Audit of the annual and consolidated financial statements as well as advice on compliance and reporting for your capital market-oriented company: your challenges, our expertise.

The management and monitoring of companies using the capital market or being financial market players themselves – such as banks and insurance companies – is subject to increasingly stringent requirements. As a capital market-oriented company – also known as a public interest entity (PIE) – you face numerous challenges in the areas of auditing, compliance, reporting and structural optimization. The audit of your annual and consolidated financial statements is part of corporate monitoring and serves to ensure the reliability of your financial information. The growing pressure from regulatory requirements, the need for transparent and accurate reporting and the complexity of international standards can lead to considerable burdens for you as a supervisory board. We at Baker Tilly therefore support you with extensive technical and industry expertise in order to meet these requirements.

Our experts offer you comprehensive services to ensure that your company not only complies with regulatory requirements, but also benefits from optimal structures and processes. We help you to avoid errors, minimize liability risks and make your reporting efficient and accurate. Let's work together to master your challenges and achieve your corporate goals.

Services for capital market-oriented companies

Audit of annual and consolidated financial statements

  • Audits of annual and consolidated financial statements (HGB and IFRS): Comprehensive auditing services to ensure compliance and transparency.
  • Component audits for group audits: Performing component audits as part of group audits of companies domiciled abroad. 
  • Fast Close: Support in the acceleration of closing processes. 
  • Issuing comfort letters: Issuing comfort letters for various purposes.

Compliance Advisory

  • Advice on compliance with regulatory requirements and minimizing compliance risks.
  • Assistance with the tendering of the audit in accordance with the EU Audit Regulation. 
  • ESEF: Support with the implementation and use of the European Single Electronic Format for financial reporting. 
  • ESG reporting audit: Ensuring compliance and transparency in sustainability reporting. 
  • Dependency: Management of dependency relationships and their impact on the corporate structure.
  • Disclosure avoidance: Strategies to avoid unwanted disclosures.

IPO Services

  • Establishing marketability
  • Project management and coordination
  • Preparation and review of pro forma financial information/profit forecast
  • Issuance of comfort letter
     

IFRS

  • Advice and support in the application of International Financial Reporting Standards. 
  • Conversion projects: Support and implementation of projects to convert to new accounting standards. 
  • Impairment tests: Implementation and documentation of impairment tests. 
  • Purchase price allocation (PPA): Support in the allocation of purchase prices in the context of M&A transactions. 
  • Second opinion: Independent second opinions on complex issues.
  • Preparation for new standards: Advice on and implementation of new accounting standards.
  • Accounting support: Support in the preparation of standalone and consolidated financial statements in accordance with IFRS.

Consolidation

  • Consulting and implementation of consolidation processes.  
  • Implementation of consolidation software: Support in the selection and implementation of suitable consolidation software. 
  • Preparation of accounting manuals: Preparation of customized accounting manuals. 
  • Process re-engineering: Optimization and restructuring of financial processes. 
  • Advice and support with intercompany settlements. 
  • Preparation of consolidated financial statements: Preparation of consolidated financial statements. 
  • Optimization of group structures: Advice on the optimization of group structures.

Structural measures under stock corporation and transformation law

  • Support in the preparation of transfer reports/joint reports and conversion reports
  • Derivation of compensation and settlement for minority shareholders
  • Review of structural measures (squeeze-out, control and profit-and-loss transfer agreement, merger, demerger, etc.)
  • Valuation certificates for and auditing of capital measures
     
Thomas Gloth

Thomas Gloth

Partner

German CPA, Certified Tax Advisor

Dr. Joachim Schroff

Dr. Joachim Schroff

Partner

German CPA

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Public Interest Entities in Germany: Significance and requirements

Definition and relevance of public interest entities

Art. 316a sentence 2 of the German Commercial Code (HGB) contains the definition of a “public interest entity”. Accordingly, public interest entities – “PIE” – are defined as follows:
•    capital market-oriented companies within the meaning of Art. 264d HGB,
•    CRR credit institutions within the meaning of Art 1 (3d) sentence 1 KWG, and 
•    insurance companies.

The term public interest entity was introduced by the Accounting Directive 2013/34/EU. On April 11, 2022, the International Ethics Standards Board for Accountants (IESBA) published the revised definition of a “Public Interest Entity” (PIE) in the International Code of Ethics.

Accordingly, PIEs are companies that enjoy special attention due to their public relevance. In addition to certain banks and insurance companies, these companies also include those whose shares or bonds are traded on regulated markets. Regulated markets are characterized by state supervision, which means that admission requirements, trading organization and ongoing obligations are regulated by law. The best-known regulated markets in Germany include the Prime Standard and the General Standard of the Frankfurt Stock Exchange. Companies listed in these markets benefit from being able to raise capital more easily, as these markets are highly liquid. PIEs must therefore fulfill special requirements in order to gain and maintain the trust of investors.

External rotation – Mandatory change of auditor

Public interest entities (“PIEs”) are obliged to change their auditor after a certain period of time (“external rotation”). The maximum term of engagement is 10 years.

For credit institutions (except savings banks and cooperative banks) and insurance companies, the auditor must be changed after the 10th audit year.

Requirements restricting the selection of the auditor are invalid for all companies subject to mandatory audits (PIE and non-PIE).

The audit committee must clarify in good time when a change of the auditor is required.

Corporate governance and disclosure requirements

The corporate governance of PIEs requires compliance with strict standards. The duties of corporate governance are clearly defined by specific information and documentation obligations.
Members of supervisory boards and audit committees in public interest entities are subject to regulatory control. The German Federal Office of Justice or the Federal Financial Supervisory Authority (BaFin) are authorized to impose fines,

  • if the monitoring of the auditor’s independence was inadequate,
  • if the recommendation for the appointment of an auditor was not made properly, or
  • if the proposal to the Annual General Meeting for the appointment of an auditor was not submitted in accordance with the EU Regulation.

These violations generally constitute administrative offenses, but can also be classified as criminal offenses punishable by imprisonment of up to one year or a fine.

Audit and disclosure obligations of banks and insurance companies

Banks and insurance companies are subject to strict auditing requirements by the German Federal Financial Supervisory Authority (BaFin). These requirements include regular audits of external accounting and the obligation to disclose reports more quickly and in standardized formats. In addition to preparing consolidated financial statements in accordance with International Financial Reporting Standards (IFRS), banks and insurance companies must publish their reports in the European Single Electronic Format (ESEF). This digital format enables analysts and investors to efficiently analyze and compare the reports. Furthermore, the quality of the audits is monitored by the German auditor oversight body APAS, which ensures that the audits are conducted properly and that the auditors regularly publish transparency reports.