General contract provisions for auditors and auditing firms from 1 January 2017

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1. Scope

(1) The contract provisions apply to contracts between auditors or auditing firms (hereinafter referred to jointly as “auditors”) and their clients for audits, tax advice, consulting in business issues and other contracts, unless something else is expressly agreed in writing or is compulsory under the law.

(2) Third parties can only derive claims from the contract between auditors and clients if these have been expressly agreed or resulting from mandatory legal regulations. In regard to such claims, these contract provisions also apply to these third parties.


2. Scope and execution of the contract

(1) The object of the mandate is the agreed service, not a specific business success. The mandate is executed under the principles of proper professional implementation. The auditors accept no tasks of business leadership in connection with their services. The auditors are not responsible for the use or implementation of the results of their services. The auditors are entitled to use expert persons in order to carry out the order.

(2) Consideration of foreign law requires - except for operating audits - an express written agreement.

(3) If the facts or legal position change after giving the final professional statement, the auditor is not obligated to instruct the client about changes or any consequences thereof.


3. Client’s collaboration obligations

(1) The client must ensure that the auditor is given all of the documents and further information needed to exercise the mandate in a timely way, and that the auditor is informed of all procedures and circumstances which could be significant to the execution of the mandate. This also applies to documents and further information, procedures and circumstances which were only learned during the auditors’ activities. The client will name suitable persons with information to the auditor.

(2) Upon requests from the auditor, the client must confirm the completeness of the documents provided and further information as well as the given information and statements in a written declaration which is formulated by the auditor.


4. Ensuring independence

(1) The client must refrain from any actions which could endanger the independence of the auditor’s staff. This applies for the term of the contractual relationship, especially for offers to hire or take over organisational functions and for offers to take orders for their own account.

(2) Should the execution of the mandate impact the independence of the auditor, any companies connected with the auditor, its network companies or those companies associated with the auditor, on the independence rules in the same way as on the auditor, or other contractual relationships, the auditor is entitled to termination of the mandate without notice.


5. Creating reports and verbal information

If the auditor prepares results in the context of preparing the mandate, only this written presentation is valid. Drafts of written presentations are non-binding. Unless otherwise agreed, verbal declarations and information from the auditors are only binding if they have been confirmed in writing. Statements and information from the auditors outside of the granted mandate are always non-binding.


6. Forwarding a professional disclosure by the auditors

(1) Forwarding professional disclosures of the auditors (work results or excerpts from work results - either as a draft or the final version) or information about the activity of the auditors for the client to a third party require written permission by the auditors unless the client is obligated to forward or give information due to a law or an official order.

(2) The use of professional disclosures by the auditors and the information about the activities of the auditors for the client for may not be used by the client for marketing purposes.


7. Remediation

(1) If there are any faults, the client has a claim for the auditor to address them. Only in the case of fault, omission or unjustified refusal, unreasonableness or the impossibility of subsequent addressing of problems may the client reduce compensation or withdraw from the contract; if the order has not been issued by a consumer, the client may only withdraw from the contract because of a fault if the service rendered is of no interest due to failure, omission, unreasonableness or the impossibility of addressing problems. If, in addition, there are claims for damages, no. 9 applies.

(2) The claim to address defects must be provided by the client immediately in a writing. Claims under para. 1 which are not related to intentional actions, expire after the end of a year after the legal start of the statute of limitations.

(3) Clear mistakes, such as typos, legal faults and formal faults, which are contained in a professional disclosure (report, expert opinions and similar) by the auditors, can be corrected at any time by the auditors or a third party. Any inaccuracies which could jeopardise the results of the professional disclosure of the auditors, require the latter to withdraw the disclosure, also to third parties. In the above cases, the client must hear from the auditor beforehand.


8. Confidentiality to third parties, data protection

(1) The auditor is obliged in accordance with laws (§ 323 para. 1 of the HGB, § 43 of the WPO, § 203 of the StGB) to maintain confidentiality in regard to the professional activities entrusted in it unless the client has freed the auditor from this obligation to confidentiality.

(2) The auditor will observe national and European legal regulations regarding data protection in processing personal data.


9. Liability

(1) For legally prescribed services from the auditors, especially audits, the respective applicable legal liability restrictions apply, especially the liability restriction of § 323 para. 2 of the HGB.

(2) If neither a statutory restriction of liability applies or there is no individual contractual restriction of liability, the liability of the auditors for claims for damages of any kind, with the exception of injury to life, limb and health, as well as damages which are founded on the manufacturer’s replacement obligation as per Sect. 1 of the ProdHaftG, for a negligently caused individual damage case as per Sect. 54a para. 1 no. 2 of the WPO is restricted to EUR 4 million.

(3) Objections and disputes from the contractual relationship with the client are also available to the auditor in regard to third parties.

(4) If several claimants derive claims from the existing contractual relationship with the auditor due to breach of duty on the part of the auditor, the maximum amount specified in para. 2 applies to the claims of all claimants as a whole.

(5) An individual damages case in the sense of para. 2 is also given in relation to a single damage related to several breaches of duty. The individual damages case includes all consequences of a breach of duty without regard to whether the damages occurred in one or several consecutive years. In so doing, multiple actions or omissions based on the same or a similar source of error are deemed a single breach of obligation if the matters in question are legally or economically related. In this case, one can only claim from the auditor up to EUR 5 million. The restriction to five times the minimum insurance sum does not apply to statutorily prescribed obligatory audits.

(6) The claim for damages is extinguished if no action is brought within six months after written rejection of compensation and the client has been advised of these consequences. This does not apply to claims for damages which can be attributed to intentional behaviour, as well as for culpable injury to life, limb or health as well as for damages which are based on the manufacturer’s replacement obligation as per Sect. 1 of the ProdHaftG. The right to assert a plea of statute of limitations remains unaffected.


10. Supplemental provisions for audit mandates

(1) If the client changes the closing financial statements or management report after the auditor has audited them, and they have been confirmed in the Auditor’s Opinion, the client may no longer use this Auditor’s Opinion.
If the auditor has not granted an opinion, a reference to the audit which was conducted by the auditor in the management report or to another public office requires written consent from the auditor and is allowed only with the wording as approved by the auditor.

(2) If the auditor withdraws the Opinion, the Auditor’s Opinion may no longer be used. If the client has already used the Opinion, it must notify of the withdrawal upon request from the auditor.

(3) The client has a claim for five copies of the report. Additional copies will be invoiced to the client.


11. Supplemental provisions for assistance in tax matters

(1) The auditor has the right in both consulting in individual tax questions, as well as in the case of permanent consulting related to the issues named by the client, especially calculations, as correct and complete; this also applies to accounting mandates. However, the auditor must inform the client of any errors which it has discovered.

(2) The accounting mandate does not include meeting deadlines for required actions unless the auditor has expressly assumed the mandate. In this case, the client must provide to the auditor all significant documents, especial tax office decisions, which are needed to meet deadlines in such a way that the auditor has a sufficient period of time available.

(3) Unless there is a differing written agreement, the current accounting includes the following activities within the term of the mandate:

a) Developing the annual tax returns for income tax, corporate tax and trade tax as well as asset tax returns based on the annual reports provided by the client and other statements and evidence needed for taxation

b) Subsequent examination of tax decisions for the taxes named in (a)

c) Negotiations with the tax authorities in connection with the returns and decisions named under (a) and (b)

d) Collaboration with operating audits and assessing results of operating audits in connection with the taxes named under (a)

e) Collaboration in opposition and appeal proceedings in connection with the taxes named under (a)

The auditors will consider the significant published legal cases and administrative decisions for the above tasks.

(4) If the auditors receive a fixed fee for on-going tax advice, they must be specially compensated unless there is a differing agreement for the activities listed under para. 3, letters (d) and (e).

(5) If the auditor is also an accountant, and the accounting compensation regulation is applied to determine compensation, a higher or lower compensation than that set forth in the law can be arranged in writing.

(6) Work on special individual questions about income tax, corporate tax, trade tax, unit assessment and asset taxes, as well as all questions about sales tax, payroll tax, other taxes and fees shall be ordered with a separate mandate. This also applies to:

a) Working on one-time tax issues, for example in the area of inheritance tax, capital movement tax and land transfer tax,

b) The collaboration and representation in proceedings before Tax and Administrative courts as well as in criminal tax matters,

c) Advisory and expert opinion activities in connection with conversions, increases and decreases in capital, reorganisation, entry or retirement of a partner, business sale, liquidation and the like and

d) Support in fulfilling disclosure and document obligations.

(7) If the developing of annual sales tax returns is assumed as an additional activity, this does not include the audit of any special accounting provisions as well as the question of whether all of the eligible VAT benefits have been realised. No guarantee is given for complete capture of documents in order to prove the input tax deduction.


12. Electronic communication

Communication between auditors and the client can also be done by email. If the client does not want communication by email, or there are special security requirements, such as encryption of emails, the client will inform the auditor of this in writing.


13. Compensation

(1) The auditor has claims for reimbursement of expenses in addition to its fees, VAT will be additionally charged. The auditor can request suitable pre-payments and expense compensation and make the delivery of its services dependent upon full satisfaction of its claims. Several clients are jointly liable.

(2) If the client is not a consumer, the offsetting against auditor’s claims for remuneration and expense reimbursement is only permitted in the case of undisputed or legally-established claims


14. Resolving disputes

The auditor is not prepared to participate in settlement proceedings before a consumer arbitration court in the sense of Sect. 2 of the Consumer Dispute Resolution Law.


15. Applicable law

German law solely applies to the mandate, its execution and resulting claims.

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