Audit Procedure Template for Germany

An Audit Procedure maps out the specific steps auditors take to examine a company's financial records and operations under German law. It follows strict guidelines set by the Institut der Wirtschaftsprüfer (IDW) and includes detailed checks of accounting records, internal controls, and compliance with German Commercial Code (HGB) requirements.

These procedures help auditors gather reliable evidence about a company's financial health and regulatory compliance. They typically cover areas like revenue verification, inventory counts, and risk assessment, with special attention to German tax regulations and EU directives. Good audit procedures protect stakeholders by ensuring thorough, consistent examinations that meet both legal standards and professional expectations.

Companies need Audit Procedures during annual financial statement reviews, mergers and acquisitions, or when facing regulatory scrutiny from German authorities. These procedures become essential when preparing for mandatory audits under the HGB (German Commercial Code), especially for companies exceeding €12 million in total assets or €24 million in revenue.

Use them before major business changes, when seeking investment capital, or during internal control assessments. Companies expanding operations or entering new markets particularly benefit from thorough audit procedures, as they help identify compliance gaps and financial risks early. Regular updates to these procedures protect against evolving regulatory requirements and market risks.

• Audit Of Cash And Bank: Focuses on examining bank reconciliations, cash flows, and banking relationships under German banking regulations
• Audit Program For Inventories: Details steps for verifying stock values, storage conditions, and valuation methods per HGB requirements
• Substantive Analytics Audit: Analyzes financial trends and performance indicators against industry benchmarks
• Audit Of Petty Cash: Examines small cash transactions and internal control procedures for daily operations
• Audit Test Of Details: Provides detailed transaction testing procedures for specific account balances or classes of transactions

• Certified Public Auditors (Wirtschaftsprüfer): Design and execute audit procedures according to German audit standards and IDW regulations
• Company Management: Provides necessary documentation and ensures staff cooperation during audits
• Internal Audit Teams: Implement and maintain ongoing audit procedures for regular internal controls
• Financial Department Staff: Prepare documentation and respond to auditors' information requests
• Supervisory Board (Aufsichtsrat): Reviews audit findings and ensures proper governance oversight
• Regulatory Bodies: Monitor compliance with German Commercial Code requirements and EU directives

• Scope Definition: Identify specific areas, departments, and processes to be audited under German standards
• Risk Assessment: Document key business risks and control points based on HGB requirements
• Resource Planning: Calculate required staff hours, expertise levels, and technical tools needed
• Documentation Review: Gather relevant financial statements, internal controls, and previous audit reports
• Timeline Planning: Create detailed schedule considering German reporting deadlines and fiscal year
• Communication Strategy: Establish protocols for information requests and status updates
• Compliance Check: Review IDW standards and EU audit requirements for your industry sector

• Audit Objectives: Clear statement of purpose and scope aligned with German audit standards
• Risk Assessment Framework: Detailed approach to identifying and evaluating risks per IDW requirements
• Testing Procedures: Specific methods for gathering audit evidence and documentation
• Compliance References: Citations of relevant HGB sections and EU audit regulations
• Data Protection Measures: GDPR-compliant procedures for handling sensitive information
• Quality Control Steps: Internal review processes meeting German quality standards
• Documentation Requirements: Specifications for maintaining audit trails and work papers
• Reporting Guidelines: Format and content requirements for final audit reports

While both documents deal with organizational oversight, an Audit Procedure differs significantly from a Compliance Procedure in several key aspects under German law. Let's examine the main distinctions:

• Primary Purpose: Audit Procedures focus on systematic examination of financial statements and operations, while Compliance Procedures establish ongoing rules for regulatory adherence
• Timing and Frequency: Audit Procedures are typically executed at specific intervals or triggered by events, whereas Compliance Procedures provide continuous guidance
• Legal Framework: Audit Procedures must follow IDW standards and HGB requirements, while Compliance Procedures cover broader regulatory obligations
• Scope of Authority: Audit Procedures are conducted by certified Wirtschaftsprüfer, while Compliance Procedures can be managed by internal compliance officers
• Documentation Requirements: Audit Procedures demand extensive evidence collection and work papers, whereas Compliance Procedures focus on policy documentation and tracking