On 18 July 2022, the IDW published further Technical Advice on the Effects of the War in Ukraine on Accounting and Auditing (in German). This should be viewed as a supplement to the Technical Advice of 8 March 2022 (most recently supplemented on 14 April 2022) and refers to the accounting standards and risks that should also be considered in accounting and reporting for the reporting date of 30 June 2022.

Following its original version in 2016, the Professional Charter for Professional Accountants in Public Practice (BS WP/vBP) has been amended for the second time by means of a resolution of the advisory board of 3 June 2022. After approval by the Federal Ministry for Economic Affairs and Climate Action (BMWK, Article 57 para. 3b sentence 1 Auditors’ Code), the amendments entered into force on 29 June 2022 (“Neu auf WPK.de” of 28 June 2022 (in German)).

Reasons for the Amendments

The need to amend the Professional Code arose from the amendments to national statute law, primarily through the Financial Market Integrity Strengthening Act (FISG, entered into force on 1 July 2021), in addition also through the Act Modernising Notarial Professional Law and Amending Other Provisions (entered into force on 1 August 2021) and the Act to Promote Consumer-Oriented Offers in the Legal Services Market (entered into force on 1 October 2021).

According to Art. 13 Regulation (EU) 537/2014, public accountants and public accounting firms that carry out statutory audits of public-interest entities must publish a transparency report on their websites every year and inform the competent authority - in Germany the Auditor Oversight Body [Abschlussprüferaufsichtsstelle (APAS)].

The German Corporate Governance Code (Deutscher Corporate Governance Kodex (DCGK)) in its newest version entered into force on 27 June 2022 after the Federal Ministry of Justice had published the revised version of 28 April 2022 in the Federal Gazette.

The new code contains updated principles and extended recommendations for management and supervisory boards of listed companies.

WPK approves only tightly limited amendments to the IESBA Code of Ethics – On 16 June 2022, the WPK issued a statement as part of the survey on the strategy and work plan 2024 to 2027 (Strategy Survey 2022) of the International Ethics Standards Board for Accountants (IESBA).

The WPK believes that the subject of sustainability is also important for the IESBA. However, the IESBA should first of all examine whether the existing principle-based regulations of the IESBA code of Ethics (Code) are sufficient to cover the subject adequately from the point of view of regulating the profession. Only if this is not the case should the IESBA consider appropriate amendments, but coordinate closely with the relevant stakeholders and, in particular, the International Auditing and Assurance Standards Board (IAASB).

According to new EU legislation, it is prohibited to provide direct or indirect services in the fields of auditing, including accountancy, bookkeeping and tax advice as well as business and public relations consultancy for the Russian government or legal entities, organisations or institutions domiciled in Russia.

On 24 May 2022, the WPK issued a comment letter on the proposed amendments to the Code of Ethics relating to the definition of engagement team and group audits.

Germany should have transposed the EU Whistleblower Directive into German law by 17 December 2021. A first attempt failed in the last legislative period, which ended in September 2021 with the federal general election.

In April 2022, the Federal Ministry of Justice has now published a draft bill to implement the Whistleblower Directive. The WPK stated its opinion on this on 10 May 2022.

Professional services have a strong integrative power, as shown by the continuing growing proportion of apprentices with foreign roots, now just under 16 %, and other indicators. From the start of the war in Ukraine they volunteered their expertise in the service of looking after and supporting people fleeing the conflict. Against this background, the Federation of German Independent Professionals [Bundesverband der Freien Berufe (BFB)] has launched a Jobs Portal for Ukrainian refugees.

The EFRAG has published the first set of draft standards on sustainability reporting (ED European Sustainability Reporting Standards, ED ESRS). The drafts and further consultation documents are available on the EFRAG website and can be commented on until 8 August 2022.

On 11 April 2022, the International Ethics Standards Board for Accountants (IESBA) published the revised definition of a “Public Interest Entity” (PIE) in the International Code of Ethics.

The IESBA is hereby expanding the list of company categories that in future should be considered to be PIEs and whose audits will therefore be subject to additional independence requirements. As a result, the increased expectations of the interest groups with respect to the independence of the auditor in PIE audits will be met.

The IDW updated its Technical Advice on the Effects of the War in Ukraine on Accounting and Auditing (in German) on 8 April 2022 because the effects of the Ukraine War will be reflected in the balance sheets and profit and loss statements of the companies affected for the first time at the end of the first quarter.

In its notification of 4 March 2022, the Financial Action Task Force (FATF) has updated the list of countries that are under FATF monitoring. In a notification of the same date, the FATF published a list of countries that have received a call for action from the FATF (unchanged as of the status of 21 February 2021).

The WPK most recently updated the overview of the lists on 8 April 2022 and has made them available in the Members area Meine WPK (in German) for information purposes.

The International Sustainability Standards Board (ISSB) has published the first two drafts of its sustainability standards for comments.

In light of recent events, the Auditors’ Supervisory Office (Abschlussprüferaufsichtsstelle - APAS) has expanded its 2022 Working Programme (which WPK reported on at “Neu auf WPK.de” of 13 January 2022 (in German)) with a chapter “Impacts of the Ukraine War”. The working programme is published on the APAS website (in German).

The European Parliament's Committee on Legal Affairs (JURI) has taken the lead in discussion the Commission’s Draft for a Corporate Sustainability Reporting Directive (CSRD) and voted on it at its meeting of 14 March 2022. From what we hear, JURI had the following views:

On 7 March 2022, the fourth version of the Delegated Regulation (EU) 2022/352 of the European Commission of 29 November 2021 supplementing Directive 2004/109/EC of the European Parliament and Council with respect to technical regulatory standards for the specification of a single electronic reporting format (ESEF) was published in the Official Journal of the EU.

In April 2022, the International Ethics Standards Board for Accountants (IESBA) will hold three virtual round tables on the subject of Tax Planning and Related Services. The dates are as follows (German times):

• 25 April 2022, 5.00 to 9.00 pm,
• 26 April 2022, 2.00 to 6.00 pm,
• 28 April 2022, 6.00 to 10.00 pm.

The International Ethics Standards Board for Accountants (IESBA) is conducting an exposure draft on amendments to the Code of Ethics relating to the definition of engagement team and group audits (Proposed Revisions to the Code Relating to the Definition of Engagement Team and Group Audits). Comments are requested by 31 May 2022.

The International Ethics Standards Board for Accountants (IESBA) is conducting an exposure draft on amendments to the Code of Ethics (Code) relating to technology (Proposed Technology-related Revisions to the Code). Comments are requested by 22 June 2022.

On 23 February 2022, the EU Commission published the proposal for a directive for corporate sustainability due diligence. Companies are to be required to identify the negative impacts of their activities on human rights (such as child labour and exploitation of employees) and on the environment (for example, environmental pollution and loss of biodiversity) and, where necessary, to prevent, cease or reduce them. The proposal for the directive thus goes in the same direction as the German Supply Chain Due Diligence Act.

On 2 February 2022, the WPK released its comment letter as part of the EU Consultation on Improving the Quality and Implementation of Company Reporting. The consultation covers the five areas outlined below.

On WPK.de, the WPK submitted its comment letter on the Proposed International Standard on Auditing for Audits of Financial Statements of Less Complex Entities – ED ISA for LCE to the International Auditing and Assurance Standards Board (IAASB).

The draft has been designed to represent a uniform worldwide approach to auditing, which should make the ISAa scalable and more appropriate for auditing less complex entities.