The German Financial Reporting Enforcement Panel (FREP; Deutsche Prüfstelle für Rechnungslegung, DPR) audits the consolidated and annual financial statements and the management reports of capital-market-oriented companies on a random basis, on account of events or at the request of the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin). In Luxembourg, the Commission de Surveillance du Secteur Financier (CSSF) handles the relevant audits.
Error findings from the audit procedures can lead to negative capital market reactions, loss of reputation of the persons responsible, loss of confidence and an increase in the frequency of audits in the future.
Usually there is little time between the initiation of the audit and the first deadline set for answering the questions asked. Furthermore, the audit procedures generally lead to a considerable additional burden on the already fully utilized employees in accounting.
Therefore, the preparation of high-quality financial statements with few weaknesses is always recommended. This also includes the prompt preparation of self-explanatory documentation that can withstand an enforcement procedure.
The appropriate, risk-oriented prioritization of documentation during the preparation of financial statements should play an important role. This prevents certain topics from being addressed several times and ensures that the central aspects were already sufficiently highlighted during the preparation of the financial statements.
Questions that are likely to arise in the audit process on these topics can then be answered regularly without extensive work. In particular, the already scarce time can be used for questions not anticipated in advance.
Enforcement Compliance Action Plan
Our proven Enforcement Compliance Action Plan and experienced staff let us accompany you at all times – before, during and after an enforcement procedure – when dealing with the German Financial Reporting Enforcement Panel (DPR) and the CSSF.