Auditing

Definition

An audit examines a company’s financial reporting to verify its accuracy and compliance with applicable accounting standards. This ensures that the financial position as presented in the financial statements (actual status) matches the target status. Specifically, an audit examines annual financial statements, consolidated financial statements, and management reports. It is commissioned by companies through a contract for services.

Companies must have an audit performed if they meet two of the following criteria:

• Total assets of more than €4,840,000
• Annual revenue of more than €9,680,000
• More than 50 employees

The basis for auditing is governed by various laws, regulations, and standards that auditors must observe in their work. However, not all audits commissioned as part of an audit engagement have a legal basis. Voluntary audits include, for example, creditworthiness audits, insolvency audits, and audits of interim reports required under securities laws.

Since tax advisors and certified public accountants have similar backgrounds, their roles are sometimes confused. Unlike tax advisors, however, certified public accountants also perform financial audit and appraisal functions.

What do you do in auditing?

The primary responsibility of certified public accountants is to conduct audits. They audit the annual financial statements of corporations and large companies. In addition, they perform special audits such as due diligence, securities account audits, formation audits, creditworthiness audits, embezzlement audits, merger audits, and profitability audits.

If auditors have conducted a proper audit, they confirm in their audit opinion that the financial statements comply with all legal requirements and present a true and fair view of the company’s financial position, financial performance, and cash flows. This opinion constitutes the final overall assessment.

In addition to auditing, certified public accountants work in the following areas, among others:

• Management consulting
• Legal consulting
• Expert opinions
• Fiduciary management
• Consulting for clients

In addition, there is the field of tax consulting. It should be noted here that the tax consulting activities of certified public accountants in Germany are restricted by law and may only be carried out to a limited extent.

The professional duties of certified public accountants include acting in a manner befitting the profession, maintaining impartiality and confidentiality, and adhering to professional ethics and quality standards.

Certified public accountants work at auditing firms, the Chamber of Certified Public Accountants, cooperative auditing associations, tax consulting firms, and the auditing departments of savings banks and giro associations.