No question about it! In economically uncertain times, many companies are susceptible to crises. Now is the time to take special care in risk management. In times of energy crisis, Ukraine conflict and supply bottlenecks, very few companies know what tomorrow will bring and drive on sight. However, anticipating the development of one’s company is crucial, especially in volatile times, in order to recognize crisis indicators in good time and largely avoid a crisis that could threaten the company’s existence. The StaRUG has made this a corporate duty. The Stabilization and Restructuring Framework Act, which came into force on January 1, 2021, aims to protect companies from insolvency and support them in a restructuring process through various instruments. Permanent planning and transparent risk management are mandatory components in the entrepreneurial toolbox. This enables management to assess how the company is developing at any time and to identify crisis indicators before the crisis makes big waves.
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We don’t like to paint the devil on the wall. Rather, we think that part of risk management is to ensure the ability of an owner or a partner to act even if the person is unable to act himself at the moment. Illness and accidents are just two examples. The roles that an entrepreneur has as owner, managing director or partner must also be fulfilled in this situation – but by whom and on what basis? This is where the entrepreneurial power of attorney helps.
Some companies take what feels like an eternity to prepare their annual financial statements. Other companies have prepared their annual financial statements one month after the balance sheet date – often also certified by the auditor. The “fast close”, i.e., the rapid preparation and – if necessary – the audit of the annual financial statements, provides stakeholders with timely information on the company’s assets, financial and earnings situation. Whether banks, suppliers, or management – up-to-date reporting is a competitive advantage and thus a real SME issue. How do you achieve high speed for your annual financial statement?
“Will the company continue? What do you mean? Yes, what else?”
This is a typical reaction of many managing directors when they are asked about the problem of whether a running business is to be assumed in a valuation of the company. The reason for this question may be overindebtedness or payment problems. In this case, the regulations of insolvency law give reason to assume that the company (GmbH, AG, GmbH & Co. KG) can no longer be continued. Therefore, in this situation, the management responsible for preparing the annual financial statements should not rely on the fact that it can continue to prepare the balance sheet at going concern values. It must first be ensured that the going concern premise is met, i.e., that it can be assumed in the evaluation of the company’s activities that it can be continued.
The new year marks the beginning of the annual financial reporting season. All companies that prepare financial reports have to deal with the issues surrounding the preparation of their annual financial statements. Even if many of those responsible are not aware of it: accounting compliance forms the foundation here. It ensures that all relevant accounting rules are recognized and applied, and that the company’s assets and liabilities are valued correctly, so that the annual financial report is prepared in accordance with the rules.
