What is a family foundation compliance review?
A family foundation compliance review focuses on two key areas: the management of the family foundation’s assets and the fulfillment of its obligations, including public-law obligations. It covers a review of the family foundation’s entire operations.
The audit assesses the family foundation’s operations in terms of:
- correctness,
- reliability,
- compliance with the law,
- compliance with the objectives of the family foundation,
- compliance with the family foundation’s documents.
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Who is a family foundation compliance review for and is it mandatory?
The Polish Family Foundation Act requires every family foundation to undergo periodic reviews covering, among other matters, asset management and the incurring and fulfillment of obligations. This review is separate from the audit of the family foundation’s financial statements.
Every family foundation is therefore required to undergo an audit, while the beneficiaries’ meeting is responsible for appointing an audit firm or a team of auditors.
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What benefits can a family foundation compliance review provide?
An audit can provide valuable information about whether the family foundation’s affairs are being managed correctly and appropriately. This is particularly important from a tax perspective, as identifying potential issues and risks makes it possible to adjust the foundation’s activities, ensure compliance with the applicable tax rules and detect any legal irregularities in its operations.
The audit findings may also help assess the effectiveness of investments made through the family foundation.
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How often must a family foundation compliance review be conducted?
A family foundation must undergo a compliance review at least once every four years. However, an exception applies to entities whose financial statements are subject to a mandatory annual audit because they met the conditions specified in the Polish Accounting Act in the preceding financial year.
A family foundation whose financial statements are subject to a mandatory audit must therefore undergo the family foundation compliance review annually.
Scope of support
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Comprehensive family foundation compliance review
A comprehensive review involves a detailed analysis of the foundation’s legal position across all areas of its operations in terms of correctness, reliability and compliance with applicable law, the objectives of the family foundation and its documents. Following the review, we prepare a report setting out the identified risks, key issues, an executive summary and recommendations.
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Comprehensive support in preparing for a family foundation compliance review
We help prepare the documentation required for a review conducted by an entity other than Grant Thornton. This gives the family foundation an opportunity to address any irregularities before the review is carried out by an independent audit team.
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Coordination of the compliance review process
We provide support in preparing documentation, facilitating cooperation with external auditors and clarifying any discrepancies.
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Assistance in implementing changes required following a family foundation compliance review
We help implement the necessary changes and modifications arising from a review conducted by a third party or an independent team of auditors. Our support also includes filing the necessary documents confirming the changes with the registry court.
Implementation process
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Kick-off meeting
In connection with the first audit of the family foundation, we will provide information on the legal requirements applicable to the audit.
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Understanding the organization
During the first stage of our work, we familiarize ourselves with your family foundation, its organizational structure, results and financial position in the context of its economic and legal environment. We also review its accounting system and the operation of its internal control system.
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Compliance review work
This is the core stage of the review. We review the legal and tax aspects of the family foundation’s operations and its internal controls. We also verify the correctness and reliability of the information presented in the financial statements.
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Findings meeting
During this meeting, we present our audit findings, identify areas requiring urgent adjustments and propose improvements to the foundation’s systems and processes.
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Opinion and report
The audit findings are presented to the management board in the form of an opinion and report. The management board is required to submit them to the supervisory board or, if no supervisory board has been established, to the beneficiaries’ meeting.
Where appropriate, we also provide the management board or beneficiaries’ meeting with a letter outlining significant audit findings that do not need to be included in the opinion or report.
In connection with the first audit of the family foundation, we will provide information on the legal requirements applicable to the audit.
FAQ – Family Foundation Compliance Reviews
Is a family foundation compliance review mandatory and how often must it be conducted?
If the foundation meets specific criteria, for example regarding revenue or asset value, and its annual financial statements are subject to a mandatory statutory audit, the family foundation audit must be conducted annually alongside the audit of its financial statements. An independent auditor, either an audit firm or a team of auditors, is appointed by the beneficiaries’ meeting.
What does a family foundation compliance review cover?
What benefits does a family foundation compliance review provide to the founder and beneficiaries?
For the founder and beneficiaries, the audit provides reliable information supporting informed decision-making and strengthens confidence in the foundation’s operations. It also facilitates preparation for regulatory changes and the adjustment of the foundation’s activities to future legal requirements.
The auditors assess the correctness and reliability of the foundation’s activities and their compliance with applicable law, the foundation’s statutes and its internal regulations.
How is a family foundation compliance review conducted and what documents must be prepared?
Key documents are then analyzed, including the foundation’s statutes, financial statements and accounting records. During the main stage of the audit, the foundation’s compliance with applicable law, accounting principles and adopted procedures is reviewed.
Once the audit has been completed, the
