According to Thorsten Pötzsch, the executive director responsible for balance sheet control, a significant number of accounts from publicly listed companies in Germany contain errors. Speaking to the “Handelsblatt”, he revealed that over recent years, the Federal Financial Supervisory Authority (BaFin) has examined 178 corporate financial statements and identified flaws in 50 of them, indicating that nearly one in every three balance sheets reviewed has defects.
The BaFin assumed this sole responsibility for auditing the balance sheets of companies whose securities are traded on the regulated market in Germany following the Wirecard scandal in 2022. Currently, this scope covers 424 firms. Pötzsch defended the reform, stating that he believes it is both necessary and correct, noting that the reform has significantly increased the likelihood of catching perpetrators engaged in balance sheet manipulation.
While the agency only issues warnings regarding “material errors” Pötzsch pointed out common issues, such as the overvaluation of receivables and real estate holdings within the balance sheet. Additionally, companies frequently fail to provide verifiable impairment write-downs for corporate assets, and the accompanying economic reports often do not reflect the actual financial situation. For managing the increasing volume of inspections, BaFin currently employs 60 specialized professionals for balance sheet control. The authority has steadily increased the number of audits performed each year, conducting 50 in the most recent year.