key. Without them, audit of FS cannot be undertaken. A report audited by an auditor who is not independent is invalid by law. This creates enormous consequences for each party – the auditor, the audit firm and the company whose FS is being audited. The auditor should also be courageous in his or her thinking and actions. You ask, is it easy to resist pressure from management boards? The answer is simple – you have to resist it, otherwise you are not independent, and this is a core value and competence of an auditor. Is it easy – I can answer for myself – yes easy, because there is no client worth giving up your values for. Not giving in to pressure only has the consequence of not continuing to work with that firm. Instead, we remain true to our values, we remain independent and therefore have the right to give an opinion on FS. 

The work of the auditor and audit firms is evaluated. This is done by PANA – the Polish Audit Supervision Agency. Please tell us what criteria such an evaluation is based on – can a capital market participant see it?

I encourage you to read the information on: https://pana.gov.pl/. It is not only useful for auditors and audit firms. Members of audit committees and investors will also find a lot of useful information there.

According to information on this webpage: based on professional knowledge and experience, proven methodology and international standards, PANA exercises independent supervision over statutory auditors, audit firms and professional self-government of auditors. PANA ensures that auditors properly perform audits and attestation services other than statutory audit and related services.

Each audit firm that audits the FS of public interest entities, including listed companies, is subject to an audit at least once every three years. The others are subject to inspection at least once every six years. During the inspection, PANA’s auditors mainly check whether the FS audit has been conducted in accordance with the National Auditing Standards, which are in line with the International Auditing Standards.

The idea is to verify during the audit in particular:

  • whether the conclusions drawn from the audit are adequately documented by the auditor
  • whether the statutory auditor, the audit firm and all audit team members remained independent throughout the FS audit process
  • whether appropriate audit procedures were selected
  • whether the audit firm has established and applies a quality control system to provide reasonable assurance that the firm and its staff comply with professional standards and applicable legal and regulatory requirements.


Financial data is not everything. Globally, there is a growing trend to integrate ESG i.e. environmental, social and corporate governance topics – that you have already mentioned – into investment and financial decisions. Please outline for us, how has the auditor’s role changed with implementation of the Non-financial Reporting Directive (NFRD) into the Accounting Act?

I strongly agree with you that financial data is not everything. ESG topics, i.e. environmental, social and corporate governance, are increasingly important in investment and financial decision-making.

Implementation of the Non-financial Reporting Directive (NFRD) in the Accounting Act has not formally had a major impact on the work of statutory auditor, as the non-financial data reporting obligations imposed on large SPUs (public interest entities), i.e. those with at least 500 employees and revenues of PLN 170 million or a balance sheet total of PLN 85 million, has not translated into mandatory audits by the auditor. Our duty as auditors was, and is, only to determine whether the audited company has met the criteria requiring it to report this data and whether it has therefore published this data. The regulator has not, and does not, require us to refer to these data in terms of both scope and reliability.

Of course, nothing prevents a company from having its non-financial reports reviewed by an auditor. This rarely happened, but as usual the leaders were ahead of the market and subjected their non-financial data to an expert review. This gave credibility to these data in the eyes of all stakeholders. I know this from reading these reports. I have read and evaluated them a lot. For many years I worked in the board of contest organised by the Responsible Business Forum for the best 'Sustainability Reports’.

Coming back to your question about how or if our work has changed. It all depends on who you ask – in my opinion very much so, despite lack of a formal obligation to verify such data. We have been given as a community a new and important source of information about companies. Because, in my opinion, it is in the non-financial data that you can read a lot, find out what risks in the areas of climate, social issues and corporate governance a company faces, and how it plans to manage these challenges. How the company is affected by climate change, and how climate change affects its business model and strategy.

Non-financial data in FS examination process is a key topic for me. I discuss these with management and supervisory boards. For me, this confirms the company management’s understanding of the changing business environment. These are important issues for the future. They are also a starting point for discussions about corporate governance and ethics. I ask questions about women’s participation on boards, about criteria for evaluating the work of the management board – whether it is based on ESG factors.

This is not the end of changes – the European Union as well as many stakeholders were dissatisfied with the existing non-financial statements and reports. We know more and more details about the CSRD (Corporate Sustainability Reporting Directive) and its proposed ESRS (European Sustainability Reporting Standards). These assume a greater role for auditors – give us an idea of how the work of audit firms will change?

The CSRD and proposed ESRS standards will bring about sizeable changes, both in the work of auditors and the companies that will be covered by the reporting obligation. The scope of reporting and the number of entities covered by the obligation will definitely widen – it is no longer only SPE but all large companies. Importantly for us, sustainability reporting (non-financial data reporting) will be subject to mandatory auditor verification. This will have a sizeable impact on our work, as our role in ensuring the credibility and safety of business trading will increase even further. And this comes with even greater responsibility. The decision to subject this data to verification is the result of signals from the market, particularly from investors who want to rely on credible data in their decision-making process. This is becoming possible with the introduction of uniform reporting standards. Sustainability reporting will be part of the management report.

What lies ahead, you ask? Education, education and more education. Building relationships and collaborations with experts on climate and social topics. This is building increasingly diverse audit teams.

From 2015 to 2019, I served as Vice President of PIBR (Polish Chamber of statutory Auditors) and coordinated topics related to education and corporate social responsibility. I cooperated with many institutions and organisations (e.g. Ministry of Finance, Ministry of Development, ACCA, IIA Poland, FOB, SEG, SKwP, CFA Society Poland, CSRinfo) on ESG topics. Together we have organised many conferences, webinars, meetings, prepared materials to assist both statutory auditors and management and supervisory boards in this reporting. As a representative of the auditing community, I often speak at conferences on corporate social responsibility, sustainability, value economics. I am a member of the programme boards of Open Eyes Economy (OEES, www.oees.pl), Solidarity in Development, among others. As part of our mandatory training, we have prepared training courses in this area. So we have already been in the process of preparing for what is soon to come.

It is a huge challenge because there has been a lot of changes and challenges in our profession’s approach to audit over the years. However, I am optimistic and believe that we will cope with this new reality and, as audit firms, we will attract new talent to work with us and learn a lot from each other.

Teamwork is important in the statutory auditor’s job. What are your experiences of working in diverse and non-diverse teams? Which do you think works better?

It is definitely better to work in diverse teams – in terms of gender, age, experience, as well as professional and personal competences. Diversity makes us gain different perspectives, pay attention to aspects that are not obvious to ourselves, pointed out by other team members. Thank to this, decisions of these teams on FS are more valuable and less prone to mistakes.

Having worked in the so-called Big Four audit firms and now co-leading ESO Audit, you meet a lot of supervisory and management boards – what are your observations on the diversity of their composition?

The level of diversity is still insufficient – which I regret. I cannot understand and accept that there are still listed companies where there are no women either on the management board or the supervisory board. I think this is simply obscene and may indicate that recruitment processes discriminate rather than include. And additionally, it is to the detriment of these companies. There are many examples of studies – both international and Polish – that companies which involve women in strategic decisions perform better financially and are more stable. I wonder what the shareholders of companies that 'shun’ women are doing to change this reality. I am hoping and very much believing that it is the actions of investors that will improve this situation. However, it is important to note that there are also conscious leaders who have done their homework and, in companies that are open to diversity, the situation has improved in recent years and there are more and more women on the board. There are some where their shareholding has exceeded 30 per cent.

You are one of those women who is very supportive of other women. Your support was invaluable to me and the wonderful women who launched the 30% Club Poland for which I thank you immensely. What advice would you give to companies where there are no women on the board all the time?

I very often say: show me the structure of a company’s governing bodies – supervisory board, management board – and I will tell you what kind of company culture it has. Without properly diverse supervisory and management boards, we give up on being open to different points of view, we may not have the chance to hire experts, to attract talent who appreciate working in a diverse environment. Investors may not want to invest in such a company. Such a company may fall out of important value chains and become 'invisible’ as a result.  

As a statutory auditor, I had several proposals to work in listed companies on audit committees with no or only one woman on board. Before considering the proposals, I asked for something like a declaration of when the company would have at least 30 per cent women both on the supervisory board and on the management board. Unfortunately, my proposal was not supported, so I did not accept the proposal either. It is not true that, as some people claim, women are not ready for responsible roles on company boards. Women are ready and they have values. Unfortunately, some companies are not yet ready for women.

Ewa, thank you so much for the answers and your support!

Advisory services

We help companies build value for stakeholders by supporting them in decision making and communication of those decisions.

Support in taking decisions that build value for stakeholders.
Organic versus acquisitive growth. Equity versus debt financing.
Corporate strategy and valuation.

Support in relations with shareholders.
Perception studies, Investors’ Days, quarterly presentations.
Dividend and buy-back policies. Creation and valuation of stock option programmes.

Building of financial models and valuation of companies.
Streamlining of the reporting process, creation of controlling and managerial accounting sheets.