Institut der Wirtschaftsprüfer

Please refer to WPK’s organization profile to learn more about this area.

Current Status:

The Wirtschaftsprüferordnung (Public Accountant Act (WPO)) 1961 sets forth different routes for admission to the Wirtschaftsprüfer profession. Overall, the IDW and WPK jointly state that the accountancy educational requirements in Germany meet the IES requirements.

Before receiving the designation of Wirtschaftsprüfer, individuals must complete a university degree. Candidates must then complete a minimum of three years’ practical experience, with at least two years being in audit practice. Subsequently, candidates may sit for examinations (content: see § 4 of the Wirtschaftsprüfer Examination Regulation and the Referenzrahmen [reference framework]). After passing the examinations (four modules in six years maximum) applicants are appointed as Wirtschaftsprüfer whereupon they receive a certificate issued by the Wirtschaftsprüferkammer (Chamber of Public Accountants – WPK). The WPO and the Wirtschaftsprüfer Examination Regulation (WiPrPrüfV) regulate the specifics of the practical experience and the content of the examinations.

The IDW actively supports the Wirtschaftsprüfer profession and aspiring candidates through its IDW Akademie. The IDW Akademie offers various courses and training seminars to guide students through their practical work experience. The IDW explains that these training courses are taken during the period of work experience to build up on the basic knowledge that candidates have acquired during their university education and concentrate on the key areas that Wirtschaftsprüfer deal with day-to-day: auditing, taxation, business administration and law. There are plans to integrate sustainability topics (such as assurance of sustainability information) more. As part of its CPD offerings, described below, IDW offers a CPD 2-module course leading to a recognition as Sustainability Auditor IDW. Successful completion of the first module is intended equip support staff who have not yet completed their professional education with the requisite knowledge of sustainability-related reporting and assurance developments.

The IDW Akademie is also an education provider for continuing professional development (CPD), which according to the institute’s Articles of Incorporation are set at 40 hours of CPD per year for IDW members. The IDW reports that its CPD offerings include advanced training events throughout the country, regional technical seminars, annual workshops, and a variety of online presentations (podcasts, interviews concerning new technical developments etc.)

In addition, the IDW issues several professional publications and guidance. In these publications, the institute will incorporate commentary on new developments.

Finally, both the IDW and WPK are part of the Professional Accountancy Education Europe (PAEE; formerly Common Content Project) which is designed to harmonize the professional qualifications and education and training outcomes for auditors across Europe. The IDW and WPK jointly produced a document detailing the content of the examination syllabus in 2021, which met or surpassed the IES requirements.

Current Status: Sustain

The German Commercial Code (Handelsgesetzbuch, HGB) regulates, inter alia, purpose and scope of an audit, and audit opinion and report. Only small companies that meet certain criteria are exempted from undergoing an audit of their financial statements. European Union member states had until June 17, 2016 to transpose the European audit reform package, comprising the Directive 2014/56/EU on statutory audits of annual accounts and consolidated accounts), into their national legislation. While the German parliament adopted the EU audit reforms on March 10, 2016, the EU Commission has not yet adopted ISA. It therefore remains the responsibility of the professional accountancy organization Institut der Wirtschaftsprüfer (IDW) to issue applicable standards.

In 2018, the IDW commenced a project to adopt the German translation of the ISAs with specific German requirements (add-ons). The German language translations of ISAs are supplemented by add-ons necessary to reflect requirements under German (and EU law) and are applicable as “ISA-DE”. There are exceptions for cases where the use of IDW Auditing Standards (IDW AuS) is necessary because German legal requirements differ from ISA to the extent that translation with add-ons would have been more complex (for example, this applies to ISAs 570, 260, and 265 and the ISA 700 series other than ISAs 710 and 720). The ISA-DE together with the remaining IDW AuS, which also include specific auditing or assurance standards without an ISA equivalent, constitute German GAAS (deutscheGrundsätze ordnungsmäßiger Abschlussprüfungen). ISA-DE have been applicable for audits of all financial statements since December 15, 2022.

ISQM 1 and 2 have been transposed and translated as part of the IDW QM Standards. These standards and ISA-DE 220 (Revised) are applicable for audits of financial statements for periods beginning on or after December 15, 2023. ISA-DE 600 (Revised) is expected to be applicable for audits of financial statements for periods beginning on or after December 15, 2024. In addition, the IDW is currently in the process of addressing its obligations under SMO 3 with respect to IAASB Pronouncements beyond auditing standards. Translations of ISRS 4400 and ISAE 3400 have been completed, and ISAE 3000 is in the process of translation. Further translations are planned in respect of ISRE 2400, 2410 and ISRS 4410.

In addition to its role in the transposition of and translation of ISA (then supplemented with DE-paragraphs to reflect additional national matters) and other IAASB-issued pronouncements, the IDW actively participates in the standard-setting processes of the IAASB having jointly nominated an IAASB member with the WPK and having its Technical Director Assurance Standards and Director International Affairs serve as the Technical Advisor. The term ends in December 2023. The IDW also submits comment letters on pronouncements published by the IAASB. This enables the views and perspective of the German profession to be considered throughout the standard-setting process. IDW also issues several professional publications and guidance. In these publications, the institute will incorporate commentary on new pronouncements issued by IAASB to inform members of new developments and solicit members’ input for comment letters to the IAASB.

To support implementation, the institute indicates it provides extensive education and training to members, and develops handbooks, manuals, and software solutions. The IDW Akademie includes courses on auditing standards to ensure members and students remain up to date with the latest developments and the IDW also offers annual technical conferences on auditing standards and sessions with IAASB updates. It also organizes regional ‘roadshows’ to garner input from its membership.

The IDW has created, and updates annually, an IDW Practice Manual for Audit and Quality Control, including a software application called IDW Audit Navigator designed for use in audits of smaller entities. The institute also provides members with a Members’ Handbook (a Comprehensive technical resource of relevant information for all areas of work performed by IDW Members covering accounting, auditing, tax and law) which is updates regularly to reflect changes arising from the revision of IAASB pronouncements; a Frequently Asked Questions document and practical examples of ISA application tailored to the German legal and economic environment; a hotline service to ask inquiries on technical matters; live and recorded Q&A sessions and interviews with experts in the field, and a series of YouTube podcasts.

Recently, IDW has created a new IDW Quality Management Audit Handbook to support implementation of IDW’s QM standards. The IDW has also developed a suite of standards for application in the audit of financial statements of less complex entities: IDW Auditing Standards for Less Complex Entities (IDW AuS LCE). Support material has also been developed, including a specific new module of the IDW Quality Management Audit Handbook and software support solutions are also under development. The IDW also plans to apply for permission to translate the IAASB’s LCE Auditing Standard once a final version has been issued.

Current Status: Sustain

Please refer to WPK’s organization profile to learn more about this area.

Current Status:

In Germany, there have been developments at the federal, state, and municipal level to increase the adoption of accrual or modified accrual accounting. However, this primarily follows private company accounting requirements as set forth in the German Commercial Code rather than IFRS or IPSAS.

Although the IDW is not the entity authorized to adopt public sector standards, the institute reports it is active at both the national and regional levels to promote and raise awareness about IPSAS. The IDW’s “best endeavours” include formal and informal activities such as comment letters and meetings with authorities (ministries, court of auditors).

The IDW has a Public Sector Committee which deals with both accrual accounting and auditing in the public sector and ministry representatives are always invited to these committee meetings.

For example, IDW has participated in public debates and consultations issued by Eurostat regarding the European Public Sector Accounting Standards (EPSAS) and the suitability of IPSASs for application in the EU. A member of the IDW Public Sector Committee regularly attends the meetings of the Eurostat Expert Group EPSAS. The IDW has publicly stated that it views the adoption of IPSAS in the EU as a long-term goal. In its SMO Action Plan, IDW has outlined several engagements it has had with German Parliament, from 2012 onwards, to articulate and discuss the benefits of accrual accounting and the IPSAS in a balanced manner. It has published several position papers and, in 2021, a Factsheet called “IPSAS as a reference framework for EPSAS?”.

The institute has also hosted several seminars on public sector accounting and developments for its members and other key stakeholders, which are also outlined in its SMO Action Plan. Following the seminars, the institute notes that it published special editions of its journal that included articles written by the IPSASB Chair and German government representatives.

In addition, until December 2018, the IDW was actively involved in the international standard-setting process through the joint nomination of an IPSASB member and having its Head of International Affairs serve as Technical Advisor. In 2022, the IDW supported the nomination of the German Supreme Audit Institution to the IPSASB and maintains a regular exchange of information and outreach. The IDW also publishes IPSASB pronouncements, submits comments to exposure drafts when issued by the IPSASB, and circulates relevant information via their website.

Current Status: Sustain

Please refer to WPK’s organization profile to learn more about this area.

Current Status:

Companies whose debt or equity securities trade in a regulated market in Germany are required to use IFRS in their consolidated accounts as required by the European Commission (EC) Regulation No. 1606/2002, as well as companies in the process of being listed on such a market. Achieved further alignment with IFRSIFRS are also permitted in the preparation of annual and consolidated financial statements of all other types of companies for informational purposes only. For all other purposes, these companies must prepare their financial statements in line with the national accounting standards (German Accounting Standards (GAS)) outlined within the German Commercial Code (Handelsgesetzbuch – HGB), which differ from the IFRS. Although in 2009 and 2015, legislation was introduced aimed at harmonizing the German accounting laws and further aligning with IFRS. The Deutsches Rechnungslegungs Standards Committee (DRSC) [Accounting Standards Committee of Germany], established in 1998, is recognized as the German standard-setter.

With accounting standards set by law and although its membership consists of auditors, the IDW undertakes several activities to promote and support the implementation of IFRS. These include building awareness around new IASB pronouncements, publicizing comment letters submitted by the IDW relating to exposure drafts issued by the IASB (example), and publishing articles in its technical magazine. Furthermore, the IDW also develops and issues IDW Accounting Principles and Accounting Practice Statements which set forth the views of the German auditing profession regarding specific accounting matters and provide guidance (examples include Knowledge Papers and FAQs) from IDW technical committees on interpreting accounting principles and dealing with specific issues. The institute reports that its publishing house’s website maintains these principles and statements within an IFRS Knowledge Base that provides access to EU-endorsed IFRS in English and German, IDW comment letters on exposure drafts, draft interpretations or discussion papers issued by the IASB, literature, articles etc.

Additionally, the IDW also provides technical support and training to members on IFRS, including a telephone hotline for members to make inquiries on technical matters. For example, in its auditor’s handbook, the IDW indicates that it includes a chapter to explain the legal basis for applying IFRS as well as an overview of the conceptual framework. Meanwhile, at the regional level, the IDW states that it further contributes to issues relating to IFRS through its participation in various organizations and groups (e.g., Accountancy Europe) and through contact with the German government and the Accounting Standards Committee of Germany.

Current Status: Sustain