Auditor supervisor APAS finds it difficult to find staff

APAS, the authority responsible for supervising auditors, needs more specialists than it can find for its extensive and new tasks. For example, the President of the Audit Oversight Office, Michael Sell, writes in the recently published annual report: "The tense personnel situation at APAS has not been improved sufficiently in 2022 to date." APAS has recently made headlines with its far-reaching investigations into the Wirecard accounting scandal and the resulting historical sanctions against the auditing firm EY.

Mark Fehr

Editor in business.

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According to Sell's foreword in the annual report, the Wirecard case continued to keep APAS busy in 2022 after the authority began investigations against EY and individual auditors in June 2020. In the fall of 2022, these investigations were essentially completed. In October, the meeting of the APAS Decision-making Chamber, which is responsible for professional supervision, began, at which five members assessed and legally evaluated the results of the investigations. The meeting continued in January 2023 and the decisions were then made in March, just before Easter.

It's not just Wirecard that's keeping APAS on its toes

APAS needs specialist personnel not only for the mammoth proceedings in the EY and Wirecard case, but also for numerous other cases and tasks. For example, APAS inspected 2022 auditing firms in 13. The inspections related to the quality assurance systems of the auditors' practices, their transparency reports and 43 audit mandates. Five other audit assignments were examined by APAS together with the US auditor supervisory authority PCAOB as part of joint inspections.

The shortage of staff at APAS has to do with demographics and competition in the job market for auditors and civil servants. According to APAS President Sell, many auditors from the baby boom cohorts are retiring, while not enough new professionals are growing. This "regrowth", as Sell calls it, also takes so much time because auditors not only need a university degree, but also have to pass a difficult professional exam with high failure rates. In addition, accounting firms and private companies are also looking for highly qualified accounting professionals and can often offer better conditions than a public authority, at least in financial terms. Although state employers can compensate for this shortcoming through job security and regular working hours, the APAS head also complains about disadvantages compared to other authorities. According to Sell, there is no "level playing field" with financial supervisory institutions such as Bafin or the Bundesbank in the struggle for legal specialists. This can be seen in the migration of individual APAS employees to the ministerial administration or in the fact that young professionals prefer other financial supervisory authorities.

Sell argues that it is imperative that the recruitment situation of APAS improve in the difficult market for auditors and lawyers so that professional oversight procedures can be processed more quickly. He also warns that the situation will worsen if new tasks are added for the APAS. As examples, he cites the supervision of the prevention of money laundering or the inspection of sustainability reporting.

Sell himself is a lawyer and tax consultant and took over the management of APAS in September 2021. His predecessor had to resign ingloriously because the Wirecard Committee of Inquiry had revealed that he had privately invested in Wirecard shares. As a result of the Wirecard scandal, the role of APAS has gained in importance.

However, the authority is also dealing with other tricky cases of professional supervision of auditors, for example with the annual audits of Greensill Bank from Bremen, whose insolvency in 2021 caused numerous cities and municipalities to lose their deposits invested with the financial institution. The audit of the balance sheets of the crisis-ridden real estate company Adler is also a case for APAS. The Wirecard scandal has not yet been ticked off with the sanctions imposed on EY. Because now the authority has to issue the official notices, which is time-consuming in view of the complex facts. It is expected that the decision will be completed and sent to the auditor EY in the second half of the year.