ICV Board of Directors committed to the “controllers’ guild”

At the ICV General Meeting at the end of April, the new Executive Advisor for Regulations & Methods, Prof. Dr. Werner Gleißner, reported that the Institute of German Auditors (IDW) makes strong reference to topics that relate to the core of controller work in its drafts for the new standards. These include, for example, planning, risk assessment, company valuation and the cost of capital. .

The Executive Board took this as an opportunity to actively contribute to the discussion process on the IDW drafts with two of its own statements in addition to its usual tasks. A working group under the leadership of Prof. Dr. Gleißner developed a ten-page statement on “IDW ES 1 n.F.: Principles for the performance of business valuations”. An even more extensive, second statement was prepared on IDW ES 16: “Design of early crisis detection and crisis management in accordance with Section 1 StaRUG”. This was produced in cooperation with representatives of the Deutsche Gesellschaft für Krisenmanagement e.V (DGfKM) and the Risk Management & Rating Association e.V. (RMA). In addition to the very strong input from Prof. Gleißner – many thanks for that – Annegret Glöckner (Executive Advisor for Corporate Memberships) and Matthias von Daacke, Prof. Christoph Eisl and Guido Kleinhietpaß from the ICV Board were also involved.

In retrospect, it became clear that this intensive work was important. There were almost 20 comments on IDW ES 1 as amended: lawyers, tax consultants, experts, numerous professors, the European Association of Certified Valuators and Analysts and the German Federal Chamber of Tax Consultants all participated.

For those interested, here is the link to the individual statements: https://www.idw.de/idw/idw-verlautbarungen/entwuerfe/stellungnahmen/s-entwuerfe/

The joint debate and discussion at the end of June was as diverse as the participants and their opinions. In addition to numerous questions on terminology (e.g. future success planning vs. management success planning or e.g. expert vs. appraiser), an initial intensive discussion revolved around the question of what the leading view of a standard was. Put simply, business and legal perspectives were pitted against each other. Above all, the lawyers sought to reflect the prevailing case law. The business economists, on the other hand, formed a counterpoint to the most recent rulings in order to obtain rulings that made more business sense in the future (especially when mapping real and unreal synergies).

A second line of discussion dealt with the question of how a new standard should be structured in concrete terms. Compared with corresponding standards from Austria, some of which are very precise, the IDW is considering issuing explanatory commentaries and essays for clarification rather than filling the standard with more details. However, this seemingly harmless question was a tough one. From the ICV’s point of view, it is essential that clear criteria are specified which the auditors expect in order to consider an existing plan as sufficient and usable.

When is the controller’s planning good enough to meet the requirements of IDW ES 1 n.F.? Are there generally applicable rules and requirements for this or do the requirements depend on the purpose of the valuation (e.g. compensation of minority shareholders or e.g. accounting of investments)? When does the auditor prepare its own planning and ignore the planning prepared by the controller department?

As Head of Controlling, reading these lines may well send shivers down your spine. Other readers, on the other hand, may welcome the fact that there is finally some movement in the discussion about the quality of planning. And some may even feel the urge to get actively involved and contribute to statements on future standards.
What do you think? Your feedback is welcome!