PricewaterhouseCoopers Polska Spółka z ograniczoną odpowiedzialnością Audyt Sp. k. with headquarters in Warsaw, at ul. Polna 11, 00-633 Warsaw is the entity authorized to audit the financial statements of JSW and the consolidated financial statements of the JSW Group. The audit firm was selected by the JSW Supervisory Board on 14 May 2021.
The agreement between JSW and PricewaterhouseCoopers Polska Spółka z ograniczoną odpowiedzialnością Audyt Sp. k. was signed on 24 June 2021, its subject is to audit of JSW’s annual financial statements for 2021-2022, the annual consolidated financial statements of the JSW Group for 2021-2022, review of JSW’s interim financial statements for H1 2021 and 2022, and review of the JSW Group’s interim consolidated financial statements for H1 2021 and 2022.
The recommendation of the Audit Committee regarding the selection of the audit firm has been prepared following the completion of an organized procedure satisfying the prevailing criteria.
The authorized auditor has been selected in compliance with the applicable regulations, including the provisions of the Act of 11 May 2017 on Statutory Auditors, Auditing Firms and Public Supervision.
Policy and procedure for selection of the audit firm and policy governing the provision of permitted non-audit services by the audit firm, by its related parties and by a member of the audit firms’chain
JSW has in place a “Policy and procedure for the selection of an audit firm and policy governing the provision of permitted non-audit services by the audit firm, by its related parties and by a member of the audit firm’s network” (“Policy”) established by the Audit Committee for Jastrzębska Spółka Węglowa S.A. In accordance with this policy:
1) The Supervisory Board is authorized to select the audit firm to audit the Company’s financial statements, having obtained the recommendation of the Audit Committee.
2) The Company is obligated to inform the Polish Financial Supervision Authority that the audit firm to audit the financial statements is selected by the JSW Supervisory Board.
3) The Supervisory Board selects the audit firm taking into account the principles of impartiality and independence of statutory auditors.
4) The Supervisory Board, selecting the audit firm, and the Audit Committee, at the stage of preparation of proposal requirements and then recommendations, follow the following criteria:
- required workload of the statutory auditor,
- knowledge of the industry and the existing experience of the audit firm in auditing the financial statements of companies with a similar business profile (underground mining and coking industry),
- knowledge of the specificity of State Treasury companies,
- composition of the audit team, in particular in terms of the optimum proportions of statutory auditors and their assistants in the team, taking into account the specificity of the Company,
- professional qualifications and personal experience of the persons directly involved in the audit,
- reputation of the audit firm in the financial markets,
- price proposed by the audit firm,
- confirmation of the independence of the audit firm,
- the independent statutory auditor’s mandate quality control policy with regard to auditing statutory entities of public interest.
5) The audit firm selection procedure should be launched and conducted within the timeframes allowing the audit firm to participate in the inventory-taking of JSW’s material assets (it is recommendable to select the audit firm and enter into a financial statements audit agreement by the end of Q3 of the financial year to be audited).
6) The costs of the audit of the financial statements are incurred by the audited entity.
7) The Supervisory Board recommends striving to ensure that the financial statements of the parent company and selected key Group companies are audited by the same audit firm.
8) If one audit firm is selected to audit the financial statements of several Group companies, the Supervisory Board should recommend to the Management Board undertaking negotiations to optimize the costs of the audit of the Company’s financial statements.
9) Before selecting the audit firm the Supervisory Board defines by way of a resolution:
- the statutory auditor selection criteria and the method for assessing the proposals regarding the audit of the Company’s financial statements,
- the content of the announcement with the invitation to submit proposals for the audit of the Company’s financial statements.
10) The audit firm is selected following the selection procedure described in the adopted Policy.
11) The Company (immediately) informs KNF about selecting the audit firm.
12) Any and all contractual clauses in the agreements entered into by the Company which limit the possibility of selecting the audit firm by the Supervisory Board for the needs of the statutory audit of the Company’s financial statements to specific categories or lists of audit firms are deemed invalid by virtue of law.
13) Periods of cooperation with the audit firm (rotation):
- in the case of a statutory audit, the first financial statements audit agreement is entered into with the audit firm for a term not shorter than two years, with the possibility of renewing it for further minimum two-year terms,
- the maximum time of uninterrupted duration of the statutory audit mandate for a single audit firm may not exceed 10 years,
- the key statutory auditor may not carry out the statutory audit in JSW for more than 5 years. They may carry out the statutory audit again after elapse of 3 years from the end of the last statutory audit.
The main assumptions of the “Policy governing the provision of permitted non-audit services by the audit firm performing the audit, by its related parties and by a member of the audit firm’s chain” are as follows:
1) The Supervisory Board may use the advisory services of an audit firm during the financial year in a strictly limited scope. The firm may not be the entity auditing the annual financial statements in JSW or its subsidiaries.
2) The audit firm auditing the statutory financial statements, the audit firm’s related party and by each member of the audit firm’s chain may not provide the entity with prohibited non-audit services or financial audit activities. The prohibition covers the audited entity, its parent company and subsidiaries in the European Union. The services described in item 6 are exempted from this prohibition.
3) The statutory auditor or audit firm carrying out the Company’s statutory audit do not provide, directly or indirectly, to the audited entity, its parent company or its controlled entities, any prohibited non-audit services in the following periods:
a) in the period from the commencement of the audited period to the issuing of the audit report, and
b) in the financial year immediately preceding the aforementioned period with regard to the services listed in item 4 g).
4) Prohibited non-audit services mean:
a) tax services pertaining to: preparation of tax returns, payroll taxes, customs liabilities, identification of public subsidies and tax incentives, unless the support of the statutory auditor with regard to such services is required by law, support pertaining to tax inspections carried out by tax authorities, unless the support of the statutory auditor with regard to such inspections is required by law, calculation of direct and indirect tax and deferred income tax, provision of tax advisory services,
b) services involving any participation in management or the decision-making process of the audited company,
c) keeping the accounts and preparing the accounting documentation and financial statements,
d) payroll services,
e) preparation and implementation of internal control procedures and risk management procedures associated with preparation or control of financial information or preparation and implementation of technological systems pertaining to financial information,
f) valuation services, including valuation in connection with actuarial services or litigation resolution support services,
g) legal services involving provision of general legal advice, negotiating on behalf of the audited company and appearing in the capacity of an ombudsman as part of dispute resolution,
h) services associated with the audited company’s internal audit function,
i) services associated with financing, capital structure and capital allocation and investment strategy of the client for whom the audit is carried out, except for providing assurance services in connection with the financial statements, such as issuing comfort letters in connection with the audited company’s prospectuses,
j) conducting promotional activities and trading in equities of the audited company on its own account or the audited company’s equity issue underwriting,
k) human resources services in respect of: management staff that may exert significant influence on preparation of the accounting documentation or financial statements subject to statutory audit, if they involve searching for and selecting candidates for such positions or verification of the references of the candidates for such positions, preparation of the organizational structure, cost control.
5) Prohibited services include also other non-financial-audit services.
6) The following services do not constitute prohibited services:
a) executing due diligence procedures as regards the economic and financial standing, issuing comfort letters - performed in connection with a prospectus of the audited entity, carried out in accordance with the local standard of related services and involving completion of agreed procedures,
b) assurance services regarding pro forma financial information, projections of results or estimate results, published in the audited entity’s prospectus,
c) audit of historical financial information for the prospectus,
d) verification of consolidation packages,
e) confirmation of satisfaction of the conditions of concluded loan agreements based on an analysis of financial information derived from the financial statements audited by the audit firm,
f) assurance services regarding reporting on corporate governance, risk management and corporate social responsibility,
g) services involving assessment of compliance of the information disclosed by financial institutions and investment firms with the disclosure requirements for capital adequacy and variable compensation components,
h) assurance pertaining to financial statements or other financial information earmarked for supervision authorities, supervisory board or other supervisory body of the company or owners, exceeding the scope of the statutory audit and aimed at helping such bodies to fulfill their statutory obligations.
7) Provision of the permitted services (listed in item 6 above) is possible only to the extent not associated with the audited company’s tax policy, after the Audit Committee has assessed the threats and safeguards of the independence of the audit firm.
8) Non-audit services, other than prohibited services, can be provided by the audit firm under the condition that they are approved by the Audit Committee.
9) The company prepares a justified motion to the Audit Committee for approval of the mandate for the audit firm auditing the financial statements to perform a specific permitted non-audit service.
10) The Audit Committee assesses the independence of the statutory auditor and the audit firm.
11) The Audit Committee approves the performance of services other than prohibited non-audit services by the audit firm auditing the financial statements for the given financial year.
Last update: 12.10.2021