Dhe authority responsible for the supervision of auditors, APAS, needs more specialists than it can find for its extensive and new tasks. The President of the Auditor Oversight Body, Michael Sell, writes in the recently published annual report: “The tense personnel situation at APAS has only been insufficiently improved in 2022 to date.” APAS recently countered with its extensive investigations into the Wirecard balance sheet scandal and the resulting historic sanctions auditing EY made headlines.
According to Sell’s foreword in the annual report, the Wirecard case continued to occupy the APAS in 2022 after the authority began investigating EY and individual auditors in June 2020. In the fall of 2022, these investigations were essentially completed. The meeting of the APAS decision-making chamber, which is responsible for professional supervision, began in October, at which five members assessed and legally evaluated the results of the investigations. The session continued in January 2023 and the decisions were made in March, just before Easter.
Not only Wirecard keeps the APAS busy
The APAS needs specialist staff not only for the mammoth procedure in matters EY and Wirecard, but also for numerous other cases and tasks. The APAS inspected 13 auditing firms in 2022. The inspections related to the quality assurance systems of the audit practices, their transparency reports and 43 audit mandates. The APAS examined five further audit assignments together with the US audit supervisory authority PCAOB as part of “joint inspections”.
The lack of staff at APAS has to do with demographics and competition in the job market for accountants and civil servants. According to APAS President Sell, numerous auditors from the baby boom generation are retiring while not enough new professionals are growing up. This “replenishment”, as Sell calls it, also takes so much time because auditors not only need a university degree, but also have to pass a difficult professional exam with a high failure rate. In addition, auditing companies and private companies are also looking for highly qualified accounting experts and can often offer better conditions than a public authority, at least from a financial point of view. Although state employers can compensate for this shortcoming with job security and regulated working hours, the APAS manager also complains about disadvantages compared to other authorities. According to Sell, there is no “level playing field” with financial supervisory institutions such as the Bafin or the Bundesbank when it comes to the struggle for legal specialists. This can be seen in the migration of individual APAS employees to the ministerial administration or in the fact that young professionals prefer other financial supervisory authorities.
Sell demands that the recruitment situation of the APAS in the difficult market for auditors and lawyers must improve so that professional supervision procedures can be processed more quickly. He also warns that the situation will worsen if new tasks are added to the APAS. He cites the supervision of money laundering prevention and the inspection of sustainability reporting as examples.
Sell himself is a lawyer and tax consultant and took over the management of APAS in September 2021. His predecessor had to resign ingloriously because the Wirecard investigation committee found out that he had invested privately in Wirecard shares. The role of APAS has gained in importance as a result of the Wirecard scandal.
However, the authority is still dealing with other tricky cases of professional supervision of the auditors, for example with the annual audits at the Greensill Bank in Bremen, whose bankruptcy in 2021 caused numerous cities and municipalities to lose their deposits with the financial institution. The audit of the balance sheets of the troubled real estate company Adler is also a case for the APAS. The Wirecard scandal has not yet been over with the sanctions imposed on EY. Because now the authority has to create the official notifications, which is time-consuming in view of the complex situation. It is expected that the notification to the EY auditor will be completed and sent in the second half of the year.
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