Court appoints KPMG as auditor for Adler
Dhe real estate company under pressure, Adler Group, has achieved partial success in its desperate search for an accountant. The district court of Berlin-Charlottenburg now has the audit KPMG appointed auditor of the German subsidiary Adler Real Estate. The parent company Adler Group announced this on Monday evening in a mandatory notification for the stock exchange.
Adler had to turn to a court because, despite long searches and targeted approaches, no examiner was willing to take on the job. No wonder, since the mandate is considered a difficult case. So did the financial regulator Bafin Several serious errors in the balance sheets were uncovered as part of a balance sheet control procedure. The Bafin control procedure is not yet complete.
In the past, the Luxembourg member company of the large and international KPMG auditor network was responsible for the annual balance sheet audit of the real estate company. The latter resigned the mandate on the grounds that Adler had not provided all the necessary information. Shortly before, a special forensic audit commissioned by Adler himself had not been able to completely dispel investors’ doubts about the balance sheets. This special audit was not carried out by KPMG Luxembourg, but by the German member company of the KPMG network. KPMG Germany is now appointed by the court as auditor for the German subsidiary Adler Real Estate been ordered.
Uncomfortable mandate for auditors
With the application for court appointment, Adler hoped that the auditor appointed by the court would also audit the Adler Group’s Luxembourg parent company. In addition, the management had announced concessions in cooperation with a court-appointed auditor and asserted that it had done extensive preparatory work for the audit.
The auditing company KPMG Germany, which has now been appointed by the court, is buttoned up when asked. “KPMG has not received a corresponding decision from the district court in Charlottenburg,” said a spokesman in a nutshell. This leaves the important question unanswered as to how KPMG will decide when the decision will be formalized at some point.
Even Adler points out that the audit mandate does not come about solely by court order, but that it also requires acceptance by KPMG. Adler also does not know whether KPMG will accept the audit mandate.
Even a court order cannot compel an auditor to accept an audit assignment. The court appointment serves the purpose of commissioning an auditor if the company concerned is not able to make such a decision itself. However, this is not the problem in the case of Adler. Because Adler would love to commission an auditor, because without an audited balance sheet, the financing is shaky.
What is lacking is the willingness of an auditor to shoulder the uncomfortable mandate. After the turbulence of the past few months, this is understandable. What also makes the search for an auditor more difficult: Not least because of its complex company structure and its problems, Adler has also given numerous consulting assignments to auditors. These providers do not qualify as auditors because they are not allowed to audit and advise the same company at the same time.
Adler’s unsuccessful search for a chartered accountant is unprecedented in the history of the profession. There have always been difficult mandates like Adler with complex structures and dubious transactions, but an auditor has always been found. It could be due to the consequences of the Wirecard scandal that the auditors have now become so cautious and, as a precaution, are rejecting potentially problematic orders. The bankruptcy of the scandalous company has not only shown how high the reputational damage can be for auditors. The liability of the auditors and thus their financial risk has also been increased by law.