Changes Regarding the Auditor’s Opinion for Non-PIEs in Germany
By Dr Thomas Geiger, Munkert & Partner Steuerberater Wirtschaftsprüfer Rechtsanwälte GbR
Starting with the current busy season, the wording of audit opinions for non-PIEs will be significantly different from the previously issued auditor’s opinions in Germany.
The new regulations are aiming for an increase of confidence in the audit and the validity of audit results, in particular by providing clearer statements on responsibilities, so that the problem of the so-called “expectation gap” will be reduced in the future.
From now on, the vital judgement will be formulated, contrary to previous practice in Germany, at the beginning of the auditor’s opinion, not at the end. In case the client prepares a management report that is subject to the audit, the independent auditor’s opinion will contain two separate audit opinions in the future: one for the annual financial statements and one for the management report.
The legal representatives’ responsibility and, where applicable, the responsibility of the Supervisory Board for the annual financial statements and the management report, will be pointed out in more detail and more clearly delineated from the auditor’s responsibilities in the context of the audit of the annual financial statements. The task and objectives of the audit, but also its limits, are therefore more transparent and easier to understand for the addressees.
Overall, it is emphasised that the auditor’s opinion is only based on a reasonable assurance, which is a high level of assurance but not a guarantee that an audit will always detect a material misstatement. By clarifying this, the public’s expectations regarding an audit shall be reduced so that the audit opinion is not to be understood as a confirmation for absolutely error-free financial statements.
In summary, it should be noted that the previous, usually maximum two-sided “formula opinion” now also for audits of non-PIEs, is obsolete. The opinion’s addressees in Germany must adjust to much longer and more individualised audit opinions. On the other hand, they will receive more meaningful information about the audited company and the scope of an audit than before. At least, that is what the new regulations are aiming for.
Dr Thomas GeigerMunkert & Partner Steuerberater Wirtschaftsprüfer Rechtsanwälte GbR, Nuremberg, Germany
T: +49 911 5987 0
Munkert & Partner, established in 1969 and celebrating its fiftieth birthday this year, is a multi-disciplinary advisory firm providing tax and legal advisory, accounting and auditing, as well as corporate finance services mainly for mid-size clients as well as public-sector companies.
Dr Thomas Geiger is the responsible partner for the business unit audit and auditrelated services within Munkert & Partner. After several years in one of the Big Four accounting firms he joined the company in 2007. He has almost 20 years of experience in the audit of annual and consolidated financial statements as well as financial due diligences.
Published: Auditing, Reporting & Compliance, No. 01, Spring 2019 l Photo: Jenifoto - stock.adobe.com