Because the real estate group Adler Group has still not received a certificate from its auditor for the 2021 balance sheet, the financial services regulator Bafin is expanding the balance sheet control process that has been running at the company since last year.
Specifically, the Bafin is investigating the subsidiary Adler Real Estate based in Berlin.
For the Adler parent company based in Luxembourg, on the other hand, the local financial regulator CSSF is responsible.
Mark Fehr
Editor in Business.
Follow I follow
As Adler announced on Wednesday, the Bafin has issued an order to Adler Real Estate to audit the consolidated financial statements and the combined management report for the 2021 financial year.
This is the extension of a special audit that is already in progress to another financial year.
For the 2019 and 2020 financial years, the Bafin had already initiated a balance sheet control procedure in August last year.
The nested group has been fighting growing doubts about its balance sheets since a short seller attack, and the price of the Adler share, which is listed on the S-Dax, has plummeted since then.
Even a special forensic test commissioned by Adler could not completely dispel the doubts.
That is why the auditing firm KPMG, responsible for the annual balance sheet audits, refused the attestation for the 2021 annual financial statements in April.
The denied attestation is the reason why the Bafin has now extended the balance sheet control to the 2021 financial year.
However, this news had little effect on the current share price until Wednesday afternoon.
As Adler announced, Bafin believes that there are concrete indications that relationships and business transactions with related persons or companies may not have been fully and correctly recorded and presented in the consolidated financial statements, contrary to the international accounting standard IAS 24.
Professional short seller Fraser Perring has also been accusing Adler of doing business with related parties to the detriment of shareholders since the fall of last year.
The auditors KPMG also justified the refusal of their certification for the Adler balance sheets by not being able to assess with sufficient certainty whether transactions with other related persons and companies had taken place and whether these transactions had been recorded completely and correctly.
If the suspicion of gaps in the balance sheet or errors is confirmed, Bafin would publish information about it.
In addition, the Bafin could request a correction of the balance sheets.
Nevertheless, Adler welcomed the Bafin test on Wednesday because it would make a further contribution to clarifying the allegations against the company.