Many consider the annual financial statement by an auditor to be a necessary evil. They usually submit to it in silent resentment either because it is prescribed by law or because an investor wants to be sure of his investment.

As an auditor, I have been intimately familiar with the legally mandated and “voluntary” annual balance of accounts for the last two decades. I have seldom been greeted with joyous enthusiasm in the audited companies (probably due to the nature of the thing), but I have noticed that these audits are being increasingly burdened by new irritations.

New Irritations during the annual Balance of Accounts


First: The charging of additional fees
The ongoing poor economic situation has led to stiff competition among accounting firms. This encourages the bad practice of first securing an audit assignment by presenting a low cost proposal and then, after being commissioned, suddenly discovering “special additional work expenditures” that supposedly can only be dealt with by a large amount of extra work time to be paid for at rates that can no longer be considered very moderate. Because it is very difficult to change auditors once one has been commissioned and one strives to avoid burdening the atmosphere even more, such additional fee demands are usually accepted through gritted teeth.

Second: Insensitive phraseology in the Audit Report
Ever since the Basel II Accord, lenders have been reading audit reports much more critically. At the same time, it is becoming increasingly likely that you will meet an auditor who simply ignores the effect poorly formulated wording in audit reports can have on banks or stockholders or approvingly accepts them because he has never sat on your - the company’s - side of the table during his professional career. As is the case with employer’s references, even a phrase that ostensibly sounds harmless or favorable can do permanent damage to the status and ranking of your company.

Third: Restrictive interpretation of options
The German Commercial Code (HGB) and the International Financial Reporting Standards (IFRS) expressly provide for a choice of options in preparing the balance sheet. If the auditor agrees with you in the selection of an option that is then used, it means nevertheless that at a later date he may have to justify his approval to his supervisor or to a reviewer of the report, as the case may be. This effort and the subjectively perceived risk of standing by their own decision is increasingly being sidestepped by auditors at the expense of the companies, who instead are forced to accept unnecessarily conservative valuation of their assets. This is often coupled with a time and money consuming repositioning of the balance sheet items (see point 1).

Fourth: The widening information gap to the disadvantage of the company
Certified annual financial statements are increasingly being qustioned; audit scandals (e.g. FlowTex, Enron, banks) led to sharp constraints by the insurers and a wave of new legislation. As recently as five years ago, an auditor was able to plan and document his audit on his own responsibility but today he has dozens of regulations and “audit standards” for each step of the audit that he must take into account. If he ignores them, he is putting his insurance coverage at risk. Even so, a great many regulations are broadly composed and their interpretation is placed at the discretion of the auditor.

Many auditors, however, are unable to cope with this generous latitude of discretion and prefer to take the easy road. The risk of having to justify a certain decision is minimized at your expense by using the most conservative interpretation conceivable. The auditor takes refuge from responsibility behind his rulebook; a “can” is presented as a “must” and audit procedures are forced upon the company that carry the principle of essentiality to an absurd.


The auditor’s increasingly complex set of regulations, however, are almost unknown outside of the industry. Once it was possible to discuss the German Commercial Code, with which both sides were acquainted, but today a company is confronted with regulations and “auditing standards” that they know as little about as, say, Latin ecclesiastical law. This means that an audited company is redundant at the mercy of the auditor’s sporadically questionable interpretations of these regulations.

Sound Familiar?
If you have not suffered any of these irritations, congratulate yourself on your excellent choice of auditors up to now. You will have no need of the services I am presenting here.

Thank you for taking the time to read this.

If, however, some things here sound painfully familiar, then please read on to learn how you can level the playing field in the future.

As you are interested in reading this article further, it is highly probable that you harbor mixed feelings about your last audit. Possibly you are also already thinking of the next audit with a sense of uneasiness and wish that this time you could face your auditor from a position of power. This need can now be satisfied because I am offering you the opportunity to “level the playing field” for your company during the audit of your next annual financial statement.

Engage an experienced auditor for your next annual financial statement who will defend your interests on your side of the table and will optimize the chances of a fair and smoothly running audit. My accountancy firm, Goldstein Consulting GmbH, offers this service under the designation “Audit Consulting.”

What does “Audit Consulting” mean for your company in concrete terms?

1. A speedy audit through pre-prepared records and data
Together with your employees, I prepare for the audit in your company and make sure that all records are optimally readied so that the audit can be completed as quickly as possible.

2. Foresee matters of contention – layout counter arguments
Should issues present themselves in advance that could attract the attention of the auditor, I will work out an appropriate strategy with you beforehand and prepare arguments. If necessary, I will also prepare the personnel in your accounting department for difficult questions from the auditor.

3. Observe the audit
During the conducting of the audit, I will make sure that the auditor audits correctly and does not interpret the latitude available for maneuvering to your disadvantage. While doing this, I do not see myself as an impartial arbitrator but rather as the advocate of the interests of your company.

4. Short-notice research to ensure our own edge on information
Should differences of opinion arise during the audit concerning the assessment of the facts of a matter or a balance sheet item, I will then on short notice research relevant commentaries or fundamental rulings. If necessary, I can consult the policy principles department of the IDW (Institute of Accountants in Germany); the IDW sets the auditing standards and is thus capable of a valid interpretation.

5. Mediation of misunderstandings
I will mediate on your behalf as needed during the audit. As someone well acquainted with the auditor’s technical terminology, I am particularly capable of avoiding linguistic misunderstandings. As a colleague, audit manager and former supervisor in one of the world’s largest public auditing firms, I can also anticipate and, should the occasion arise, dispel the commissioned auditor’s fears regarding a possible liability risk.

6. Exit conference that promises success
It has been my experience that matters of contention are generally brought up during the exit conference. I will then negotiate for you on your side of the table and will be able to refer to the same commentaries, sets of rules and auditing standards that will form the basis of the argumentation of the commissioned auditor. At the same time, I am familiar with the “other side’s” argumentation patterns and discussion strategies from my decades of professional experience.

7. Critical review and editing of the draft report
As soon as the commissioned auditor has delivered the draft of the audit report, I will review it judiciously for the correct presentation of the facts as well as filter out wording that is contradictory or potentially detrimental to your company. Even problematical facts can be formulated in the audit report so as not to elicit any unnecessary bad impressions in the reader.

8. Fending off unjustified additional fee charges
If additional fees are charged, I will critically examine them and, if they are unjustified, seek to have them reduced.

Now you may be asking what makes me particularly qualified to represent you during the next financial statement. And how much extra is it going to cost you?

Kindly continue ...


Eminently qualified to represent you and assert your interests

I have taken part in hundreds of audits over the last twenty years, including those of a number of world-renowned German companies. After earning my degree, I worked for the industry leader, Ernst & Young, eventually as a partner in the audit department of their branch office in Germany’s capital, Berlin.

Ten years ago I went into business for myself and founded accounting firm, Goldstein Consulting GmbH, where I am also constantly conducting annual accounts audits as an appointed auditor.

So I am well familiar with the issues large and small accountancy firms have in common with respect to audit strategies and procedures and where their differences lie. You will find further information about my career under the item Team in the menu.

Moreover, for many years I have been instrumentally involved in the training of the next generation of professionals. Operating under the aegis of the Chamber of Public Accountants, the Institute of Accountants in Germany (IDW) has entrusted me during this time with hundreds of training course participants, to whom I teach auditing strategies and procedures in compliance with the binding principles of the IDW in week-long seminars. In addition, I am the author of the teaching materials used.

There is hardly anyone who is as familiar with the actual IDW guidelines as I am. The fair and correct conducting of an audit is a matter of personal concern to me.

I am also equally familiar with the legally established quality assurance for auditors (Peer Review) which recently has come into effect and additionally regulates the auditor’s activities.  Goldstein Consulting GmbH was one of the first firms in Germany who was authorized to carry out quality assurance tests at other accountancy firms.

Again and again in the past years I have provided advice to audited companies during their annual accounts audit; although this only took place upon specific request, it did make me aware of the increasing demand for Audit Consulting. The alarming development that I described in the introduction to this article has motivated me to offer this activity as an independent service of Goldstein Consulting GmbH.

How much does Audit Consulting cost?

The fees for Audit Consulting are orientated on the fees of the appointed auditor of the annual accounts statement in question. As a rule, it amounts to 20 percent of the appointed annual accounts auditor’s fee. Included in this fee are all eight of the elements listed in Audit Consulting; in rare cases, extra expenses could be incurred, for example, for work outside the Berlin/Brandenburg Region (documented, of course).

If you only want to take advantage of certain services in the package described above, such as a critical review of the draft of the auditor’s report or my participation in the exit conference, then an hourly fee can also be the basis of billing. In this case, the hourly fee is 210,00 Euro plus 19 percent VAT.

The additional 20 percent on top of the auditor’s fee can pay for itself very quickly; for example in savings from avoiding additional work by the appointed auditor through appropriate preparation or by a better defense against additional charges. In addition, experience has shown that the “observation” of the appointed auditor by an independently hired auditor usually yields a quicker and smoother audit, meaning your company can sooner focus on daily business – this too has its cash value.

Considering the financial disadvantages that can result from a poorly formulated audit report with investors, banks or in the evaluation of your company, my fee could prove to be one of the best investments your company could make.

Find out more now!

As you have read this article to the end, I assume that the irritations mentioned at the start are not unknown to you. Forget them!

  • Worry about them no longer and level the playing field for your company in the next audit of your annual accounts.

  • Do away with the information advantage that appointed auditors use to hide behind and cite relevant commentaries and rulings yourself.

  • Invoke powerful arguments in the same language auditors use if you want to have them respect the options you favor.

  • Avoid the risk of your company being imposed with an unnecessary burden through ignorance or an adversity to risks.


If I have piqued your interest, then give me a call. Regardless of whether or not you are now ready to use the advantages of my Audit Consulting, I would be pleased to hear your feedback, questions, or suggestions.

You can reach me in my office daily Monday through Friday from 9 am to 6pm by dialing

Tel. (030) 3030 8999

I am looking forward to your call.


Annette Goldstein


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