New Requirement to Disclose Threats to the Company’s Existence in Accordance with IDW AS 270, as Amended?

Even Goethe knew: “When encountering scientific difficulties, one must take care not to exacerbate the problem.”

In accordance with Auditing Standard (AS) 270 of the Institute of Public Auditors in Germany (IDW), companies of all sizes and legal forms whose existence is in jeopardy will be required to include disclosures in their Notes stating that their existence is in jeopardy and explaining what led to this situation and what their legal representatives intend to do about it. The standard will take effect starting in the 2019 audit season. This IDW standard will particularly affect small companies, which do not issue management reports and therefore are not presently required to report threats to their existence at all.

IDW has declared that threats to a company’s existence are an extraordinary circumstance requiring disclosure because the financial statements would not convey a true and fair view of the company’s financial, earnings and liquidity position if this circumstance were not disclosed (§ 264(2) Sentence 1 of the Commercial Code; for a critical view on this matter, see Schüttler, NWB WP Praxis 2018, 213). If this disclosure is missing or inadequate, it would be necessary to issue a qualified auditor’s opinion on the financial statements.

Independently of IDW, the Federal Chamber of Tax Advisers also revised its guidelines for the preparation of financial statements based on the going concern principle in March 2018. Although for completely different reasons, the Chamber also advises accountants who are engaged to prepare the financial statements to make this disclosure in the Notes, but it declares that this disclosure is “purely informational”; i.e. voluntary. What this means for auditors of financial statements is that the absence of a voluntary disclosure may not result in a qualified auditor’s opinion. Moreover, voluntary disclosures do not require publication, unlike mandatory disclosures (cf. Schüttler, NWP WP Praxis 2018, 278).

In the future, auditors will have to decide on their own responsibility whether to insist upon a disclosure in the Notes or not.


  • Schüttler, Neue Angabepflicht zur Bestandsgefährdung nach IDW (E)PS 270? – IDW-Vorgabe speziell für kleine Gesellschaften ohne Lagebericht problematisch, NWB WP Praxis 2018, 213.
  • Schüttler, Update: Neue Angabepflicht zur Bestandsgefährdung nach IDW PS 270? – Bundessteuerberaterkammer vertritt andere Meinung als IDW, NWB WP Praxis 2018, 278.


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