Auditing in accordance with the Principle of Proportionality - IDW and DATEV offer Support to the Auditing Profession

Press Information 9/2011
November 11, 2011

If nothing else, the EU Commission's green paper shows that the audit is constantly subject to new challenges and to being developed further. By no means does this, however, only apply to capital-market-oriented companies. On the contrary, addressees of medium-sized companies' financial statements have just as high and justified an interest in an efficient audit. All segments of the auditing profession therefore constantly need to substantiate anew and improve the value of their service. At the same time, however, they need to pay special attention to efficiency in view of the competitive situation in the audit market.

"Against this background, the issue of applying the auditing standards in a manner that is appropriate to a given situation is of central importance," explains Klaus-Peter Naumann, Chief Executive Officer of Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany (IDW)]. "The individual auditing procedures that will be necessary in achieving a high quality audit opinion depend upon the specific risk situation of the company to be audited. This is the only way that an audit can be performed both effectively and efficiently. We had already taken up this topic a few years ago when signs of acceptance of the International Auditing Standards, the ISAs, first began to show in the EU," continued Naumann. The high-level group appointed by the president of the EU Commission to reduce bureaucracy within Europe, which is led by the former Bavarian Premier Dr. Stoiber, had already accepted the ISA's principle of proportionality back in 2009 at the urging of the IDW, and had called upon the EU Commission to take this principle into consideration in any European adoption of International Auditing Standards. In June 2010, the oversight authorities also accepted the principle of proportionality at the initiative of the profession.

The IDW has pushed strongly for the ISAs to be understood as a principles-based framework by all participants - especially by the profession's oversight authorities - which allows the auditor to react to the specific circumstances of each individual audit with flexibility and in a manner appropriate to the particular situation. In other words, the ISAs cannot be viewed as a checklist to be worked through uniformly and rigidly in each individual case; this also applies to audit documentation. IDW Executive Board Member Klaus-Peter Feld had the following to add to this: "The concept of proportional application of the ISAs derives from the fact that it is based on the risk-oriented audit approach. However, for an effective audit, the risk-oriented approach does not only allow, but even requires auditors to gear their work towards the size and complexity of the company, its business model, or its position in the particular industry. Only in this way can all audits be carried out to obtain an equally high level of assurance and justify today's wide scope of application for statutory audits." With the oversight authorities in mind, Naumann added: "As the IDW, we especially appreciate that the WPK Wirtschaftsprüferkammer; German Chamber of Public Auditors) has also now publically acknowledged the principle of proportionality in auditing standards."

The IDW does not, however, want to stop here. An important additional goal is to provide concrete support to the auditing profession in implementing the auditing standards in practice, including their proportional application. "After having compiled the IDW Practice Handbook (IDW Praxishandbuch zur Qualitätssicherung), which covers quality control for the firm and the audit, a few years ago and having continually refined it since then, we intend to address the issue of auditing software next," said Naumann. "The effectiveness and the efficiency of audits can equally profit from an intelligent software solution." Therefore, the IDW is pleased to have a strong cooperation partner in DATEV. "By combining DATEV's technical IT know-how and the auditing expertise at the IDW, we expect significant progress compared to the current situation and, in the interest of the entire auditing profession, also want to set the trend for other software providers," explained Feld. Wolfgang Stegmann, Board Member of DATEV, had the following to add: "In this regard, we fully agree that we want to develop a solution following the concept 'think small first', which means keeping the audits for small and medium-sized companies, in particular, in mind. We hope to be able to provide the auditing profession with the appropriate product as early as sometime next year."

Contact:
Institut der Wirtschaftsprüfer in Deutschland e.V. (IDW)
Director Public Relations and Member Communication:
Dr. Petra Wiedefeldt
Tersteegenstrasse 14
40474 Düsseldorf / Germany
Phone: +49-211-4561-127
Fax: +49-211-4561-88-127
Email: wiedefeldt@idw.de

The German Institut der Wirtschaftsprüfer in Deutschland e.V. (IDW), founded in 1932, represents approximately 13,000 (German Public Auditors) Wirtschaftsprüfer and (Public Audit Firms) Wirtschaftsprüfungsgesellschaften - thus more than 85% of all German Public Auditors. Membership is optional. The IDW protects the interests of its members, supports them in exercising their profession with professional advice and standards set from within the profession, promotes the education and continuing professional development of Public Auditors and trainee professionals in the branch, and offers extensive member services. The IDW's activity spans the topics of accounting and auditing, tax law, laws governing professions, and consultation services. www.idw.de

http://www.datev.com/portal/ShowPage.do?pid=dpicom&nid=130477

© 2014 DATEV

How to contact us

phone: +49 911 319-7222 fax: +49 911 319-7115

Search

in the category News. Please enter a keyword.

Search