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TransparencyReport 2016Ernst & Young Audyt Polskaspółka z ograniczonąodpowiedzialnością sp. k.

Transparency Report 2016 — EY Audyt 2

ContentsPresident of Management Board of General Partner’s letter ............................................................................................... 3

About us ........................................................................................................................................................................ 4

Legal structure, ownership and governance ................................................................................................................... 4

Network arrangements ................................................................................................................................................ 5

Commitment to quality .................................................................................................................................................... 8

Infrastructure supporting quality................................................................................................................................... 8

Instilling professional values ......................................................................................................................................... 9

Internal quality control system .................................................................................................................................... 10

Client acceptance and continuance .............................................................................................................................. 11

Performing audits ..................................................................................................................................................... 12

Review and consultation ............................................................................................................................................ 13

Audit partner rotation ................................................................................................................................................ 14

Audit quality reviews ................................................................................................................................................. 14

External quality assurance review ............................................................................................................................... 15

Compliance with legal requirements ............................................................................................................................ 15

Independence practices ................................................................................................................................................. 17

Continuing education of audit professionals and certified auditors .................................................................................... 19

Revenue and remuneration ............................................................................................................................................ 20

Financial information ................................................................................................................................................. 20

Partner remuneration ................................................................................................................................................ 20

Appendix 1: EY Audyt public interest entity financial revision services clients ................................................................... 22

Appendix 2: The Management Board of General Partner's Statements .............................................................................. 29

More information about EY can be found at ey.com.


President of Management Boardof General Partner’s letter

Welcome to the 2016 Transparency Report of Ernst & Young Audyt Polska spółka z ograniczoną odpowiedzialnością sp.k. (“EYAudyt”). We appreciate that our stakeholders want to understand how we advance audit quality, manage risk and maintain ourindependence as auditors. This report is one of the ways in which we share with our stakeholders what we are doing in each ofthese areas. Regular dialogue is important to us and we welcome the opportunity to engage with our stakeholders on a range ofmatters.

Partner responsible for preparation of this report is Jarosław Dac (statutory auditor no 10138).

Executing high-quality audits continues to be our number one priority. It is at the heart of our ability to serve the public interestand grow the global EY network successfully and responsibly, while achieving our purpose of building a better working world.Auditors play a vital role in the functioning of capital markets by promoting transparency and supporting investor confidence.Companies, regulators and other stakeholders count on us to deliver excellence in every engagement.

EY is focused on investing in tools to improve what we do, creating the highest-performing teams and building trust and confidencein the audits we perform.

EY Audyt’s reputation is based on and grounded in providing high-quality, professional audit services objectively and ethically toevery company we audit.

We continue to embrace the transparency objectives of the European Union’s 8th Company Law Directive and Act on Auditors,which require Polish statutory auditors of public interest entities to publish annual transparency reports.

The 2016 EY Audyt Transparency Report complies with the Act on Auditors, and covers the fiscal year ending 30 June 2016. Inthis report, you can learn more about our internal quality control system: how we instill professional values, how we perform anaudit, our review and consultation processes, our approach to audit quality reviews and our independence practices.

EY Audyt is focused on enhancing audit quality and maintaining our independence, informed by several matters including externaland internal inspection findings. Continuously improving audit quality requires us to challenge approaches to audit execution, andwe focus on this by evaluating all inspection findings and taking responsive actions.

I encourage all our stakeholders — including investors, audit committee members, companies and regulators — to continue toengage with us on our strategy as well as any of the matters covered in this report.

Our purpose: building a better working worldEY is committed to doing its part in building a better working world.

The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the worldover. We develop outstanding leaders who team to deliver on our promises to stakeholders. In so doing, we play a critical role inbuilding a better working world for our people, our clients and our communities.


About usLegal structure, ownership andgovernanceIn Poland, Ernst & Young Audyt Polska spółka z ograniczonąodpowiedzialnością sp.k. (entered on the list of entitiesauthorized to audit financial statementson 16 February 1995 under no. 130), established is alimited partnership organized in Warsaw and is a memberfirm of Ernst & Young Global Limited, a UK company limitedby guarantee (EYG). In this report, we refer to ourselves asEY Audyt, “we,” “us” or “our.” EY refers collectively to theglobal organization of the member firms of EYG.

Information about legal structure and ownership arepresented as of 30 June 2016.

EY in Poland includes the other EYG member firms:

• Ernst & Young Usługi Finansowe Audyt spółka zograniczoną odpowiedzialnością Polska sp.k.

• Ernst & Young Audyt Polska spółka z ograniczonąodpowiedzialnością sp. k.

• Ernst & Young Doradztwo Podatkowe sp. z o.o.• Ernst & Young spółka z ograniczoną odpowiedzialnością

Corporate Finance sp. k.• Ernst & Young Usługi Księgowe sp. z o.o.• Ernst & Young spółka z ograniczoną odpowiedzialnością

Academy of Business sp. k.• Ernst & Young sp. z o.o.• Ernst & Young spółka z ograniczoną odpowiedzialnością

Business Advisory sp.k.• Ernst & Young Fundacja• Ernst & Young Usługi Finansowe Audyt sp. z o.o.• Ernst & Young Usługi Finansowe Audyt spółka z

ograniczoną odpowiedzialnością sp. k. w likwidacji• Ernst & Young Law Tałasiewicz i Wspólnicy sp. k.• Ernst & Young Audyt Polska sp. z o.o.• Ernst & Young Operations sp. z o.o.• EY Global Services (Poland) sp. z o.o.Ernst & Young Audyt Polska spółka z ograniczonąodpowiedzialnością sp. k. has the following Partners: Ernst &Young Audyt Polska sp. z o.o. entered on the list of entitiesauthorized to audit financial statements under no. 3822(General Partner) and Ernst & Young Usługi Finansowe Audytsp. z o.o Polska sp.k. (Limited Partner). Further detailsregarding the ownership of EY Audyt are available in thepublic registry of companies (National Court Registermaintained by the District Court for the city of Warsaw, XIIEconomic Department) in Poland.

The Members of the Management Board of the GeneralPartners are:

• Jacek Hryniuk – President of the Management Board(statutory auditor no 9262)

• Artur Żwak – Member of the the Management Board(statutory auditor no 9262)

The Members of the Supervisory Body of the GeneralPartners are:

• Iwona Kozera – statutory auditor no 9528• Jarosław Dac – statutory auditor no 10138• Renata Hayder

EYG member firms are grouped into four geographic Areas:Americas; Asia-Pacific; Europe, Middle East, India and Africa(EMEIA); and Japan. The Areas comprise a number ofRegions, which consist of member firms or sections ofthose firms.

EY Audyt is part of the EMEIA Area, which comprises EYGmember firms in 99 countries in Europe, the Middle East,India and Africa. Within the EMEIA Area, there are12 Regions.

Ernst & Young (EMEIA) Limited (EMEIA Limited), an Englishcompany limited by guarantee, is the principal coordinatingentity for the EYG member firms in the EMEIA Area. EMEIALimited facilitates the coordination of these firms andcooperation between them, but it does not control them.EMEIA Limited is a member firm of EYG, has no financialoperations and does not provide any professional services.

Each Region elects a Regional Partner Forum (RPF), whoserepresentatives advise and act as a sounding board toRegional leadership. The partner elected as PresidingPartner of the RPF also serves as the Region’srepresentative on the Global Governance Council(see page 6).

In Europe, a holding entity, Ernst & Young Europe LLP(EY Europe), with its registered office in London, 6 MoreLondon Place was formed in conjunction with EMEIALimited. EY Europe is an English limited liability partnership,owned by partners of the EYG member firms operating inEurope. It is an audit firm registered with the Institute ofChartered Accountants in England and Wales (ICAEW), but itdoes not carry out audits or provide any professionalservices. To the extent permitted by local legal andregulatory requirements, EY Europe has acquired or willacquire voting control of the EYG member firms operating inEurope. EY Europe is a member firm of both EYG and EMEIALimited.

EY Europe acquired voting control of EY Audyt as of 30September 2010.


EY Europe’s principal governing bodies are:

Europe Operating ExecutiveThe Europe Operating Executive (EOE) operates as the boardof EY Europe. It has authority and accountability for strategyexecution and management of EY Europe’s operations. TheEOE comprises: the Europe Managing Partner; the leadersfor Accounts, Talent and Risk Management; the service lineleaders for Assurance, Advisory, Transaction AdvisoryServices and Tax; and all European Regional ManagingPartners.

Europe Governance Sub-CommitteeEY Europe has the Europe Governance Sub-Committee,which includes one representative from each Region inEurope. It serves in an advisory role to the EOE on policies,strategies and other matters, and its approval is required fora number of significant matters, e.g., the appointment of theEurope Managing Partner, approval of the financial reportsof EY Europe and material transactions.

Network arrangementsEY is a global leader in assurance, tax, transaction andadvisory services. Worldwide, 231,000 people in memberfirms in more than 150 countries share a commitment tobuilding a better working world, united by shared values andan unwavering commitment to quality, integrity andprofessional skepticism. In today’s global market, EY’sintegrated approach is particularly important in the deliveryof high-quality multinational audits, which can span multiplejurisdictions.

EY’s central entity, EYG, coordinates the member firms andpromotes cooperation among them. EYG does not provideservices, but its objectives include the promotion ofexceptional, high-quality client service by member firmsworldwide.

Each member firm is a legally distinct entity. Theirobligations and responsibilities are governed by theregulations of EYG and various other agreements.

The structure and principal bodies of the global organizationduring the year ended 30 June 2016 are described below.


They reflect the principle that EY, as a global organization,has one shared strategy.

EY streamlined its operating model by creating theExecutive and the Regions. The Executive includes theGlobal Executive (GE), its committees and teams, and theleadership of the four Areas. This streamlined structureallows EY to further enhance its global scale and the deliveryof consistent exceptional client service worldwide, with theExecutive responsible for one global approach to strategy,quality, risk management, business planning, investmentsand priorities.

At the same time, this operating model allows for greaterstakeholder focus in the 28 Regions, permitting memberfirms to build stronger relationships with clients and othersin each country and be more responsive to local needs.

Global Governance CouncilThe Global Governance Council (GGC) is the main oversightbody of EYG. It comprises one or more representatives fromeach Region, other member firm partners as at-largerepresentatives and six independent non-executives (INEs).The Regional representatives, who otherwise do not holdsenior management roles, are elected by their RPFs for athree-year term, with provisions for one successivereappointment. The GGC advises EYG on policies, strategiesand the public interest aspects of their decision-making. Theapproval of the GGC is required for a number of significantmatters that could affect EY.

Independent non-executivesIndependent non-executives (INEs) are appointed fromoutside EY and bring the global organization, and the GGC,the significant benefit of their varied perspectives and views.The INEs also form a majority of the Public Interest Sub-Committee of the GGC, which addresses public interestmatters including stakeholder dialogue. The INEs arenominated by a dedicated committee.

Global ExecutiveThe GE brings together EY’s leadership functions, servicesand geographies. It is chaired by the Chairman and CEO ofEYG and includes its Global Managing Partners of ClientService and Business Enablement; the Area ManagingPartners; the global functional leadership for Talent andFinance; the leaders of the global service lines — Assurance,Advisory, Tax and Transaction Advisory Services; the GlobalLeader for Public Policy; and one EYG member firm partneron rotation.

The GE also includes the Chair of the Global AccountsCommittee and the Chair of the Emerging MarketsCommittee, as well as a representative from the emergingmarkets practices.

The GE and the GGC approve nominations for the Chairmanand CEO of EYG, and ratify appointments of the GlobalManaging Partners. The GE also approves appointments ofGlobal Vice Chairs. The GGC ratifies the appointments of anyGlobal Vice Chair who serves as a member of the GE.Furthermore, the GE appoints Area Managing Partners andapproves appointments of Regional Managing Partners. Theappointments of the Area Managing Partners are subject toratification by the GGC.


The GE’s responsibilities include the promotion of globalobjectives and the development, approval and, whererelevant, implementation of:

• Global strategies and plans• Common standards, methodologies and policies to be

promoted within member firms• People initiatives, including criteria and processes for

admission, evaluation, development, reward andretirement of partners

• Quality improvement and protection programs• Proposals regarding regulatory matters and

public policy• Policies and guidance relating to member firms’ service

of international clients, business development, marketsand branding

• EY’s development funds and investment priorities• EYG’s annual financial reports and budgets• GGC recommendations• Any other proposal that supports the global objectivesIt also has the power to mediate and adjudicate disputesbetween member firms.

GE committeesEstablished by the GE and bringing together representativesfrom the four Areas, the GE committees are responsible formaking recommendations to the GE. There are committeesfor Global Markets and Investments, Global Accounts,Emerging Markets, Talent, Risk Management, Assurance,Advisory, Tax, and Transaction Advisory Services, and thereis the Global Audit Committee.

Global Practice GroupThis group brings together the members of the GE, GEcommittees and Regional leaders. The Global Practice Groupseeks to promote a common understanding of EY’s strategicobjectives and consistency of execution across theorganization.

EYG member firmsUnder the regulations of EYG, member firms committhemselves to pursue EY’s objectives, such as the provisionof high-quality service worldwide. To that end, the memberfirms undertake to implement the global strategies andplans, and to maintain the prescribed scope of servicecapability. They are required to comply with commonstandards, methodologies and policies, including thoseregarding audit methodology, quality and risk management,independence, knowledge sharing, human resources, andtechnology.

Above all, EYG member firms commit to conducting theirprofessional practices in accordance with applicableprofessional and ethical standards and all applicablerequirements of law. This commitment to integrity and doingthe right thing is underpinned by EY’s Global Code ofConduct and EY’s values (see page 10).

Besides adopting the regulations of EYG, member firmsenter into several other agreements covering aspects oftheir membership in the EY organization such as the rightand obligation to use the EY name and the sharing ofknowledge.

Member firms are subject to reviews that evaluate theiradherence to EYG requirements and policies governingissues such as independence, quality and risk management,audit methodology and human resources. As necessary,special focus reviews are performed to address situations orconcerns as they arise. Member firms unable to meet thequality commitments and other EYG membershiprequirements may be subject to separation from the EYorganization.


Commitment to qualityInfrastructure supporting qualityQuality in our service linesVision 2020, which sets out EY’s purpose, ambition andstrategy, calls for EY member firms to provide exceptionalclient service worldwide. This is supported by an unwaveringcommitment to quality and service that is professionally andglobally consistent, and means service that is based onobjectivity, professional skepticism and adherence to EY andprofessional standards.

EY service lines are accountable for delivering qualityengagements, including managing quality reviews and real-time quality assurance of engagements, which measurescompliance with professional standards and all EY policies.

Vision 2020 has reinforced the ownership of qualitywithin the service lines, including audit. It has alsoresulted in increased clarity around the role of riskmanagement in policies and practices that support andimprove quality audit.

The Global Vice Chair of Assurance coordinates memberfirms’ compliance with and implementation of EY policiesand procedures for assurance services.

Professional PracticeThe Global Vice Chair of Professional Practice, referred to asthe Professional Practice Director (PPD), is overseen by theGlobal Vice Chair of Assurance and works directly with theArea PPDs to establish global audit quality control policiesand procedures. Each of the Area PPDs is overseen by theGlobal PPD and the related Area Assurance Leader. Thishelps provide greater assurance as to the objectivity of auditquality and consultation processes.

The Global PPD and Area PPDs also lead and oversee theProfessional Practice group. This is a Global and Areanetwork of technical subject matter specialists in accountingand auditing standards who consult on accounting, auditing,and financial reporting matters and perform various practicemonitoring and risk management activities.

The Global PPD oversees development of the EY Global AuditMethodology (EY GAM) and related technologies to beconsistent with relevant professional standards andregulatory requirements. The Professional Practice groupalso oversees the development of the guidance, training andmonitoring programs and processes used by member firmprofessionals to execute audits consistently and effectively.The PPDs, together with other professionals who work withthem in each member firm, are knowledgeable about EYpeople, clients and processes, and are readily accessible forconsultation with audit engagement teams.

Additional resources often augment the ProfessionalPractice group, including networks of professionalsfocused on:

• Internal-control reporting and related aspects of ouraudit methodology

• Accounting, auditing and risk issues for specificindustries and sectors

• Event-specific issues involving areas of civil and politicalunrest; or sovereign debt and related accounting,auditing, reporting and disclosure implications

• General engagement issues and how to work effectivelywith audit committees

Risk managementResponsibility for the delivery of high quality service andownership of the risks associated with quality is placed in theservice lines. The Global Risk Management Leader overseesthe management of these risks by the service lines, as hedoes in respect of other risks across the organization as partof the broader Enterprise Risk Management framework, andcontinues to work with the service lines on significant risks.

Member firm partners are appointed to lead riskmanagement initiatives in the service lines and memberfirms, supported by other staff and professionals. The GlobalRisk Management Leader is responsible for establishingglobally consistent risk management execution priorities andenterprise-wide risk management. These priorities cascadeto member firms, and their execution is monitored throughan Enterprise Risk Management program.


Global confidentiality policyProtecting confidential information is engrained in theeveryday activities of EYG member firms. Respect forintellectual capital, and all other sensitive and restrictedinformation, is established within the Global Code ofConduct, which provides a clear set of behaviors expected ofall EY people. In order to further enhance this approach toprotecting information, and to reflect the ever-increasinguse and distribution of restricted data, EYG launched a newGlobal Confidentiality Policy in 2015. This policy providesadded clarity to EY people and forms the fundamentalelement of a wider approach that includes other key policieson conflicts of interest, personal data privacy and recordsretention. Other elements of the approach include:

• Social media guidance• Information handling requirements• Knowledge sharing protocols

Components of audit quality control programIn the following sections, we describe the principalcomponents of the EY Audyt audit quality control program:

• Instilling professional values• Internal quality control system• Client acceptance and continuance• Performing audits• Review and consultation• Audit partner/ key certified auditor rotation• Audit quality reviews• External quality-assurance reviews• Compliance with legal requirements

Instilling professional valuesSustainable Audit QualityWe understand that audit quality is our primary goal, andthis is reflected in the launch of our Sustainable AuditQuality (SAQ) program. SAQ is our globally consistentapproach to implementing the highest level of audit qualityacross the organization. Launched in 2015, it is the highestpriority for our Assurance practice.

We use the word “sustainable” in SAQ to demonstrate thatthis is not a one-off, short-term initiative, but an ongoingprocess of improvement. EY has had a common auditmethodology for some time, and now we have a commonlanguage and processes regarding audit quality.

There are six components to SAQ: tone at the top; people;simplification; transformation and innovation; enablement,quality support and monitoring; and accountability. SAQ isimplemented by each member firm and is coordinated andoverseen globally.

We are constantly reinforcing the importance of the sixcomponents. It is something we talk about to every regionalAssurance leader and every partner. Audit quality and thekey elements of SAQ are something every senior manager,manager and team member must understand and becommitted to implementing locally. SAQ is essential to allour goals and ambitions.

Tone at the topSenior EY leadership is responsible for setting the right toneat the top and demonstrating EY’s commitment to building abetter working world through behavior and actions. Whilethe tone at the top is vital, our people also understand thatquality and professional responsibility start with them. Ourshared values, which inspire our people and guide them todo the right thing, and our commitment to quality areembedded in who we are and in everything we do.

Our approach to business ethics and integrity is contained inthe EY Global Code of Conduct and other policies and isembedded in our culture of consultation, training programsand internal communications. Senior management regularlyreinforces the importance of performing quality work,complying with professional standards and adhering toour policies, leading by example and through variouscommunications. Also, our quality review programs assessprofessional service as a key metric in evaluating andrewarding all professionals.

Our culture strongly supports collaboration and placesspecial emphasis on the importance of consultation indealing with complex or subjective accounting, auditing,reporting, regulatory and independence matters. We believeit is important to determine that engagement teams andclients correctly follow consultation advice, and weemphasize this when necessary.

Our consistent stance has been that no client is moreimportant than our professional reputation — thereputation of EY Audyt and the reputation of each ofour professionals.


Code of conductWe promote a culture of integrity among our professionals.The EY Global Code of Conduct provides a clear set ofstandards that guide our actions and our business conduct.It is organized into five categories containing principles thatare to be followed by everyone at EY Audyt to guidebehavior across all areas of activity:

• Working with one another• Working with clients and others• Acting with professional integrity• Maintaining our objectivity and independence• Respecting intellectual capitalThrough our procedures to monitor compliance withthe EY Global Code of Conduct, and through frequentcommunications, we strive to create an environment thatencourages all personnel to act responsibly, includingreporting misconduct without fear of retaliation.

The EY Ethics Hotline provides our people, clients and othersoutside of the organization with a means to report activityconfidentially that may involve unethical or improperbehavior and that may be in violation of professionalstandards or otherwise inconsistent with the EY GlobalCode of Conduct. The hotline is operated by an externalorganization that provides confidential and, if desired,anonymous hotline reporting services for companiesworldwide.

When a report comes into the EY Ethics Hotline, either byphone or internet, it receives immediate attention.Depending on the content of the report, appropriateindividuals from Risk Management, Talent, Legal or otherfunctions are involved to address the report. All matters arehandled by experienced individuals, with oversight from theglobal Risk Management function. For those matters that arereported outside of the EY Ethics Hotline, the sameprocedures are followed.

Our valuesWho we are

People who demonstrate integrity, respect and teaming

People with energy, enthusiasm and the courage to lead

People who build relationships based on doing the right thing

Internal quality control systemEY Audyt ’s reputation for providing high-qualityprofessional audit services independently, objectively andethically is fundamental to our success as independentauditors. We continue to invest in initiatives to promoteenhanced objectivity, independence and professionalskepticism. These are fundamental attributes of ahigh-quality audit.

At EY Audyt, our role as auditors is to provide assurance onthe fair presentation of the financial statements of thecompanies we audit. We bring together qualified teams toprovide our services, drawing on our proven experienceacross industry sectors and services. We continually strive toimprove our quality and risk management processes so thatthe quality of our service is at a consistently high level.

We recognize that in today’s environment — characterized bycontinuing globalization and the rapid movement of capital —the quality of our audit services has never been moreimportant. As part of Vision 2020, EY continues toinvest heavily in developing and maintaining our auditmethodology, tools and other resources needed tosupport quality service delivery.

While the market and stakeholders continue to demand high-quality audits, they also demand increasingly efficient andeffective delivery of audit services. In addition to theinvestment mentioned, EY continues to seek ways toimprove the effectiveness and the efficiency of its auditmethodology and processes, while maintaining audit quality.

We work to understand where our audit quality may not beup to our own expectations and those of stakeholders,including external audit firm regulators. We seek to learnfrom external and internal inspection activities and toidentify root causes of adverse quality occurrences to enableus to continually improve audit quality, and we believe thatan important part of the audit inspections process is to takeeffective and appropriate actions to improve quality.

In EY Audyt the person responsible for implementation andeffective operation of the internal quality control system isProfessional Practice Director – Jarosław Dac. This does notexclude the overall responsibility of the Management of theEY Audyt.

Effectiveness of the quality control systemEY has designed and implemented a comprehensive set ofglobal audit quality control policies and practices. Thesepolicies and practices meet the requirements of theInternational Standards on Quality Control issued by theInternational Auditing and Assurance Standards Board(IAASB). EY Audyt has adopted these global policies andprocedures and has supplemented them as necessary tocomply with local laws and professional guidelines, and toaddress specific business needs.


We also execute the EY Audit Quality Review (AQR) programin order to evaluate whether our system of audit qualitycontrol has operated effectively so as to provide reasonableassurance that EY Audyt and our people comply withapplicable professional and internal standards, andregulatory requirements.

The results of the AQR program and external inspections areevaluated and communicated within EY Audyt to provide thebasis for continual improvement in audit quality, consistentwith the highest standards in the profession.

The GE is responsible for implementing quality improvementand protection programs. As such, it reviews the results ofour internal AQR program and external regulatory reviews,as well as any key actions designed to address areas forimprovement.

The recent results of such monitoring, together with therecent feedback from independent regulatory inspectionvisits, provide EY Audyt with a basis to conclude that ourinternal control systems are designed appropriately and areoperating effectively.

Client acceptance andcontinuanceEY policyThe Client Acceptance and Continuance Policy sets outprinciples for member firms to determine whether to accepta new client or a new engagement, or to continue with anexisting client or engagement. These principles arefundamental to maintaining quality, managing risk,protecting our people and meeting regulatoryrequirements. The objectives of the policy are to:

• Establish a rigorous process for evaluating risk andmaking decisions to accept or continue clients orengagements

• Meet applicable independence requirements• Identify and deal appropriately with any conflicts

of interest• Identify and decline clients that pose excessive risk• Require consultation with designated professionals to

identify additional risk management procedures forspecific high-risk factors

• Comply with legal, regulatory and professionalrequirements

In addition, the EY Conflicts of Interest Global Policy definesglobal standards for addressing categories of potentialconflicts of interest and a process for identifying them. Italso includes provisions for managing potential conflicts ofinterest as quickly and efficiently as possible through the useof appropriate safeguards. Such safeguards range fromobtaining a client’s consent for EY member firms to act fortwo or more clients to declining an engagement in order toavoid an identified conflict.

The EY Conflicts of Interest Global Policy, and associatedguidance, was updated in early 2015. The updates take intoaccount the increasing complexity of our engagements andclient relationships, and the need for speed and accuracy inresponding to our clients. They also align with the latestInternational Ethics Standards Board for Accountants(IESBA) standards.

Putting policy into practiceWe use the EY Global Tool for Acceptance and Continuance(GTAC), an intranet-based system, for efficientlycoordinating client and engagement acceptance andcontinuance activities in line with global, service line andmember firm policies. GTAC takes users through theacceptance and continuance requirements, and identifies thepolicies and references to professional standards needed toassess both business opportunities and associated risks.

As part of this process, we carefully consider the riskcharacteristics of a prospective client and several duediligence procedures. Before we take on a new engagementor client, we determine if we can commit sufficient resourcesto deliver quality service, especially in highly technical areas,and if the services the client wants are appropriate for usto provide. The approval process is rigorous, and no newaudit engagement may be accepted without the approval ofour PPD.

In our annual client continuance process, we review ourservice delivery and ability to continue to provide qualityservice and confirm that clients share EY Audyt’scommitment to quality and transparency in financialreporting. The partner in charge of each audit, together withour Assurance leadership, annually reviews our relationshipwith the audit client to determine whether continuance isappropriate.

As a result of this review, certain audit engagements areidentified as requiring, and are then subjected to, additionaloversight procedures during the audit (close monitoring),and some audit clients are discontinued. As with the clientacceptance process, our PPD is involved in the clientcontinuance process and must agree with the continuancedecisions.


Both client acceptance and client continuance decisionsconsider the engagement team’s assessment of whetherthe company’s management could pressure us to acceptinappropriate accounting, auditing and reportingconclusions to undermine quality. Considerations andconclusions on the integrity of management are essentialto acceptance and continuance decisions.

Performing auditsAs part of Vision 2020, EY has invested significantly inimproving our audit methodologies and tools, with the goalof performing the highest-quality audits in the profession.This investment is consistent with EY’s goal to have theleading audit practice in the profession by 2020 and reflectsour commitment to building trust and confidence in thecapital markets and in economies the world over.

Audit methodologyThe EY Global Audit Methodology (EY GAM) provides aglobal framework for delivering high-quality audit servicesthrough the consistent application of thought processes,judgments and procedures in all audit engagements.Making risk assessments, reconsidering and modifyingthem as appropriate, and using these assessments todetermine the nature, timing and extent of audit proceduresare fundamental to EY GAM. The methodology alsoemphasizes applying appropriate professional skepticismin the execution of audit procedures. EY GAM is based onInternational Standards on Auditing (ISAs) and issupplemented in Poland to comply with Polish auditingstandards and regulatory or statutory requirements.

The EY auditor is presented with a version of EY GAMorganized by topic and designed to focus our audit strategyon the financial statement risks and the design andexecution of the appropriate audit response to those risks.EY GAM consists of two key components: requirements andguidance, and supporting forms and examples. Therequirements and guidance reflect both the audit standardsand EY policies. The forms and examples include leadingpractice illustrations and assist in performing anddocumenting audit procedures.

Using technology, EY GAM can be “profiled” or tailored topresent the relevant requirements and guidance, dependingon the nature of the entity being audited. For example, thereare profiles for listed entitles and for those considerednoncomplex entities.

Enhancements to the audit methodology are made regularlyas a result of new standards, emerging auditing issues andmatters, implementation experiences, and external andinternal inspection results. In 2016, EY GAM was updated toinclude the new and revised ISAs dealing with auditorreporting, other information included in an annual reportand financial statement disclosures. We also enhanced EYGAM by adding guidance to address common questions fromaudit teams and issues arising from inspections.

In addition, we monitor current and emergingdevelopments continually and issue timely audit planningand other reminders. These reminders emphasize areasnoted during inspections as well as other key topics ofinterest to our regulators, including the International Forumof Independent Audit Regulators (IFIAR). These topicsinclude professional skepticism, group audits, revenuerecognition and engagement quality reviews.

EY GAM requires compliance with relevant ethicalrequirements, including independence from the companywe audit.

TechnologyOur audit engagement teams use technology to assist inexecuting and documenting the work performed inaccordance with EY GAM. Beginning in late fiscal year 2015,EY launched the next generation global audit platform EYCanvas, on a phased basis across EYG member firmsglobally. The deployment continues and will be completed infiscal year 2017. EY Canvas is web-based, built using state-of-the-art technology to provide heightened data securityand allows us to evolve our software to respond to changesin the accounting profession and regulatory environment.

Through the use of profile questions, audit engagements inEY Canvas are automatically configured with informationrelevant to the company’s listing requirements and industry,helping keep our audit plans customized and up-to-date byproviding direct linkage to our audit guidance, professionalstandards and documentation templates. It is built with afresh, clear design and user interface that allows users tovisualize risks and their relationship to our planned responseand work performed in key areas. EY Canvas also enables alinkage for our group audit teams to communicate interofficerisks and instructions so that the primary audit team candirect execution and monitor performance of the groupaudit. Over the coming year, we will phase out ourpredecessor audit support tool, GAMx.

Audit engagement teams use other software applications,forms and templates during various phases of an audit toassist in executing procedures, making and documentingaudit conclusions, and performing analysis.


EY Helix is our suite of data analytic tools for use in audits.These help our engagement teams analyze a company’sdata, enhancing our risk assessment processes and enablingthe audit of higher-risk transactions.

EY Helix is already assisting our people to ask betterquestions about audit findings and evaluating the outcomes.Analytics are transforming the audit by analyzing largerpopulations of audit-relevant data, identifying unseenpatterns and trends in that data, and helping to direct ouraudit efforts. The use of analytics also allows us to obtainbetter perspectives, richer insights and a deeperunderstanding of transactions and areas of risk.

Formation of audit engagement teamsEY Audyt policies require an annual review of partner/ keycertified auditor assignments by our Assurance leadershipand PPD to make sure that the professionals leading publicinterest entities audits possess the appropriatecompetencies (i.e., the knowledge, skills and abilities) tofulfill their engagement responsibilities and are incompliance with applicable auditor rotation regulations.

The assignment of professionals to an audit engagement isalso made under the direction of our Assurance leadership.Factors considered when assigning people to audit teamsinclude competence, engagement size and complexity,specialized industry knowledge and experience, timing ofwork, continuity and opportunities for on-the-job training.For more complex engagements, consideration is given towhether specialized or additional expertise is needed tosupplement or enhance the audit engagement team.

In many situations, internal specialists are assigned as partof the audit engagement team to assist in performing auditprocedures and obtaining appropriate audit evidence. Theseprofessionals are used in situations requiring special skills orknowledge, such as information systems, asset valuation andactuarial analysis.

Review and consultationReviews of audit workOur policies describe the requirements for timely and directsenior professional participation as well as the level ofreview required for the work performed. Supervisorymembers of the audit engagement team perform a detailedreview of the audit documentation for accuracy andcompleteness. Senior audit executives and/or engagementpartners perform a second-level review to determineadequacy of the audit work as a whole and the relatedaccounting and financial statement presentation. A taxrepresentative reviews the significant tax and other relevantworking papers. For public interest entities and certain othercompanies, an engagement quality reviewer (describedbelow) reviews important areas of accounting, financial

reporting and audit execution, as well as the financialstatements of the company we audit and our audit report.

The nature, timing and extent of the reviews of audit workdepend on many factors, including:

• The risk, materiality, subjectivity and complexity of thesubject matter

• The ability and experience of the audit team memberspreparing the audit documentation

• The level of the reviewer’s direct participation in theaudit work

• The extent of consultation employedOur policies also describe the roles and responsibilities ofeach audit engagement team member for managing,directing and supervising the audit, as well as therequirements for documenting their work and conclusions.

Consultation requirementsOur consultation policies are built upon a culture ofcollaboration, whereby audit professionals are encouragedto share perspectives on complex accounting, auditing andreporting issues. Consultation requirements and relatedpolicies are designed to involve the right resources so thataudit teams reach appropriate conclusions.

Consultation is built into the decision-making process; itis not just a process to provide advice.

For complex and sensitive matters, we have a formal processrequiring consultation outside of the audit engagement teamwith other personnel who have more experience orspecialized knowledge, primarily Professional Practice andIndependence personnel. In the interests of objectivity andprofessional skepticism, our policies require members ofProfessional Practice, Independence and certain others towithdraw from a consultation if they currently serve, or haverecently served, the client to which the consultation relates.

Our policies also require that we document all consultations,including written concurrence from the person or personsconsulted, in order to demonstrate their understanding ofthe matter and its resolution.

Engagement quality reviewsEngagement quality reviews are performed by auditpartners in compliance with professional standards foraudits of all public interest entities and those consideredhigher risk. Engagement quality reviewers are experiencedprofessionals with significant subject matter knowledge.They are independent of the engagement team and ableto provide objective evaluation of significant accounting,auditing and reporting matters. In no circumstances maythe responsibility of the engagement quality reviewer bedelegated to another individual.


The engagement quality review spans the entireengagement cycle, including planning, risk assessment,audit strategy and execution. Policies and procedures for theperformance and documentation of engagement qualityreviews provide specific guidelines on the nature, timing andextent of the procedures to be performed and the requireddocumentation evidencing their completion. Our PPDapproves all engagement quality review assignments forpublic interest entities and those considered higher risk.

Audit engagement team resolution process fordifferences of professional opinionEY has a collaborative culture that encourages and expectspeople to speak up, without fear of reprisal, if a differenceof professional opinion arises or if they are uncomfortableabout a matter relating to a client engagement. Policiesand procedures are designed to empower members of anaudit engagement team by requiring them to raise anydisagreements relating to significant accounting, auditingor reporting matters.

These policies are made clear to people as they join EY, andwe continue to promote a culture that reinforces a person’sresponsibility and authority to make their own views heardand canvas the views of others.

Differences of professional opinion that arise during an auditare generally resolved at the audit engagement team level.However, if any person involved in the discussion of an issueis not satisfied with the decision, he or she has both theright and the obligation to see that the issue is referred tothe next level of authority until agreement is reached or afinal decision is made. Until such time, the parties to thediscussion do not withdraw, step aside or otherwise extractthemselves from the process.

Furthermore, if the engagement quality reviewer makesrecommendations that the engagement partner does notaccept or the matter is not resolved to the reviewer’ssatisfaction, the audit report is not issued until the matter isresolved by following consultation processes for resolvingdifferences of professional opinion. Our documentationrequirements for disagreements and their resolution are thesame as for other consultations. Anyone involved in theprocess may separately document his or her personalposition in an attachment to the documentation of the finaldecision.

Audit partner/ key certifiedauditor rotationEY supports mandatory audit partner rotation to helpstrengthen auditor independence. EY Audyt complies withthe audit partner rotation requirements of the code of theInternational Ethics Standards Board for Accountants(IESBA), and Act on Auditors, as well as the U.S. Securities

and Exchange Commission (SEC), where required. EY Audytsupports audit partner rotation because it provides a freshperspective and promotes independence from companymanagement while retaining expertise and knowledge of thebusiness. Audit partner rotation, combined withindependence requirements, enhanced systems of internalquality controls and independent audit oversight, helpsstrengthen independence and objectivity and are importantsafeguards of audit quality.

For public interest entities where rotation of the auditpartner is not mandated by local independence regulation oris less restrictive than the IESBA requirements, the EY GlobalIndependence Policy requires the lead engagement partnerand the engagement quality reviewer to be rotated afterseven years. For a new public interest entity (including anewly listed company) client, the lead engagement partnerand the engagement quality reviewer may remain in placefor an additional two years before rotating off the team,regardless of the time they served prior to the listing.Following rotation, the partner may not resume the lead orengagement quality review role until at least two years haveelapsed.

In Poland we have supplemented the above requirements ofthe provisions of the Act on Auditors, according to which keycertified auditor may not perform audit of the financialstatements in public interest entities longer than 5 years andunder the provisions of the Law on Insurance Activity (DzU2010.11.66 with subsequent amendments) according towhich the same audit firm cannot be elected for more than 5years.

We employ tools to track partner rotation that enableeffective monitoring of compliance with requirements.We have also implemented a process for partner rotationplanning and decision-making that involves consultationwith, and approvals by, our Professional Practice andIndependence professionals.

Audit quality reviewsThe Global Audit Quality Review (AQR) program is thecornerstone of our process to monitor audit quality. EYAudyt executes the Global AQR program, reports results anddevelops responsive actions plans. The primary goal of theprogram is to determine whether systems of quality controls,including those of EY Audyt, are appropriately designed andfollowed in the execution of audit engagements to providereasonable assurance of compliance with policies andprocedures, professional standards, and regulatoryrequirements. The Global AQR program complies withguidelines in the International Standard on Quality ControlNo. 1, as amended (ISQC No. 1), and is supplemented wherenecessary to comply with Polish professional standards andregulatory requirements. It also aids EY Audyt’s continual


efforts to identify areas where we can improve ourperformance or enhance our policies and procedures.

Implemented annually, the program is coordinated andmonitored by representatives of the PPD network, withoversight by the Assurance leadership.

The engagements reviewed each year are selected on a risk-based approach emphasizing audit engagements that arelarge, complex or of significant public interest. The GlobalAQR program includes detailed, risk-focused file reviewscovering a large sample of listed and nonlisted auditengagements to measure compliance with internal policiesand procedures, EY GAM requirements, and relevant localprofessional standards and regulatory requirements. It alsoincludes reviews of a sample of non-audit engagements.These measure compliance with the relevant professionalstandards and internal policies and procedures that shouldbe applied in executing non-audit services. In addition,practice-level reviews are performed to assess compliancewith quality control policies and procedures in the functionalareas set out in ISQC No. 1. The Global AQR programcomplements external practice monitoring and inspectionactivities, such as regulatory inspection programs andexternal peer reviews.

AQR reviewers and team leaders are selected for their skillsand professional competence in accounting and auditing, aswell as their industry specialization; they often work in theGlobal AQR program for a number of years and are highlyskilled in the execution of the program. Team leaders andreviewers are assigned to inspections outside of their homelocation and are independent of the audit teams reviewed.

The results of the Global AQR program and external practice-monitoring and inspection activities are evaluated andcommunicated to improve quality. Any quality improvementplans describe the follow-up actions to be taken, the peopleresponsible, the timetable and deadlines, and sign-off oncompleted actions. Measures to resolve audit quality mattersnoted from the Global AQR program, regulatory inspectionsand peer reviews are addressed by our Assurance leadershipand our PPD with input from Risk Management groups. Theactions are monitored by our PPD and Assurance leadership.These programs provide important practice monitoringfeedback for our continuing quality improvement efforts.

External qualityassurance reviewEY Audyt’s audit practice and our registered statutoryauditors are subject to annual inspection by the NationalChamber of Statutory Auditors (pol. Krajowa Izba BiegłychRewidentów, KIBR). As part of its inspections, the regulatorevaluates quality control systems and reviews selectedengagements.

The last quality assurance inspection by KIBR took place in2016. The final report on the inspection was issued on 31May 2016.

We respect and benefit from the KIBR inspection process.We thoroughly evaluate points raised during the inspectionin order to identify areas where we can improve auditquality. Together with our AQR process, external inspectionsaid us in making our audits and related control processes ofthe highest quality in the interests of investors and otherstakeholders.

Information on the above-mentioned regulator can be foundon its website www.kibr.org.pl.

Compliance with legalrequirementsThe EY Global Code of Conduct provides a clear set ofstandards that guide our actions and business conduct.EY Audyt complies with applicable laws and regulations, andEY’s values underpin our commitment to doing the rightthing. This important commitment is supported by a numberof policies and procedures, including:

Anti-briberyThe Anti-bribery Global Policy provides our people withdirection around certain unethical and illegal activities. Itemphasizes the obligation of our people to comply with anti-bribery laws and provides greater definition of whatconstitutes bribery. It also identifies reportingresponsibilities when bribery is discovered. In recognition ofthe growing global impact of bribery and corruption, effortshave been increased to embed anti-bribery measures acrossEY, and training is mandated for all our people.

Insider tradingThe Insider Trading Global Policy reaffirms the obligation ofour people not to trade in securities with insider information,provides detail on what constitutes insider information andidentifies with whom our people should consult if they havequestions regarding their responsibilities.


Trade sanctionsGiven the level of EY’s global integration, it is important thatwe are aware of the ever-changing situation in respect ofinternational trade sanctions. EY monitors sanctions issuedin multiple geographies and provides guidance to our peopleon impacted activities.

Data privacyThe Global Personal Data Privacy Policy sets out theprinciples to be applied to the use and protection of personaldata, including that relating to current, past and prospectivepersonnel, clients, suppliers and business associates. Thispolicy is consistent with applicable laws and regulationsconcerning data protection and privacy for maintaining andprocessing personal data. Furthermore, we have a policy toaddress our specific Polish data privacy requirements andbusiness needs.

Document retentionEY Audyt’s record retention policy applies to allengagements and personnel. This policy emphasizes that alldocuments must be preserved whenever any personbecomes aware of any actual or reasonably anticipatedclaim, litigation, investigation, subpoena or othergovernment proceeding involving us or one of our clientsthat may relate to our work. It also addresses Polish legalrequirements applicable to the creation and maintenance ofworking papers relevant to the work performed.


Independence practicesEY Independence policies require EY Audyt and our peopleto comply with the independence standards applicable tospecific engagements, including, for example, theindependence standards of the International EthicsStandards Board for Accountants (IESBA) of theInternational Federation of Accountants (IFAC), Act onAuditors, National Financial Revision Standards andprinciples of internal quality control system.

We consider and evaluate independence from severalperspectives, including: our financial relationships and thoseof our people; employment relationships; businessrelationships; the permissibility of non-audit services weprovide to audit clients; partner rotation; fee arrangements;audit committee preapproval, where applicable; and partnerremuneration and compensation.

Failure to comply with applicable professionalindependence requirements will factor into a person’spromotion and compensation decisions and may lead toother disciplinary measures, including separation fromEY Audyt.

EY Audyt has implemented EY’s global applications, toolsand processes to support us, our professionals and otheremployees in complying with independence policies.

EY Global Independence PolicyThe EY Global Independence Policy contains theindependence requirements for member firms, professionalsand other personnel. It is a robust policy predicated on theIESBA Code of Ethics, supplemented with more stringentrequirements where prescribed by a given regulator. Thepolicy also contains guidance to help people apply theindependence rules. The EY Global Independence Policyis readily accessible and easily searchable throughEY’s intranet.

Global Independence SystemThe Global Independence System (GIS) is an intranet-basedtool that helps our professionals identify the listed entitiesfrom which independence is required and the independencerestrictions that apply. Most often, these are listed auditclients and their affiliates, but they can be other types ofattest or assurance clients too. The tool includes family-treedata relating to affiliates of listed audit clients and is

updated by client-serving engagement teams. The entitydata includes notations that indicate the independence rulesthat apply to each entity, helping our people determine thetype of services that can be provided or other interests orrelationships that can be entered into.

Global Monitoring SystemThe Global Monitoring System (GMS) is another importantglobal tool that assists in identifying proscribed securitiesand other impermissible financial interests. Professionalsranked as manager and above are required to enter anysecurities they hold, or those held by their immediate family,into the GMS. When a person enters a proscribed security orif a security they hold becomes proscribed, they receive anotice and are required to dispose of the security. Identifiedexceptions are reported through the Global IndependenceIncident Reporting System (GIIRS) for regulatory matters.

GMS also facilitates annual and quarterly confirmation ofcompliance with independence policies, as described below.

Independence complianceEY has established a number of processes and programsaimed at monitoring the compliance with independencerequirements of EY member firms and their people. Theseinclude the following activities, programs and processes:

Independence confirmations

Timely and accurate completion of annual and quarterlyindependence confirmations is a high priority for theresponsible leadership teams.

Annually, EY Audyt is included in an Area-wide process toconfirm compliance with the Global Independence Policy andrequirements and to report identified exceptions, if any.

All EY professionals, and certain others based on their roleor function, are required to confirm compliance withindependence policies and procedures at least once a year.All partners are required to confirm compliance quarterly.

Global independence compliance reviews

EY conducts member firm visits to assess compliance withindependence matters. These reviews include aspects ofcompliance related to non-audit services, businessrelationships with the companies we audit and financialrelationships of member firms.


Personal independence compliance testing

Each year, EY’s global Independence team establishes aprogram for testing compliance with personal independenceconfirmation requirements and with reporting of informationinto GMS. For the 2015 testing cycle, EY Audyt tested 31partners and other personnel.

Non-audit services

We monitor compliance with professional standardsgoverning the provision of non-audit services to audit clientsthrough a variety of mechanisms. These include the use oftools (e.g., GTAC — see page 11 and Service OfferingReference Tool (SORT) — see below), training and requiredprocedures completed during the performance of audits andinternal inspection processes.

Global independence learning

EY develops and deploys a variety of independence learningprograms. All professionals and certain other personnelare required to participate in annual independence learningto help maintain our independence from the companieswe audit.

The goal is to help our people understand theirresponsibility and to enable each of them, and EY, to befree from interests that might be regarded as beingincompatible with objectivity, integrity and impartialityin serving an audit client.

The annual independence learning program coversindependence requirements focusing on recent changes topolicy, as well as recurring themes and topics of importance.Timely completion of annual independence learning isrequired and is monitored closely.

In addition to the annual learning program, independenceawareness is promoted through a number of events andmaterials, including the new-hire program, milestoneprograms and core service line curricula.

Service Offering Reference Tool

We assess and monitor our portfolio of services on anongoing basis, confirming that they are permitted by law andprofessional standards, and to make sure that we have theright methodologies, procedures and processes in place asnew service offerings are developed. We restrict servicesfrom being provided that could present undue independenceor other risks. Service Offering Reference Tool (SORT)provides our people with information about our serviceofferings. SORT includes guidance around which servicescan be delivered to audit and non-audit clients, as well asindependence and other risk management issues.

Business Relationship Evaluation Tool

The Business Relationship Evaluation Tool (BRET) processhelps to support our business relationships’ compliance withindependence requirements. Our people are required touse BRET in many circumstances to evaluate and obtainadvance approval of potential business relationship with anaudit client.

Audit committees and oversight of independenceWe recognize the important role audit committees andsimilar corporate governance bodies undertake in theoversight of auditor independence. Empowered andindependent audit committees perform a vital role on behalfof shareholders in protecting independence and preventingconflicts of interest. We are committed to robust and regularcommunication with audit committees or those charged withgovernance. Through our quality review programs, wemonitor and test compliance with our standards for auditcommittee communications, as well as the pre-approval ofnon-audit services, where applicable.


Continuing education ofaudit professionals andcertified auditorsProfessional developmentThe EY career development framework, EYU, provides ourpeople with opportunities for the right experiences, learningand coaching to help them grow and achieve their potential.

The learning component of EYU is based on an extensive andglobally consistent learning curriculum that helps all ourpeople develop the right technical and personal leadershipskills, wherever they are located around the world. Coreaudit training courses are supplemented by learningprograms that are developed in response to changes inaccounting and reporting standards, independence andprofessional standards, and emerging practice issues.

We are redesigning our core audit training into “The AuditAcademy” — a curriculum for learning. This high-impactlearning combines interactive classroom-based simulations,“on-demand” e-learning modules and relevant reinforcementand application support.

Where EY audits and reviews International FinancialReporting Standards (IFRS) financial statements, relevantteam members undertake learning to become IFRSaccredited.

EY Audyt requires our audit professionals to obtain at least20 hours of continuing professional education each year andat least 120 hours over a three-year period. Of these hours,40% (8 hours each year and 48 hours over a three-yearperiod) must cover technical subjects related to accountingand auditing.

All certified auditors are required to attend on a yearly basismandatory training relating to Module Audit and Accounting,as required by the Auditors Act. Based on the approvalreceived from the National Council of Statutory Auditors, EYAudyt is entitled to organize such courses.

In addition to formal learning, professional developmentoccurs through coaching and experiences our professionalsreceive on the job. Coaching helps to transform knowledgeand experience into practice.

Experienced professionals are expected to coach anddevelop less experienced personnel to create a continual

learning environment. We also manage the assignment ofour people to particular engagements in a systematic waythat helps to ensure they have exposure to a range ofexperiences as part of their own development.

Knowledge and internal communicationsIn addition to professional development and performancemanagement, we understand the importance of providingclient engagement teams with up-to-date information to helpthem perform their professional responsibilities. EY makessignificant investments in knowledge and communicationnetworks to enable the rapid dissemination of information tohelp people collaborate and share best practices. Examplesinclude:

• Global Accounting and Auditing Information Tool(GAAIT), which includes local and internationalaccounting and auditing standards as well asinterpretive guidance

• Publications such as International GAAP, IFRSdevelopments and illustrative financial statements

• Global Accounting and Auditing News, a weekly updatecovering assurance and independence policies,developments from standard setters and regulators aswell as internal commentary thereon

• Point of view and Overviews, which provide importantperspectives on current public policy and regulatorydevelopments

• Practice alerts and webcasts covering a range of globaland country-specific matters designed for continuousimprovement in the member firms’ Assurance practices

Performance managementA comprehensive performance management processrequires our people to set goals, have clear workexpectations, receive feedback and talk about theirperformance. The Performance Management andDevelopment Process (PMDP) is designed to help our peoplegrow and succeed in their careers.

Under the PMDP, periodic job performance reviews arecombined with annual self-appraisal and reviews. As part ofthe annual review process, each professional, in conjunctionwith his or her counselor (an assigned, more experiencedprofessional), identifies opportunities for furtherdevelopment. Professionals and their counselors are guidedby a set of expectations that articulate the knowledge, skillsand behaviors that should be maintained and developed fortheir respective ranks. These expectations are derived from,and align with, EY’s global strategy and values.


Revenue andremunerationFinancial informationThe financial information presented below for EY Audytrepresents combined, not consolidated, revenues andincludes expenses billed to clients and revenues related tobillings to other EYG member firms. Also, revenue amountsdisclosed in this report include revenues from both audit andnon-audit clients.

Revenue is presented in accordance with the Act onAuditors.

Financial information for the period ended 30 June 2016expressed in thousands of PLN.

Service Revenue(kPLN)

Percent

audit 93 762 44,59%

review 7 108 3,38%

other assurance services 1 826 0,87%

accounting books and taxregisters maintenance

0 0,00%

tax counselling 216 0,10%

bankruptcy and liquidationproceedings

0 0,00%

publishing and training 289 0,14%

expert, economic and financialopinions

43 356 20,62%

certification services,counselling and management

63 705 30,30%

Total 210 262 100,00%

Partner/ Key certified auditorremunerationQuality is at the center of EY’s business strategy and a keycomponent of our performance management systems. EYAudyt partners/ key certified auditors and otherprofessionals are evaluated and compensated based oncriteria that include specific quality and risk managementindicators, covering both actionsand results.

Global performance management processes cover partners/key certified auditors in EYG member firms around theworld. They reinforce the global business agenda by linkingperformance to wider goals and values. These ongoing,cyclical processes include goal setting, personaldevelopment planning and performance review, and are tiedto partners’ recognition and reward. It is the cornerstone ofthe evaluation process to document partners’/ key certifiedauditors, goals and performance. A partner’s/ key certifiedauditors’ goals are required to reflect various globalpriorities, one of which is quality.

EY prohibits evaluating and compensating lead auditengagement partners and other key audit partners on anengagement based on the sale of non-Assurance services totheir audit clients. This reinforces to our partners theirprofessional obligation to maintain our independence andobjectivity.

Specific quality and risk performance measures have beendeveloped to account for:

• Technical excellence• Living the EY values as demonstrated by behaviors and

attitude• Demonstrating knowledge of, and leadership in, quality

and risk management• Compliance with policies and procedures• Compliance with laws, regulations and professional

duties• Contributing to protecting and enhancing the EY brand


The EY partner/ key certified auditors’ compensationphilosophy calls for meaningfully differentiated rewardsbased on a partner’s/ key certified auditors’ level ofperformance, as measured by the Global PartnerPerformance Management (GPPM) process, which is aglobally consistent evaluation process for all partners in EYGmember firms around the world. Partners/ key certifiedauditors are assessed annually on their performance indelivering quality, exceptional client service and peopleengagement alongside our financial and market metrics.

We operate under a system that requires quality tobe a significant consideration in a partner’s/ keycertified auditors overall year-end rating.

To recognize different market values for different skills androles, and to attract and retain high-performing individuals,the following factors are also considered when calculatingtotal reward:

• Experience• Role and responsibility• Long-term potential• MobilityInstances of noncompliance with quality standards result inremedial actions, which may include compensationadjustment, additional training, additional supervision orreassignment. A pattern of noncompliance or particularlyserious noncompliance may result in actions that includeseparation from EY Audyt.


Appendix 1: EY Audyt public interest entity financialrevision services clientsIn the financial year that ended on 30 June 2016, EY Audyt performed financial revision services of the following public interestentities:

Alumetal SA

Amundi Parasolowy FIOsubfundusz Akcji Małych i Średnich Spółeksubfundusz Akcyjnysubfundusz Obligacjisubfundusz Płynnościowysubfundusz Stabilnego Wzrostusubfundusz Zrównoważony

Arctic Paper SA

Asseco Business Solutions SA

Asseco Poland SA

Asseco South Eastern Europe SA

ATM Grupa SA

Bank Ochrony Środowiska SA

Bank Of China (Luxembourg) SA Oddział w Polsce

Bank of Tokyo-Mitsubishi UFJ (Polska) SA

Bank Polskiej Spółdzielczości SA

BPI Bank Polskich Inwestycji SA

BPS FIOsubfundusz Akcjisubfundusz Obligacjisubfundusz Pieniężnysubfundusz Stabilnego Wzrostu

BPS SFIOsubfundusz Obligacji Korporacyjnychsubfundusz Płynnościowy

Ceska Pojistovna SA Oddział W Polsce

Dom Development SA

Dom Maklerski Banku BPS SA

Dom Maklerski Banku Ochrony Środowiska SA

Dom Maklerski mBanku SA

Echo Investment SA

Elektrobudowa SA


EMC Instytut Medyczny SA

Erste Securities Polska SA

EQUES SFIOsubfundusz EQUES Akcjisubfundusz EQUES Aktywnej Alokacjisubfundusz EQUES Obligacjisubfundusz EQUES Pieniężny

PRETIUM SFIO

Elavon Financial Services Limited sp. z o.o. Oddział w Polsce

Euro Bank SA

Fabryka Farb i Lakierów Śnieżka SA

Fabryka Obrabiarek Rafamet SA

Famur SA

Generali Powszechne Towarzystwo Emerytalne SA

Generali Otwarty Fundusz Emerytalny

Generali Towarzystwo Ubezpieczeń SA

Generali Życie Towarzystwo Ubezpieczeń SA

Globe Trade Centre SA

Groclin SA

Grupa Kapitałowa Immobile SA

Grupa LOTOS SA

IDEA BANK SA

IMPEL SA

ING BSK Fundusze Indeksowe SFIOsubfundusz ING BSK Indeks MSCI EMUsubfundusz ING BSK Indeks S&P 500subfundusz ING BSK Indeks WIG 20

Kruk SA

LC CORP. SA

Lentex SA

Liberty Seguros Compania de Seguros y Reaseguros SA Oddział w Polsce

MIDAS SA

mBank Hipoteczny SA

mBank SA

MetLife Towarzystwo Ubezpieczeń na Życie i Reasekuracji SA

mWealth Management SA

NN SFIO Akcji 2

NN SFIO Obligacji 2

NN Parasol FIOsubfundusz Akcjisubfundusz Akcji Środkowoeuropejskichsubfundusz Gotówkowy


subfundusz Lokacyjny Plussubfundusz Obligacjisubfundusz Selektywnysubfundusz Stabilnego Wzrostusubfundusz Średnich i Małych Spółeksubfundusz Środkowoeuropejski Budownictwa i Nieruchomościsubfundusz Zrównoważony

NN SFIOsubfundusz Ameryki Łacińskiej (L)subfundusz Depozytowy (L)subfundusz Europejski Spółek Dywidendowych (L)subfundusz Globalny Długu Korporacyjnego (L)subfundusz Globalny Spółek Dywidendowych (L)subfundusz Japonia (L)subfundusz Nowej Azji (L)subfundusz Obligacji Rynków Wschodzących (Waluta Lokalna) (L)subfundusz Spółek Dywidendowych Rynków Wschodzących (L)subfundusz Spółek Dywidendowych USA (L)subfundusz Stabilny Globalnej Alokacji (L)subfundusz Stabilny Globalnej Alokacji EUR (L)subfundusz Dynamiczny Globalnej Alokacji (L)subfundusz Obligacyjny Globalnej Alokacji (L)

NN Perspektywa SFIOsubfundusz Perspektywa 2020subfundusz Perspektywa 2025subfundusz Perspektywa 2030subfundusz Perspektywa 2035subfundusz Perspektywa 2040subfundusz Perspektywa 2045

ING Konto Funduszowe SFIOsubfundusz Pakiet Dynamicznysubfundusz Pakiet Ostrożnysubfundusz Pakiet Umiarkowany

Fundusz Własności Pracowniczej PKP SFIO

Investor FIZ

Investor Gold FIZ

Investor Parasol FIOsubfundusz Investor Akcjisubfundusz Investor Akcji Dużych Spółek Dywidendowychsubfundusz Investor Obligacjisubfundusz Investor Płynna Lokatasubfundusz Investor Top 25 Małych Spółeksubfundusz Investor Top 50 Małych i Średnich Spółeksubfundusz Investor Zabezpieczenia Emerytalnegosubfundusz Investor Zrównoważony

Investor Parasol SFIOsubfundusz Investor Akcji Rynków Wschodzącychsubfundusz Investor Akcji Spółek Wzrostowychsubfundusz Investor Ameryka Łacińskasubfundusz Investor BRICsubfundusz Investor Globalny Akcjisubfundusz Investor Gold Otwartysubfundusz Investor Gotówkowysubfundusz Investor Indie i Chinysubfundusz Investor Niemcy


subfundusz Investor Obligacji Korporacyjnychsubfundusz Investor Obligacji Rynków Wschodzących Plussubfundusz Investor Rosjasubfundusz Investor Sektora Infrastruktury i Informatykisubfundusz Investor Sektora Nieruchomości i Budownictwasubfundusz Investor Turcja

First Private Equity FIZAN

Investor CEE FIZ

Investor Property FIZAN

ALIOR SFIOsubfundusz Agresywnysubfundusz Papierów Dłużnychsubfundusz Stabilnych Spółeksubfundusz Zmiennej Alokacji

BGŻ SFIOsubfundusz Systematycznego Oszczędzaniasubfundusz Multistrategiasubfundusz Konserwatywnysubfundusz Dynamiczny

Ipopema m-INDEKS FIO

Ipopema SFIOsubfundusz IPOPEMA Akcjisubfundusz IPOPEMA Dłużnysubfundusz IPOPEMA Globalnych Megatrendówsubfundusz IPOPEMA Gotówkowysubfundusz IPOPEMA Makro Alokacjisubfundusz IPOPEMA Małych i Średnich Spółeksubfundusz IPOPEMA m-INDEKSsubfundusz IPOPEMA Obligacjisubfundusz IPOPEMA Short Equity

KBC Alokacji Sektorowych FIZ

KBC BETA Dywidendowy SFIO

KBC Parasol Biznes SFIOsubfundusz KBC DELTAsubfundusz KBC GAMMA

KBC PARASOL FIOsubfundusz KBC Akcji Małych i Średnich Spółeksubfundusz KBC Akcyjnysubfundusz KBC Aktywnysubfundusz KBC Globalny Akcyjnysubfundusz KBC Globalny Ochrony 90 Listopadsubfundusz KBC Obligacji Korporacyjnychsubfundusz KBC Papierów Dłużnychsubfundusz KBC Pieniężnysubfundusz KBC Stabilnysubfundusz KBC Zmiennej Alokacji

KBC Portfel VIP SFIOsubfundusz KBC Portfel Akcji Średnich Spółeksubfundusz KBC Portfel Akcyjnysubfundusz KBC Portfel Obligacyjnysubfundusz KBC Portfel Pieniężny

KBC ALFA SFIO


Korporacja Ubezpieczeń Kredytów Eksportowych SA

Narodowy Bank Polski

Nordea Powszechne Towarzystwo Emerytalne SA

Nordea Otwarty Fundusz Emerytalny

Open Finance FIOsubfundusz Open Finance Akcjisubfundusz Open Finance Akcji Małych i Średnich Spółeksubfundusz Open Finance Aktywnej Alokacjisubfundusz Open Finance Obligacjisubfundusz Open Finance Pieniężnysubfundusz Open Finance Stabilnego Wzrostu

DB Funds FIOsubfundusz DB Fund Dynamicznysubfundusz DB Fund Globalny Zrównoważonysubfundusz DB Fund Instrumentów Dłużnych

Novo FIOsubfundusz NOVO Akcjisubfundusz NOVO Akcji Globalnychsubfundusz NOVO Aktywnej Alokacjisubfundusz NOVO Gotówkowysubfundusz NOVO Obligacji Przedsiębiorstwsubfundusz NOVO Papierów Dłużnychsubfundusz NOVO Stabilnego Wzrostusubfundusz NOVO Zrównoważonego Wzrostu

OPERA FIOsubfundusz OPERA Avista.plsubfundusz OPERA Equilibrium.plsubfundusz OPERA Pecunia.plsubfundusz OPERA Universa.pl

Opera NGO SFIO

OPERA SFIOsubfundusz Eurogeddonsubfundusz OPERA Alfa-plus.plsubfundusz OPERA Avista-plus.plsubfundusz OPERA Tutus-Plus

Opera Za 3 Grosze FIZ

Optimum FIOsubfundusz Optimum Akcjisubfundusz Optimum Gotówkowysubfundusz Optimum Obligacji

Orange Polska SA

Orzeł Biały SA

PBG Spółka Akcyjna w upadłości układowej

Pemug SA

Polska Grupa Odlewnicza SA

Polski Koncern Mięsny Duda SA

Powszechne Towarzystwo Emerytalne Allianz Polska SA

Allianz Polska Otwarty Fundusz Emerytalny


Prime Car Management SA

PRZETWORSTWO TWORZYW SZTUCZNYCH PLAST BOX SA

RAFAKO SA

RBS Bank (Polska) SA

Robyg SA

SIGNAL IDUNA Polska Towarzystwo Ubezpieczeń SA

SIGNAL IDUNA Życie Polska Towarzystwa Ubezpieczeń SA

Skarbiec Holding SA

SKARBIEC FIOsubfundusz Akcji SKARBIEC-AKCJAsubfundusz Dłużnych Papierów Wartościowych SKARBIEC-DEPOZYTOWYsubfundusz Instrumentów Dłużnych SKARBIEC-OBLIGACJAsubfundusz Pieniężny SKARBIEC-KASAsubfundusz SKARBIEC-AKCJI NOWEJ EUROPYsubfundusz SKARBIEC-III FILARsubfundusz SKARBIEC-LOKACYJNYsubfundusz SKARBIEC-Małych i Średnich Spółeksubfundusz SKARBIEC-Market Neutralsubfundusz SKARBIEC-MARKET OPPORTUNITIESsubfundusz SKARBIEC-RYNKÓW ROZWINIĘTYCHsubfundusz SKARBIEC-RYNKÓW SUROWCOWYCHsubfundusz SKARBIEC-RYNKÓW WSCHODZĄCYCHsubfundusz SKARBIEC-SPÓŁEK WZROSTOWYCHsubfundusz SKARBIEC-TOP BRANDSsubfundusz Zrównoważony SKARBIEC-WAGA

Skarbiec-JPMorgan Asset Management Funds Polska SFIOsubfundusz JPMorgan-Emerging Markets Opportunities Fund Polskasubfundusz JPMorgan-Global High Yield Bond Fund Polskasubfundusz JPMorgan-Global Strategic Bond Fund Polskasubfundusz JPMorgan-Highbridge US STEEP Fund Polska

SKARBIEC-TOP Funduszy Akcji SFIO

SKARBIEC-TOP Funduszy Stabilnych SFIOsubfundusz SKARBIEC-Obligacji Globalnych

BNP Paribas FIOsubfundusz BNP Paribas Akcjisubfundusz BNP Paribas Papierów Dłużnychsubfundusz BNP Paribas Stabilnego Wzrostu

Trigon Polskie Perły FIZ

ENERGA Trading SFIOsubfundusz Energa Trading 1

Parasol UniFundusze FIOsubfundusz UniAkcje Dywidendowysubfundusz UniAkcje Turcjasubfundusz UniAkcje Wzrostusubfundusz UniAkcje: Małych i Średnich Spółeksubfundusz UniAkcje: Nowa Europasubfundusz UniDolar Pieniężnysubfundusz UniKorona Akcjesubfundusz UniKorona Obligacjesubfundusz UniKorona Pieniężnysubfundusz UniKorona Zrównoważony


subfundusz UniLokatasubfundusz UniObligacje: Nowa Europasubfundusz UniStabilny Wzrost

Parasol UniFundusze SFIOsubfundusz UniBessasubfundusz SGB Gotówkowysubfundusz SGB Zagranicznysubfundusz UniAkcje Biopharmasubfundusz UniAkcje Daleki Wschódsubfundusz UniAkcje Globalny Dywidendowysubfundusz UniAktywny Pieniężnysubfundusz UniDynamiczna Alokacja Aktywówsubfundusz UniEURIBORsubfundusz UniObligacje Aktywnysubfundusz UniObligacje Zamiennesubfundusz UniStrategie Dynamicznysubfundusz UniWIBID Plus

UniSystem FIZsubfundusz UniSystem 1

Trigon Dom Maklerski SA

Towarzystwo Ubezpieczeń Inter Polska SA

Towarzystwo Emerytalne Orange Polska SA

TOWARZYSTWO UBEZPIECZEN INTER ZYCIE POLSKA SA

TOWARZYSTWO UBEZPIECZEŃ ALLIANZ ŻYCIE POLSKA SA

Towarzystwo Ubezpieczeń i Reasekuracji Allianz Polska SA

UBS Limited sp. z o.o. Oddział w Polsce

Voxel SA

WASKO SA

Wawel SA

Western Union International Bank GmbH sp. z o.o. Oddział W Polsce

WIELTON SA

X-Trade Brokers Dom Maklerski SA

ZAMET INDUSTRY SA

Zespół Elektrowni Pątnów-Adamów-Konin SA


Appendix 2: The Management Boardof General Partner’s Statements

The Management Board of Ernst & Young Audyt Polska sp. z o.o. General Partner of Ernst & Young Audyt Polska spółka zograniczoną odpowiedzialnością sp. k. confirms that:

° the internal quality control system has been prepared and implemented according to art. 21 para 3 point 3b) of the Act onstatutory auditors and their self-governance, audit firms authorized to audit financial statements and public oversight, dated 7May 2009 (Act on statutory auditors).

° the independence procedures are in line with art. 56 of the Act on statutory auditors and Code of Ethics IFAC, adopted byNational Council of Statutory Auditors (pol. Krajowa Rada Biegłych Rewidentów) as Code of Ethics for Statutory Auditors. Thelast control of independence compliance took place in 2013 and has been performed by EY specialists from outside the Polishpractice. The Management Board confirms also that EY Audyt possess the specialized team responsible for ongoing monitoringof independence procedures.

° the company gives the possibility to all certified auditors who work in the company to attend mandatory training for certifiedauditors as required by National Council of Statutory Auditors communiqués and

° EY Audyt monitors statutory auditors’ compliance with mandatory trainings requirements.

Warsaw, 30 September 2016

EY | Assurance | Tax | Transactions | Advisory

About EYEY is a global leader in assurance, tax, transaction andadvisory services. The insights and quality services we deliverhelp build trust and confidence in the capital markets and ineconomies the world over. We develop outstanding leaderswho team to deliver on our promises to all of ourstakeholders. In so doing, we play a critical role in building abetter working world for our people, for our clients and forour communities.

EY refers to the global organization, and may refer to one ormore, of the member firms of Ernst & Young Global Limited,each of which is a separate legal entity. Ernst & Young GlobalLimited, a UK company limited by guarantee, does notprovide services to clients. For more information about ourorganization, please visit ey.com.

© 2016 Ernst & Young Audyt Polskaspółka z ograniczoną odpowiedzialnością sp. k.All Rights Reserved.

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This material has been prepared for general informational purposes only and isnot intended to be relied upon as accounting, tax, or other professional advice.Please refer to your advisors for specific advice.

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