Source: https://www.wpk.de/eng/members/profession-of-auditors/
Timestamp: 2020-04-07 13:07:43
Document Index: 287533138

Matched Legal Cases: ['§ 276', '§ 323', '§ 264', '§ 323', '§ 323', '§ 54', '§ 54', '§ 54']

Profession of Auditors - Wirtschaftsprüferkammer
www.wpk.de/eng/members/profession-of-auditors/
The Profession of Auditors
One of the main responsibilities of our members is to conduct statutory audits of financial statements of certain companies. Companies and corporate groups beyond a certain size and in certain sectors (such as banks, insurance companies and publicly-owned companies) are required to have their financial statements audited annually.
Additionally, a vast number of companies are legally not required to have a statutory audit of their financial statements. Nonetheless, they may have their financial statements audited on a voluntary basis, e.g. for presenting them to third parties such as banks.
By examining the company's accounting system and correspondence, and by using special auditing techniques, the auditor is to gain certainty as to whether the financial reporting formally and materially adheres to the law.
The auditor[1] expresses an audit opinion within the auditor’s report, thereby explaining the conclusions. If the financial statements comply with legal and statutory requirements, the auditor issues an unmodified audit opinion. Otherwise the audit opinion is to be modified or denied.
The auditor’s report is generally published along with the balance sheet, the income statement, the disclosures and the management report, whereas the additional long form audit report is confidential and available only to management, the supervisory board and the company's shareholders.
Due to the comprehensive knowledge and experience, the auditor is also a trusted business advisor to clients in the areas of business administration and organisation. As a management consultant in a broader sense, the auditor has to consider and find solutions for the clients' economic, financial organisational and even business legal issues. IT knowledge is prerequisite for responsible and efficient professional conduct.
As a qualified advisor in tax matters, the auditor is authorised in the same capacity as a tax advisor to represent clients in tax matters before the financial authorities and fiscal courts. Given the increasing volume and complexity of tax regulations, the processing and handling of tax matters in the client’s interests auditor’s key area of activity alongside auditing and business advisory services.
In addition, an auditor can act as trustee (e.g. asset manager, executor of wills) as well as an expert witness and authority on a subject (i.e. in court).
Due to the comprehensive education, the auditor is authorised in areas in which he is professionally involved to also take on legal work, to the extent this has direct relevance to his responsibilities.
The liability of an auditor is based on the general civil legal principles of the German Civil Code (BGB). This liability requires unlawful behaviour and personal culpability, in the form of intention or negligence (see § 276 para. 1 BGB). For statutory audit of financial statements there is a statutory liability limit according to § 323 para. 2 German Commercial Code (HGB). The liability for negligent breach of duty is limited to 1 million Euros, and to 4 million Euros for the statutory audit of public companies (e.g. listed companies as defined in § 264d HGB).
The indemnity privilege does not exist for voluntary audits of financial statements. However, § 323 para. 2 HGB is at least to be applied accordingly to other statutory activities of the auditor – even outside the HGB – if there is a reference to § 323 para. 2 HGB in the underlying legal regulation. If there is no statutory limit to liability, the auditor has unlimited liability unless otherwise negotiated. Such a contractual limitation of liability is pursuant to § 54a Public Accountant Act (WPO) and can be achieved – yet only for the case of damages due to negligence – individually or through standard contract conditions (General Conditions of Contract for Audits of Annual Accounts).
In case of an individual agreement the level of mandatory minimum liability (1 million Euros) is determined according to § 54a para. 1 no. 1 WPO. If standard contract conditions are used the limitation equals four times the minimum level of indemnity liability (4 million Euros) (§ 54a para. 1 no. 2 WPO). This requires that insurance cover exists in this amount.
The terms "auditors" and "audit firms" cover all Wirtschaftsprüfer [German public accountants], vereidigte Buchprüfer [German sworn auditors], Wirtschaftsprüfungsgesellschaften [German public audit firms] and Buchprüfungsgesellschaften [German firms of sworn auditors] in Germany.