Financial statement audits by certified public accountants

Does a company ensure proper bookkeeping and compliance with the accounting standards required by law? Determining the answer to these questions is the objective of a financial statement audit. The certified public accountant confirms the accuracy of the company’s accounting and financial reporting in his or her audit opinion and audit report. This builds trust among the parties a company does business with, particularly its financial backers.

Above a certain size, corporations are required to have their annual financial statements audited by a certified public accountant, who must issue an audit opinion. Whether or not a company is subject to statutory audit is set out in the German Commercial Code (Handelsgesetzbuch, HGB). Three aspects – a company’s total assets, turnover and number of employees – are relevant. If the company exceeds the thresholds for two of these three items – total assets of EUR 6 million, turnover of EUR 12 million, or an average of 50 employees – on two consecutive reporting dates, it is subject to statutory audit.

Companies can also choose to undergo a voluntary audit in the form of a financial statement audit or balance sheet audit. Such voluntary audits can improve credit ratings issued by banks, for example. This may be important in new financing rounds or if individual shareholders request an audit of the annual financial statements. Annual financial statements that have been audited by a certified public accountant will normally do more to boost the confidence of financial backers and other business partners in your company than financial statements that have merely been subjected to reasonableness tests.

Which certified public accountant or sworn auditor will audit your company is decided by the shareholders or the supervisory board.