The standards required for year-end accounts have continually risen over the last few years. PwC has made continual and progressive improvements to the organisation and process of annual audits. As a result of its close integration within the international PwC network, its year-end accounts also meet international standards.
International standards such as the International Financial Reporting Standards (IFRS) and US GAAP (US Generally Accepted Accounting Principles) are becoming ever more significant. The recent rules on corporate governance and international regulations, such as the Sarbanes-Oxley Act, have changed the way publicly listed companies conduct their reports. Even middle market companies are also going to have to adapt to the IFRS - not least in relation to raising capital.
In response to these challenges, PwC has made continual and progressive adjustments to the process and organisation of annual audits. As a result of its integration in the international PwC network, PwC is a competent business partner for all audit issues, both under German standards and international accounting standards, particularly IFRS. PwC's competence also extends, of course, to reviews of (interim) financial statements. PwC routinely updates its techniques and business practices - not least in response to new legislation and regulations.
Modern tools that support auditing ensure this knowledge is transferred in a rapid and focussed way to our specialist auditors working on-site, who are happy to pass on ideas on improving processes to clients.
Along with competence in accounting and reporting, PwC's audit teams possess complete competence in their relevant industries. In some industries PwC has already developed - of course in concurrence with the clients concerned - wide-ranging benchmarks which not only help with the analysis of a business's financial data, but also put the industry's process indicators under the spotlight.
Audit teams are confronted with special demands when auditing annual financial statements in the area of private equity-managed companies and financial investors.
On the one hand, answers have to be found to special and complex questions from the accounting sector such as portrayal in the balance sheet of financing aspects (including payment in kind notes, mezzanine capital etc.) or commercial aspects (including covenant definition, determination and compliance). On the other hand, the audit team has to be able to deal with the differing expectations and needs of the portfolio company's shareholders and management. Together with the necessary sector expertise, this represents the need for a greater level of action by the auditor.
In order to be able to act rapidly according to market requirements, we have developed a private equity audit approach. Along with the integration of transaction specialists into the audit team, all audits of the annual financial statements of a financial investor's portfolio companies are headed by a central contact person experienced in private equity transactions.
Another priority is the industry-wide auditing of business processes. These are analysed in a structured way. PwC's experts can provide appropriate methods and tools for this analysis during the audit. Irrespective of whether businesses are using SAP, other standard software or their own, PwC experts swiftly and efficiently analyse the accounts and assess the organisational performance of the business processes using the concepts of truth, fairness and efficiency. In public companies, the annual audit generally includes an opinion on the truth and fairness of the management report.
PwC has a comprehensive and efficient quality assurance programme; quality is of high importance. This is regularly audited through a professional external peer review.
Drawing on the international PwC network, PwC's experts can provide the best support to help businesses meet national and international standards. This applies particularly when adopting new standards. Businesses can also count on PwC when it comes to solving important issues outside the annual audit.