Auditing
Under auditing means the audit of the financial reporting of companies according to the applicable accounting standards, particularly in the context of the law for medium and large corporations annual audit . The term includes auditing of bookkeeping and accounting . The profitability is only assessed to the extent that it is determined whether the company is likely to continue as a going concern. In theory, an audit compares an actual state with a target state and, on the basis of the discrepancy, a corresponding audit certificate is either granted or refused without restriction or restriction. This is to ensure that the addressees of the financial statements (e.g. investors, suppliers, lenders, employees) can trust the information in the annual financial statements (information function), that the profit is correctly reported (payment assessment function) and indirectly the correct tax burden (relevance of the commercial balance sheet for the tax balance sheet). Depending on the accounting standard, certain functions predominate, which is reflected in different approach and evaluation criteria.
Auditing may only be carried out by auditors or sworn auditors with the support of other employees (assistants without exams) according to the Wirtschaftsprüferordnung (WPO) . This is to be distinguished from a control by employees of the audited company, which is then referred to as internal auditing , or a control of the finances of an association by auditors elected from the group of members ( auditing ).
history
References to controls can be found in ancient Babylonian and Egyptian records. The Roman Empire already had a very sophisticated system of controls for tax officials.
Origin in Germany
In Germany, the first state audit office was established in 1701. The first obligation to audit arose in Germany in 1870 with the first amendment to stock corporation law . A partnership limited by shares (KGaA) or a stock corporation (AG) had to have a supervisory board . The supervisory board was obliged to examine the annual financial statements and to report the results to the general meeting . In 1884 the company law was revised again ( 2nd amendment to company law ). KGaA or AG could have the audit of the balance sheet carried out by special auditors (external auditors). Under certain conditions (see Article 209h of the 2nd amendment to stock corporation law ), companies had to have their annual financial statements checked by special auditors.
The profession of books auditor was created by the "Industrial Code for the German Reich" in the version of 26 July 1900. The Graduate School of Leipzig offered in 1907 for the first time the two-semester degree program graduate books auditor to.
In 1896 the Association of Berlin Book Reviewers was founded, which in 1905 became the "Association of German Book Reviewers" (VDB). This was the first association of individual auditors. In 1929, 853 auditors were members of the VDB.
In the summer of 1929, Frankfurter Allgemeine Versicherungs AG (FAVAG), the second largest insurance company in the Weimar Republic, collapsed. For years, FAVAG had made non-insurance investments with high risk. Booking accounts and the balance sheet were used to cover up the company's financial distress. Allianz integrated the insurance-related parts of the group into its group, while the remaining parts of FAVAG were wound up.
A reform of the stock corporation law, initiated as early as 1928, focused on the “publicity of corporate relationships and control of corporate administrations”. In particular, the introduction of a mandatory audit was discussed. With the background of the collapse of FAVAG and in order to accelerate parts of the reform, the “Ordinance of the Reich President on Stock Corporation Law, Banking Supervision and Tax Amnesty” (VO) was published on September 19, 1931. Among other things, it contains provisions on disclosure requirements (annual report, annual financial statements and auditing). Auditors were only allowed to be trained and experienced in accounting. Audit firms were only allowed to check balance sheets if one of the owners, board members or managing directors was trained and experienced in bookkeeping.
The profession of auditor originated from the 1st implementing regulation for the regulation on December 15, 1931. Auditors had to be publicly appointed and audit firms had to be registered.
The federal states of the German Reich established “the legal and institutional framework” for the new profession. The requirements for admission were defined as “a minimum age of 30 years, six years of practical experience” (“of which at least three years as an auditor”) and “passing a specialist examination”. Proven practitioners were able to “be exempted from the specialist examination in a five-year transition phase”. Applicants had to be either “authorized signatories of a sole trader or a trust company” or a full-time auditor. In 1931 twelve approval and examination offices for auditors were created. The main office was established at the German Industry and Trade Day in Berlin.
At the beginning of 1932 there were around 280 auditors in Germany and 32 auditing firms registered.
On February 1, 1932, the Institut der Wirtschaftsprüfer e. V. (IDW) in Berlin . Only auditors and auditing firms could become members of the IDW.
The "Ordinance on the merger in the field of economic auditing and fiduciary services" of March 23, 1943 brought together "auditors, auditing companies and sworn auditors (sworn auditors)" in the "Reich Chamber of Public Accountants". The "main office for publicly appointed auditors" and the "main office for auditing and fiduciary services" were merged to form the "main office for auditing" based in Berlin. The public appointment and the swearing-in of the auditors and accountants was regulated by the Reich Economics Minister. The job title "sworn auditor" has been replaced by "sworn auditor".
Development since the 1990s
Often spectacular corporate crises led to changes in the examination requirements. The bankruptcy of the building contractor Jürgen Schneider led to a tightening of the credit check rules for banks in Germany in 1994 .
Various reasons such as a lack of risk management, inadequate monitoring of the financial accounting or accounting or personal misconduct led to the insolvency of other companies. Between 1993 and 2002 these included the metal company , the construction company Philipp Holzmann AG, the computer dealer Escom and the large shipyard Bremer Vulkan .
With the aim of better corporate monitoring and more transparency for (foreign) investors, the law on control and transparency in the corporate sector ( KonTraG ) came into force in May 1998 .
After manipulating the balance sheet at the major company Enron and the telecommunications group Worldcom , the Sarbanes-Oxley Act ( SOX ) came into force in the USA in July 2002 . American companies are subject to the law, as are their overseas subsidiaries and non-American companies that are traded on American stock exchanges.
In June 2006, the European "Eighth Directive 2006/43 / EC " (also known as the Auditing Directive ( EuroSOX )) came into force in June 2006 based on the American SOX law. The law defines minimum requirements for companies for risk management and lays down the duties of the auditor.
The German legislator implemented the requirements of the Euro SOX Directive in the Balance Sheet Modernization Act ( BilMoG ) in May 2009.
The market for auditing and tax consulting companies in Germany
In 2018, the following providers significantly determined the German market for auditing and tax consulting - with the Big Four of auditing companies, as well as internationally, being the clear market leaders.
| rank | Companies | Sales in Germany in million euros (2018) | Number of employees in Germany (2018) | Sales in Germany in million euros (2017) | Number of employees in Germany (2017) | Sales in Germany in million euros (2016) | Number of employees in Germany (2016) | Sales in Germany in million euros (2015) | Number of employees in Germany (2015) |
|---|---|---|---|---|---|---|---|---|---|
| 1 | PwC GmbH, Frankfurt am Main 1) | 2,156.62 | 11,145 | 2,070.0 | 10,627 | 1,898.0 | 10,364 | 1,636.0 | 9,804 |
| 2 | Ernst & Young Group, Stuttgart | 1,970.0 | 10,705 | 1,828.0 | 9,937 | 1,573.0 | 9,437 | 1,531.0 | 8,854 |
| 3 | KPMG AG, Berlin | 1,830.0 | 11,700 | 1,660.0 | 10,451 | 1,600.0 | 10,464 | 1,506.0 | 9,800 |
| 4th | Deloitte GmbH, Munich | 1,465.0 | 7,931 | 1,335.5 | 6,566 | 963.4 | 5,731 | 789.6 | 5,098 |
| 5 | BDO AG, Hamburg | 241.3 | 1,794 | 230.2 | 1,705 | 214.9 | 1,690 | 212.2 | 1,694 |
| 6th | Rödl & Partner GbR, Nuremberg | 236.1 | 1,930 | 218.7 | 1,900 | 201.9 | 1,810 | 183.2 | 1,667 |
| 7th | Ebner Stolz PG mbB, Stuttgart | 213.2 | 1,398 | 196.5 | 1,270 | 180.7 | 1,178 | 167.8 | 1,080 |
| 8th | Baker Tilly GmbH & Co. KG Wirtschaftsprüfungsgesellschaft, Düsseldorf 2) | 151.7 | 1,040 | 147.5 | 1,030 | 139.8 | 1,030 | 137.5 | 1,025 |
| 9 | Mazars GmbH & Co. KG, Hamburg | 143.0 | 1.312 | 135.3 | 1,277 | 124.4 | 1,163 | 114.0 | 993 |
| 10 | Warth & Klein Grant Thornton AG, Düsseldorf | 104.7 | 889 | 96.2 | 783 | 87.8 | 749 | 85.9 | 692 |
- 1) On March 1, 2017, the name of PwC AG was changed to PwC GmbH.
- 2) The name “Baker Tilly Roelfs” was renamed “Baker Tilly” on April 10, 2017.
Inclusion in this ranking is subject to precisely defined criteria. More than 60 percent of sales are generated with auditing, tax advice (without tax declarations and bookkeeping), corporate finance and / or legal advice, of which at least 15 percent is accounted for by auditing (purely auditing, without advice). Furthermore, only independently organized auditing companies (no network companies or alliances) are listed.
As of July 1, 2015 , 2,880 auditing firms were represented in the Chamber of Public Accountants (WPK), Berlin. The chamber had 14,577 auditors and 3,039 sworn accountants among its members.
Course of an exam
Basics
Auditors practice a liberal profession , which is given a legal framework by a large number of statutory provisions, in particular the auditor regulations and the commercial code . In addition, there are professional standards of professional conduct, which are formally not laws, but are of outstanding importance for auditors.
These are the principles of proper auditing as set out by the Institut der Wirtschaftsprüfer in Deutschland e. V. (IDW). In particular, the auditing standards give the auditor very detailed instructions on how to accept, plan, carry out and document orders.
The auditing standards have quasi-legal status insofar as the auditing profession is almost always of the opinion that non-application of the standards without sufficient documentation is a breach of professional duty. The violation of professional duties can be sanctioned by the Wirtschaftsprüferkammer .
Examination Techniques
A test is usually carried out through random samples. A comparatively high number of samples is used in areas with high risk. The auditor determines before the start of the actual audit procedures, the criteria by which errors are to be regarded as insignificant and when the material errors affect the auditor's report take. These criteria are defined for the entire area as well as for the individual examination fields.
The exam techniques can be used in the
-
System check (e.g. check of the internal control system or payroll accounting system ) with
- Advanced examination and
- Functional test and the
-
statement-related test with
- analytical audit procedures and
- Case-by-case examination
be divided.
Audit risk
The audit risk in the annual audit describes the risk that the auditor will issue an auditor's report although the annual financial statements contain material errors. These errors can lead to the auditing company being held liable for the comfort letter issued by the auditing company.
A distinction is made between the examination risk
- the risk of error with
- the inherent risk : this is the probability that errors will be included in the annual financial statements,
- the control risk : the likelihood that errors are contained that were not caused by internal control mechanisms e.g. B. the internal audit are discovered and
- the risk of discovery : the likelihood that the auditor will not discover material errors.
Types of exams
The main area of activity of auditors is the annual audit . In addition, interim financial statements are checked, for example in the event of company sales, conversions or other structural changes. Special audits to uncover suspected irregularities are rare, but particularly labor-intensive .
criticism
From the side of science and practice, criticism of the auditing concept is repeatedly raised, since an auditor is faced with the conflict of objectives with every audit, on the one hand to check carefully - critically towards his client - and on the other hand to get the audit assignment for the next year again . However, i. d. As a rule, the client may also be interested in making economic decisions on the basis of a set of calculations that correctly depicts the company's situation. The auditing market is largely controlled by four large companies, the so-called Big Four , and is characterized by intense competition. In the past, audits were often used to get more lucrative jobs in management consulting ; this has partly led to changes in the law.
With the Accounting Law Reform Act, the German legislature introduced, among other things, Section 319a of the German Commercial Code ( HGB ), which constitutes special grounds for exclusion for the auditor. So there are u. a. the ban on providing auditing and certain advisory services with the same client. In fact, restrictions on the attestation are rare - measured against the total number of audited annual and consolidated financial statements. In Germany, too, despite a well-developed system of corporate auditing, there were a number of major accounting scandals and corporate collapses in which the auditors had not written any restrictions in the attestation, e.g. B. the scandal surrounding the collapse of Bankgesellschaft Berlin .
On the other hand, the auditor's certificate indicates that the result of the audit can only be determined with "sufficient certainty". The attestation does not guarantee protection against fraudulent behavior.
See also
- Consulting company
- Corporate governance
- Compliance
- GoBD
- List of chairs for auditing at German universities
- Principal-agent theory
- Accounting
literature
- Löhnig, Volker: The auditor in the crisis of the Weimar Republic. The emergence of a profession under the influence of interest groups, Cologne 1999.
- Markus, Hugh Brian: The Chartered Accountant. Origin and development of the profession in the national and international area, Munich 1996.
- Meisel, Bernd Stefan: History of the German auditors. Origin and development history against the background of microeconomic and macroeconomic crises, Cologne 1991.
- Frielinghaus, Otto: The job of the auditor. Training and organizational principles, Berlin 1931.
- Koch, Waldemar: The Auditor's Profession, Berlin 1957.
- Brösel / Freichel / Toll / Buchner: Business auditing: the entry into auditing
Web links
- Federal Ministry of Economics , bmwi.de: Information page on the professional law of auditors
- Deutschlandfunk , May 11, 2015, Brigitte Scholtes : The power of insiders
- idw.de: Homepage of the Institut der Wirtschaftsprüfer in Deutschland e. V.
- Wirtschaftsprüfer.de
- wpk.de: Homepage of the Chamber of Auditors
Individual evidence
- ↑ Trade Regulations for the German Empire, Deutsches Reichsgesetzblatt Volume 1900, No. 47, Pages 871–979.
- ↑ Heike Franz: Between Market and Profession. Business economist in Germany in the field of tension between the educated and economic middle class (1900–1945). Vandenhoeck & Ruprecht, 1998, ISBN 978-3-525-35676-0
- ↑ a b c d e f g IDW (ed.): 75 years of auditors at IDW - think together, shape together, take responsibility together. IDW-Verlag, November 2007, ISBN 978-3-8021-1318-5
- ^ Manfred Köhler: Insurance. The Frankfurter Allgemeine Versicherung became part of Allianz 75 years ago. In: www.faz.net. August 27, 2004, accessed September 12, 2015 .
- ↑ Heike Franz: Between Market and Profession. Business economist in Germany in the field of tension between the educated and economic middle class (1900–1945). Vandenhoeck & Ruprecht, Göttingen 1998, ISBN 3-525-35676-5
- ^ Ordinance on the merger in the field of economic auditing and fiduciary services (RGBl. 1943 No. 32 p. 157)
- ↑ [1] (PDF)
- ↑ Membership statistics of the WPK. As of July 1, 2013. (PDF, approx. 2.5 MB) (No longer available online.) Chamber of Auditors (WPK). Public corporation, p. 2 , archived from the original on October 19, 2013 ; Retrieved October 19, 2013 . Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.
