Deutsche publicly listed companies frequently file inaccurate financial statements. According to Thorsten Pötzsch, the Executive Director responsible for balance sheet control, the Federal Financial Supervisory Authority (BaFin) reviewed 178 corporate financial reports over recent years and found significant errors in 50 of them. He noted that this implies that nearly every third balance sheet examined contained deficiencies.
Following the Wirecard scandal in 2022, the BaFin assumed sole responsibility for auditing the balance sheets of all companies whose securities are admitted for trading on the regular market in Germany. Currently, this scope covers 424 firms. Pötzsch stated that this reform was “correct and important” explaining that it has significantly increased the chances of detecting balance sheet manipulation by misconducting parties.
The authority, however, cautions that it only flags “material” errors. Common issues include the overvaluation of claims and real estate assets within the balance sheet, as well as a failure to adequately document write-downs of corporate values. In addition, the reported business situation in the management reports often fails to reflect actual conditions.
Pötzsch also provided details on the operational scale of the BaFin’s oversight, mentioning that the agency currently employs 60 specialists for balance sheet control. The number of audits conducted has increased year by year, with 50 reviews being carried out in the previous year alone.
