Compliance Responses and Action Plans

  • Compliance Responses and Action Plans

    IFAC members and associates have provided self-assessment information about the regulatory and standard-setting framework in their countries (Part 1) and their organizations' activities in addressing IFAC's membership requirements (Part 2) as described in the Statements of Membership Obligations. Based on an analysis of this information, they are developing SMO Action Plans for continuous development and improvement.

    Some organizations have qualified to submit SMO Action Plans on a biennial basis by meeting eligibility criteria. These organizations are indicated with an asterisk (*).

    In the interest of transparency and providing information to the profession, regulators, and other stakeholders, all responses and SMO Action Plans are accessible below.

     

    Introduction

    The information below has been submitted as part of the IFAC Member Body Compliance program. The Program has two components:

    Part 1: Assessment of the Regulatory and Standard-Setting Framework (provides information about regulatory requirements and standard-setting processes in member body countries); and
    Part 2: Assessment of Compliance (provides information on compliance by member bodies with the Statements of Membership Obligations). Part 2 of the Compliance Program will begin later this year, and the results will also be posted to the website.

    The responses to Part 1 are provided below. IFAC staff has reviewed the responses and, where necessary, validated them with external knowledgeable parties. A list of key terms is available to assist readers in understanding the responses.

    The purpose of this Part 1 Assessment is to collect information on the roles of IFAC member bodies and other organizations (including government, regulatory or other appointed authorities) with respect to:

    1. Setting auditing, accounting, ethics, public sector and education standards; and
    2. Regulating the accountancy profession.

    Sections 1 and 2 of Part 1 contain an introduction and instructions for member body respondents. For this reason, they are not included here, and the responses begin with Section 3.

    Questions or comments may be sent to complianceassessment@ifac.org.


    Section 3 -- Member Body General Information

    1. Country:

      Germany


    2. Name of member body:

      Or please specify name:



    3. Individual responsible for preparation:
      Dr. Wolfgang Schaum, Executive Director


    4. Date member body became a member of IFAC:
      Note: Please enter a numeric date (e.g., 12/2001, Month/Year)

      10 / 1977



    Questions 5 - 22 are for internal use only


    Section 3G -- Affiliations


    23. Please list those regional organizations to which your organization belongs (e.g., FEE, CAPA, ECSAFA, IAA, etc.):



    Section 4 -- Statutory Framework


    Responses to this section will provide a description of the legal framework governing the commercial aspects of auditing and financial reporting in your country.

    Section 4A -- The Companies Act or Commercial Code


    The following questions concern the Companies Act (the Act) or Commercial Code (the Code) or similar Legal authority in your country. If no Legal authority exists, or the Legal authority does not address particular questions, please indicate "N/A" for Not Applicable.

    24. What is the full name of:
      a). the Act or the Code: Various - see IDW Attachment Question 24a
      b). the Enacting body: Various - see IDW Attachment Question 24b (and 24c for relevant dates)
      c). date the Act or Code came into force: /


    25. How can IFAC obtain a copy of the Act or Code?
      The official version of German law is that contained in the Bundesgesetzblatt. However, access to German legislation can be obtained via the Internet, a starting point is : http://bundesrecht.juris.de/bundesrecht/index.html. The official versions of the above mentioned laws in respect of government accounting are issued in state law gazettes (Gesetzesblätter). However, access to German legislation can be obtained via the Internet, a starting point for the federal legislation is: http://bundesrecht.juris.de/bundesrecht/GESAMT_index.html. Also see IDW Attachment for additional information on Question 26.


    26. Is the Act or Code available in English?
      Yes   No


    27. What are the types of entities covered by the Act or the Code?
      Please check all that apply.
      Listed entities   Other (please specify): Please see IDW Attachment Question 27 for all checked entities.
      Private companies   Other (please specify):
      Governmental   Other (please specify):
      Not-for-profit   Other (please specify):


    28. Is there a requirement for the following entities to prepare annual statutory financial statements? If YES, please describe the financial reporting requirements including the accounting standards to be followed.
      Please check all that apply.
        No Yes (If YES, please describe)
      Listed entities From 2005 (from 2007 for those currently using US GAAP), listed companies will be required to prepare consolidated accounts in accordance with IFRS, but continue to prepare nonconsolidated accounts in accordance with HGB (the German Commercial Code) - See IDW Attachment Question 28
      Private companies See IDW Attachment Question 28
      Governmental See IDW Attachment Question 28
      Not-for-profit See IDW Attachment Question 28
      Other (please describe) See IDW Attachment Question 28
      Other (please describe)


    29. Is there a statutory requirement for the following entities to be audited? If YES, describe the requirement including the auditing standards to be followed:
      Please check all that apply.
        No Yes (If YES, please describe)
      Listed entities See IDW Attachment Question 29
      Private companies See IDW Attachment Question 29
      Governmental See IDW Attachment Question 29
      Not-for-profit See IDW Attachment Question 29
      Other (please describe) See IDW Attachment Question 29
      Other (please describe)


    30. Are the auditors ("statutory auditors") that are appointed for audits required by the Act or Code ("statutory audits") appointed for a specific period?
      Yes   No
      If YES, please indicate the term of appointment: Year(s)


    31. Who appoints the statutory auditors?
      Please check all that apply.
      Shareholders   Management
      Board of directors   Other (please specify): See IDW Attachment Questions 30 and 31
      Audit committee   Other (please specify):
      Government agency   Other (please specify):


    32. Does the Act or Code require joint auditors for the statutory audit?
      Yes   No
      If yes, please describe the requirement:


    33. Does the Act or Code require the rotation of the auditors or audit firms performing statutory audits?
      Yes   No
      If yes, please describe the requirement:



    Section 4B -- Securities Market Regulations


    Responses to this section will provide a description of the financial reporting and auditing requirements for listed entities in your country.

    34. What are (a) the major items of Legal authority for such requirements, (b) the Enacting body(ies) and (c) the latest amendment date? Please identify the specific articles or sections that pertain to auditing and financial reporting:
    1. the major items of Legal authority for such requirements

      With regard to financial reporting and auditing there are no specific individual laws or regulations applying solely in respect of listed companies. Listed companies are covered by the Acts and Codes described in our answers to section 4A, depending on their legal form and on the section of industry to which they belong. The German Commercial Code (Handelsgesetzbuch, HGB) contains some specific requirements applicable to listed companies.

    2. the Enacting body(ies)

      See answer to question 24b

    3. the latest amendment date?

      See answer to question 24c


    35. How can IFAC obtain a copy of the Legal authority?
      See answers to question 25

      For question 36 - see question 26.


    36. Is the Legal authority available in English?
      Yes   No


    37. Are there any additional or alternative financial statement reporting requirements for listed entities that are not described in your answer to Question 28?
      Yes   No
      If YES, please describe the requirement:
      Refer to question 28.


    38. Are there any additional auditing requirements that apply to listed entities other than those described in your answer to Question 29 (e.g., additional GAAS requirements, additional independence requirements, requirements to report to those charged with governance, etc.)?
      Yes   No
      If YES, please describe the requirement:
      Refer to question 29.


    39. Who appoints the statutory auditors of listed entities?
      Please check all that apply.
      Shareholders   Management
      Board of directors   Other (please specify): Appointment of statutory auditors of listed entities covers 3 actions: 1-recommendation of the auditor by the supervisory board, 2-election of the auditor by the shareholders at their general meeting and 3-engagement of auditor by the supervisory board
      Audit committee   Other (please specify):
      Government agency   Other (please specify): See IDW Attachment for additional information on Question 40.


    40. Are auditors who perform audits of listed entities appointed for a specified period?
      Yes   No
      If YES, please indicate the term of appointment: Year(s)


    41. Are joint auditors required for audits of listed entities?
      Yes   No
      If YES, please describe the requirement:


    42. Is rotation of the auditor or audit firm for audits of listed entities required?
      Yes   No
      If YES, please describe the requirement:
      For entities listed in the amtlicher Markt [This is a specific segment of the regulated market with more demanding requirements.] § 319 para. 3 No. 6 HGB (Commercial Code) requires internal rotation of the German public auditor signing the auditors report, if the same German public auditor has signed the auditors report six times within the previous 10 years. With the Bilanzrechtsreformgesetz coming into force the requirement for internal rotation will be extended to all listed entities.



    Section 5 -- Auditing Standards


    Responses to this section will provide a description of the legal and professional framework governing audit and other assurance standards in your country. The section focuses on the establishment of such standards. Please indicate the role your organization plays within this framework.

    Section 5A -- Statutory Framework


    43. Please provide the name of the Legal authority and/or self-regulatory rules that establish audit and other assurance standards in your country, the date of the last amendment of such authority or rules and the name of body responsible for setting audit and other assurance standards. If the standards are different for different entities (e.g., listed entities, private companies, governmental bodies, not-for-profit organizations, etc.), please specify the details that apply to each:
      Type of entity Name of
      applicable
      legal
      authority
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting audit and
      other assurance standards
      Listed entity See IDW Attachment Questions 43-54 for all entities
      Other (please describe) See IDW Attachment Questions 43-54 for all entities
      Other (please describe)
      Other (please describe)

      a. How can IFAC obtain copies of these documents?



      b. Are the documents available in English?
      Yes   No



    Section 6 -- Ethics


    Responses to questions in this section will provide a description of the legal and professional framework governing ethics standards for accountants in your country. This section focuses on the establishment of such standards. Please indicate the role your organization plays within this framework.

    Section 6A -- Statutory Framework


    55. For each of the following types of professionals, please indicate the name of the Legal authority and/or self-regulatory rules establishing ethics standards for accountants and auditors in your country, the date of the last amendment of such authority or rules and the name of body responsible for setting the ethics standards.
      Type of professional covered Name of
      applicable
      legal
      authority
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting ethics standards
      Professional Accountants in Public Practice See IDW Attachment for Questions 55-66 See IDW Attachment for Questions 55-66
      Professional Accountants in Business See IDW Attachment for Questions 55-66 See IDW Attachment for Questions 55-66
      Professional Accountants in the Public Sector See IDW Attachment for Questions 55-66 See IDW Attachment for Questions 55-66
      Other (please describe)

      a. How can IFAC obtain copies of these documents?



      b. Are the documents available in English?
      Yes   No



    Section 7 -- Education


    Responses to questions in this section will provide a description of how education requirements for the profession are established. Please indicate the role your organization plays within this process.

    Section 7A -- Education Requirements


    67. Please describe in general terms the education system in your country including the different stages of education from early childhood education through to tertiary level study. Please indicate which aspects / levels are compulsory as part of the national education system:


    68. Is there a legal authority or regulation that specifies the requirements for an individual to operate as an accountant or auditor in your country?
      Yes   No

      If YES, please provide the name and describe the requirements, including any relating to education, experience or qualifications.



    69. Please select from below all the relevant key levels of requirements to obtain certification from your member body (i.e. to qualify as a certified or chartered accountant) and provide a general description of the requirement.
      Academic requirements
      Professional examinations
      Practical experience
      The duration of practical experience depends on the academic degree:
      Masters or similar degree: 3 years of auditing practice
      Bachelors or similar degree: 4 years auditing practice

      Two years of the required practical experience must be in the area of financial statements audit. The academic degree is obtained prior to the recognition of practical experience.
      Final qualifying examination
      Other (please describe)


    70. Which of the following arrangements best describes who establishes the education requirements for the accounting profession in your country? Please select one option.
      A government ministry, department or agency establishes education requirements for the accounting profession with no additional requirements set by the member body(ies).
      A government ministry, department or agency establishes minimum education requirements for the accounting profession, and member body(ies) supplement these requirements.
      Member body(ies) establishes the education requirements for the accounting profession.
      Other (please describe)


    71. Please provide the name(s) of the relevant body in the government ministry, department, agency and / or member body who establishes the education requirements.

    1. A general description of the role of the relevant body(ies) including how it operates and its due process in establishing the education requirements.

      Amendments of the law have to pass the German legislative procedure.

    2. How many voting members does the relevant body(ies) have

      Not applicable

    3. Are the members of the relevant body(ies) involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe: Not applicable

    4. For how many years has the body been in existence?

      Year(s)


    72. How would you describe the authority that the education requirements have?
      Requirements are legally-based
      Requirements are set in the constitution, by-laws or other rules of the relevant body(ies).
      Requirements are set in member body(ies) policy document(s).
      Other (please describe)

    72 a. How can IFAC obtain copies of these documents?
      http://www.wpk.de

    72 b. Are these documents available in English?
      Yes   No


    73. Are the education requirements for accountants and auditors the same throughout your country, or do they differ among regions, provinces or states?
      Same   Different
      If different, please briefly describe the main differences:


    74. Please indicate the scenario that best describes who delivers the education and examination process for members of the profession. Please only select one option.
      The education program and final examination are delivered by the member body.
      The education program and final examination are delivered by the member body and other education institutions (e.g., universities, colleges, and others).
      The education program and final examination are delivered by education institutions (e.g., universities, colleges, and others).
      Other (please explain) See IDW Attachment for Questions 74, 75


    75. Once qualified as a member of your professional body, can members offer their services directly to the public?
      Yes   No



    Section 7B -- Licensing


    76. Are there licensing requirements for auditors in your country?
      Yes (continue with Question 77)   No (proceed to Section 8)


    77. Who sets the requirements to obtain a license?
      See IDW Attachment for additional information in respect of Question 76.

      The requirements are part of federal legislation in the WPO (Law Regulating the Profession).


    78. What are the requirements to obtain a license (please select all relevant requirements.)?
      Academic study specific for obtaining a license
      Practical experience
      Licensing examination
      Final qualifying examination
      Other (please describe)
      As above, licensing by WPK and successful participation in the system of quality assurance organized by WPK.


    79. Are there ongoing requirements to retain a license?
      Yes   No

      If YES, please select all relevant requirements.
      Continuing professional development
      Re-examination
      Other (please specify):


    80. What entity grants the license?


    81. Describe any additional licensing requirements for auditors of listed entities (e.g., additional education requirements, registration, etc.).



    Section 8 -- Public Sector Accounting Standards


    Responses to this section will provide a description of the legal and professional framework governing public sector accounting standards in your country. The section focuses on the establishment of such standards. Please indicate, where appropriate, the role of your organization within this framework.

    Section 8A -- Statutory Framework


    82. Please provide the name of the Legal authority and/or self-regulatory rules establishing public sector accounting standards in your country, the date of last amendment and the name of the body responsible for setting public sector accounting standards. If the standards are different for different entities (e.g., whole of government, ministry/department, statutory authority/agency, profit entity owned by government, state governments, local governments, other [please specify]), please specify the details that apply to each.
      Type of entity Name of
      legal
      authority
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting public sector
      accounting standards
      Whole of government
      Ministry/department
      Statutory authority/agency
      Profit entity owned by government
      State governments
      Local governments
      Other (please describe) See IDW Attachment for Question 82 See IDW Attachment for Question 82
      Other (please describe)

      a. How can IFAC obtain copies of these documents?



      b. Are the documents available in English?
      Yes   No


    Section 8B -- Standard-Setting (See IDW Attachment for Question 82)


    83. For See IDW Attachment for Question 82, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      For Questions 83-93 see IDW Attachment.

      b. Name of standards



    84. How many voting members does the standard-setting body have?


    85. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    86. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?


    87. Who appoints these members (e.g., member body, government, user, regulator, etc.)?


    88. What is the term of appointment for members?
      Year(s)


    89. For how many years has the standard-setting body been in existence?
      Year(s)


    90. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)



    91. To what entity is the standard-setting body accountable?


    92. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards



    2. accessibility of meetings (i.e., public or private)



    3. approval process for final standards (i.e., majority required to approve final standards)



    4. other relevant due process activities



    93. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      Day(s)



    Section 9 -- Private Sector Accounting Standards


    Responses to the questions in this section will provide a description of the legal, statutory and professional framework governing private-sector accounting standards in your country. The section focuses on the establishment of such standards. Please indicate what role your organization plays within this framework.

    Section 9A -- Statutory Framework


    94. Please provide the name of the Legal authority and/or self-regulatory rules that establish private-sector accounting standards in your country, the date of last amendment, and the name of the body responsible for setting private sector accounting standards. If the standards are different for different entities (for example, listed entities, private companies, governmental organization, not for profit organizations, etc.), please specify the requirements that apply to each.
      Type of entity Name of legal
      authority or
      applicable
      rules
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting private sector
      accounting standards
      Listed entity
      Other (please describe) See IDW Attachment for Question 94 See IDW Attachment for Question 94 German Accounting Standards Board/Committee
      Other (please describe)
      Other (please describe)
      Other (please describe)

      a. How can IFAC obtain copies of these documents?

      See Section 4 and Question 26.

      b. Are the documents available in English?
      Yes   No


    Section 9B -- Standard-Setting (German Accounting Standards Board/Committee)


    95. For German Accounting Standards Board/Committee, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body



      b. Name of standards

      German Accounting Standards (GAS)
      refer to http://www.drsc.de for details


    96. How many voting members does the standard-setting body have?
      7


    97. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe: Not employed, 6 Employed 1


    98. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      Members must be accountants and should meet different qualification criteria (refer to http://www.drsc.de for details). Independence is also necessary.


    99. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      Executive Board of the German Accounting Standards Committee

      See IDW Attachment for additional info for Question 100


    100. What is the term of appointment for members?
      4 Year(s)


    101. For how many years has the standard-setting body been in existence?
      5 Year(s)


    102. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      Information not available

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      N/A



    103. To what entity is the standard-setting body accountable?
      Federal Ministry of Justice


    104. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      See IDW Attachment for Question 104.

    2. accessibility of meetings (i.e., public or private)



    3. approval process for final standards (i.e., majority required to approve final standards)



    4. other relevant due process activities



    105. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      20 Day(s)



    Section 10 -- Monitoring (Quality Assurance) and Enforcement


    Responses to the questions in this section will provide a description of the legal and professional framework governing regulation of the profession in your country. Please indicate what role your organization plays within this framework.

    Section 10A -- Securities Market Regulatory Authority


    106. Name the authority that regulates the securities market:
      SEE OVERALL COMMNETS IN IDW ATTACHMENT SECTION 10.

      Federal Financial Supervisory Authority (BaFIn)


    107. What responsibilities does this organization have for monitoring and enforcing compliance with accounting, reporting or auditing requirements? Please identify the Legal authority that establishes that responsibility:


    108. Briefly describe the role of the regulatory authority as it relates to the following:
    1. regulation of the audit profession

      No role of the BaFin

    2. accounting and auditing standard-setting

      No role of the BaFin

    3. review of financial statements prepared by listed entities, and monitoring of their compliance with the accounting and disclosure requirements

      Currently no role of the BaFin (see answer to question 107).



    Section 10B -- Stock Exchange


    109. Name the four largest stock exchangers (by market capitalization) and whether it is organized as a profit or not-for-profit organization:
      Profit Not
      for
      profit
      Stock Exchange
      Frankfurter Wertpapierbörse; held by Deutsche Börs
      Börse Stuttgart
      Börse Düsseldorf
      Börse München



    Section 10B -- Stock Exchange
    Frankfurter Wertpapierbrse; held by Deutsche Brs Details


    110. For Frankfurter Wertpapierbrse; held by Deutsche Brs, is there a mechanism at the stock exchange(s) for monitoring and enforcing financial reporting, accounting and auditing of listed entities?
      Yes   No

      If YES, please describe the following:

    1. How the monitoring and enforcement of financial reporting, accounting and auditing is conducted.

      Not applicable

    2. The consequences of non-compliance with the financial reporting, accounting or auditing requirements.

      Not applicable

    3. How enforcement actions are administered.

      Not applicable


    Section 10B -- Stock Exchange
    Brse Stuttgart Details


    110. For Brse Stuttgart, is there a mechanism at the stock exchange(s) for monitoring and enforcing financial reporting, accounting and auditing of listed entities?
      Yes   No

      If YES, please describe the following:

    1. How the monitoring and enforcement of financial reporting, accounting and auditing is conducted.

      Not applicable

    2. The consequences of non-compliance with the financial reporting, accounting or auditing requirements.

      Not applicable

    3. How enforcement actions are administered.

      Not applicable


    Section 10B -- Stock Exchange
    Brse Dsseldorf Details


    110. For Brse Dsseldorf, is there a mechanism at the stock exchange(s) for monitoring and enforcing financial reporting, accounting and auditing of listed entities?
      Yes   No

      If YES, please describe the following:

    1. How the monitoring and enforcement of financial reporting, accounting and auditing is conducted.

      Not applicable

    2. The consequences of non-compliance with the financial reporting, accounting or auditing requirements.

      Not applicable

    3. How enforcement actions are administered.

      Not applicable


    Section 10B -- Stock Exchange
    Brse Mnchen Details


    110. For Brse Mnchen, is there a mechanism at the stock exchange(s) for monitoring and enforcing financial reporting, accounting and auditing of listed entities?
      Yes   No

      If YES, please describe the following:

    1. How the monitoring and enforcement of financial reporting, accounting and auditing is conducted.

      Not applicable

    2. The consequences of non-compliance with the financial reporting, accounting or auditing requirements.

      Not applicable

    3. How enforcement actions are administered.

      Not applicable



    Section 10C -- Regulatory Oversight of the Accounting Profession


    111. Has an audit profession oversight body been established (e.g., to oversee the external quality assurance review process, etc.)?
      Yes   No

      If NO, proceed to the next section.

      If YES, please describe :

    1. What are the name and duties of the oversight body?



    2. The number of members on the oversight body

      5 individuals (non-members of the audit profession)

    3. Its powers



    4. How the oversight body conducts or oversees a program of inspections to assess the degree of compliance of each audit firm/auditor with applicable auditing standards and regulations



    5. The sanctions the oversight body may impose in the event of non-compliance

      The Public Oversight Board on Quality Control has no sanctioning power towards the single auditor or audit firm. If the Public Oversight Board on Quality Control discovers weaknesses in the system of quality assurance it has to provide recommendations for improvement of the system. These recommendations will be included in the annual report of the Public Oversight Board on Quality Control.

    6. How the oversight body is accountable to any public institution or body

      The Public Oversight Board on Quality Control is required to publish an annual report on its activities. Members are appointed by the Federal Ministry of Economics and Labour, but are independent and not bound by instructions of the Ministry.


    Section 10D -- Banks Regulatory Authority


    112. Name the authority that regulates the banks and similar financial institutions. Discuss how this authority differentiates between accounting requirements for regulatory reporting and general purpose external financial reporting:
      General Remarks: AS NOTED IN THE ANSWER TO QUESTION 107 THE FEDERAL FINANCIAL SUPERVISORY AUTHORITY (BAFIN)WILL IN THE FUTURE PLAY AN IMPORTANT ROLE WITHIN THE TWO-STAGE ENFORCEMENT PROCESS IN GERMANY. The Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht BaFin) and the German National Bank (Deutsche Bundesbank). The BaFin has no authority to establish requirements for general purpose external financial reporting. Requirements in addition to legal accounting requirements are laid down in the Long-form Audit Report Regulation (Prüfungsberichtsverordnung PrüfBV) of the Federal Financial Supervisory Authority.


    113. Discuss briefly the legal requirements with respect to monitoring and enforcement by the regulatory authority of accounting and auditing standards that apply to the banks and similar financial institutions:
      The audit of the annual financial statements and the reporting thereon in the long-form audit report are essential sources of information for the regulatory authority. In addition, the regulatory authority itself can carry out special audits or can engage certified public accountants to do so.


    114. Briefly describe the role of the regulatory authority as it relates to the following:
    1. regulation of the audit profession

      No role (They do, however, have the authority to reject an auditor proposed by the entity before the contract is offered.)

    2. accounting and auditing standard-setting

      No role

    3. review of financial statements prepared by listed entities

      The BaFin does not perform a review in the general sense, but only in as far as is necessary for its oversight function. This is not a compliance review. There is currently no special role with regard to listed entities. In this respect it is not relevant whether an entity is listed or not, rather the fact that it is a bank. As noted above this role is subject to future revision.

    4. enforcement of accounting, reporting and auditing requirements

      Financial statements of banks and similar financial institutions are a source of information for the regulatory authority; currently there is no additional responsibility but see general remarks above. The role of the BaFin with regard to enforcement of accounting, reporting and auditing requirements does not extend to policing compliance with these requirements. In so far as errors or inconsistencies have come to the attention of BaFin appropriate action can be instigated, within the context of BaFins regulatory duties in respect of the banking industry.



    Section 10E -- Non-Banking Financial Institutions Regulatory Authority


    115. Name the regulatory authority(ies) responsible for monitoring compliance with and enforcing accounting, reporting and auditing requirements imposed on non-banking institutions.
      The Federal Financial Supervisory Authority (BaFin) and the German National Bank


    116. What is the source of Legal authority of the regulatory authority(ies)?
      Banking Act (Kreditwesengesetz)


    117. Briefly describe the role of the regulatory authority(ies) as it relates to the following:
    1. regulation of the audit profession

      No role (The BaFin, however, has the authority to reject an auditor proposed by the entity before the contract is offered.)

    2. accounting and auditing standard-setting

      No role

    3. review of financial statements prepared by listed entities

      The BaFin does not perform a review in the general sense, but only in as far as is necessary for its oversight function. This is not a compliance review. There is currently no special role with regard to listed entities. In this respect it is not relevant whether an entity is listed or not, rather the fact that it is a financial service entity. As noted above this role is subject to future revision.

    4. enforcement of accounting, reporting and auditing requirements

      Financial statements of financial service entities and similar financial institutions are a source of information for the regulatory authority; until now there is no additional responsibility but see general remark under 10D. The role of the BaFin with regard to enforcement of accounting, reporting and auditing requirements does not extend to policing compliance with these requirements. In so far as errors or inconsistencies have come to the attention of BaFin appropriate action can be instigated, within the context of BaFins regulatory duties in respect of the financial service industry.



    Section 10F -- Insurance Companies Regulatory Authority


    118. Name the regulatory authority responsible for monitoring compliance with and enforcing accounting, reporting and auditing requirements imposed on insurance companies.
      Federal Financial Supervisory Authority (BAFin)


    119. What is the source of Legal authority of the regulatory authority(ies)?
      The German Insurance Supervisory Law (Versicherungsaufsichtsgesetz (VAG)).


    120. Briefly describe the role of the regulatory authority(ies) as it relates to the following
    1. regulation of the audit profession

      No role (The BaFin, however, has the authority to reject an auditor proposed by the entity before the contract is offered and retain the right to appoint an external auditor on behalf of the insurance company.)

    2. accounting and auditing standard-setting

      None

    3. review of financial statements prepared by listed listed entities

      The BaFin does not perform a review in the general sense, but only in as far as is necessary for its oversight function. This is not a compliance review. There is currently no special role with regard to listed entities. In this respect it is not relevant whether an entity is listed or not, rather the fact that it is an insurance entity. As noted above this role is subject to future revision.

    4. enforcement of accounting, reporting and auditing requirements

      Financial statements of insurance entities are a source of information for the regulatory authority; until now there is no additional responsibility but see general remark under 10D. The role of the BaFin with regard to enforcement of accounting, reporting and auditing requirements does not extend to policing compliance with these requirements. In so far as errors or inconsistencies have come to the attention of BaFin appropriate action can be instigated, within the context of BaFins regulatory duties in respect of the insurance industry.



    Section 10G -- Other Regulatory Authority


    121. Name any other regulatory authority(ies) responsible for monitoring compliance with and enforcing accounting, reporting and auditing requirements.


    122. What is the source of Legal authority of each regulatory authority?


    123. Briefly describe the role of the regulatory authority(ies) as it relates to the following
    1. regulation of the audit profession



    2. accounting and auditing standard-setting



    3. review of financial statements prepared by listed listed entities



    4. enforcement of accounting, reporting and auditing requirements




    Section 10H -- Quality Assurance


    124. Does any organization of professional accountants/auditors organize a program of quality assurance review to monitor compliance with accounting, reporting and auditing requirements?
      Yes   No

      If NO, proceed to next Section.

      If YES, briefly describe the monitoring and enforcement mechanism.

      See IDW Attachment for Question 124



    125. Under what authority does the organization conduct the program of quality assurance review?
      See IDW Attachment for Question 125.


    126. Who performs the review (e.g., one firm reviewing another firm, staff from the national professional organization, contractors, or a combination of these)?
      See IDW Attachment for Question 126.



    Section 10 I -- Investigation and Discipline


    127. Is there a process for investigating and disciplining the accounting profession in your country?

    128. Which of the following best describes the responsibility for the investigatory and disciplinary function in your country?
      Government or other agencies are solely responsible for this function.
      Government or other agencies have this responsibility, but the member body or bodies participate in the process.
      Government formally delegates this function to the member body or bodies, to exercise on its behalf.
      Member body or bodies have separate and independent processes that operate alongside processes of legal authorities.
      Other (please explain)


    129. Please indicate the name of the body or bodies responsible for investigation and discipline.



    Responses to the remaining questions in this Section are required if your organization has responsibility for investigation and disciplinary actions.

    130. How many voting members does the body have?
      IDW Ehrenrat 6


    131. Are the members of the body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    132. What are the criteria considered in selecting members of the body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?



    133. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      See IDW Attachment for Question 133, 134, 135, 138


    134. What is the term of appointment for members?
      4 Year(s)


    135. For how many years has the body been in existence?
      42 Year(s)


    136. Please indicate the budget in US$ of the body for the last fiscal year.
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      N/A

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      N/A (specify currency)



    137. To what entity is the body accountable?



    138. Approximately how many days per year does the body meet in full session (including teleconferences)?
      Day(s)



     

     

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