Who must be audited
Section 316 HGB requires the annual financial statements and management report of corporations (Kapitalgesellschaften) to be audited unless the company is small under section 267(1) HGB. If a required audit has not taken place, the financial statements cannot be adopted. The same applies to consolidated financial statements.
The size classes (section 267 HGB, current version)
- Small: does not exceed two of: €7.5 million balance sheet total, €15 million revenue, 50 employees on average
- Medium: exceeds two of the small thresholds but not two of: €25 million balance sheet total, €50 million revenue, 250 employees
- Large: exceeds two of the medium thresholds; capital-market-oriented companies are always large
The two-year rule
The legal consequences of a size class apply only if the thresholds are exceeded, or no longer exceeded, on the balance sheet dates of two consecutive financial years. Average employees are measured from the headcounts on 31 March, 30 June, 30 September and 31 December, excluding trainees.
How we help
Our team, with managers in Germany, prepares HGB and IFRS financial statements and audit-ready files, and supports audit firms with offshore staff. Confirm your classification with your Wirtschaftsprüfer.
This article is general information, not accounting, tax or legal advice. Rates, thresholds and effective dates should be confirmed with the official sources (IFRS Foundation, tax authorities, regulators) or your adviser before acting.