Lawsuit against auditor BDO has been filed

Duty to warn not exercised

In any case, the obligation to speak or the refusal to issue an audit opinion would have prevented “the accumulation of further liabilities arising from prohibited repayments of deposits”.

The duty to speak is a duty to warn and must be exercised by the auditor when there are serious concerns and violations regarding the balance sheet. BDO apparently had none.

According to the lawsuit, BDO is now liable for the damage resulting from the difference in assets between the time of the audit report for the 2021 balance sheet dated April 27, 2022 (or the audit report for the 2022 balance sheet dated June 28, 2023) and the opening of insolvency proceedings against Signa Holding on November 30, 2023.

Serious accusation

The core accusation is “prohibited repayment of deposits”. According to the law, Signa Holding would only have been entitled to a distribution of the balance sheet profits of subsidiaries. All other distributions are prohibited. In fact, however, Signa Holding is said to have received funds (credits, loans) from subsidiaries amounting to 410 million euros in 2021 and around 1.029 billion euros in 2022. According to special administrator Wagner, these debts of Signa Holding to its subsidiaries “were due immediately and could not be deferred or offset”.

The BDO “did not judge this prohibited deposit repayment as such”. Signa Holding presented most of these liabilities with remaining terms of several years, which BDO culpably and unlawfully did not object to,” claims the special administrator. His conclusion: At the time of the annual financial statement audits for 2021 and 2022, Signa Holding was “insolvent, over-indebted under insolvency law, at risk of going concern and in need of reorganization.”

Over-indebtedness

Signa Holding’s liabilities to its subsidiaries have exceeded its liquid assets many times over. According to Wagner, Signa Holding’s insolvency-related over-indebtedness amounted to EUR 384 million at the end of the 2021 financial year and even around EUR 972 million at the end of the 2022 financial year.

“There was no reason for BDO to assume that Signa Holding GmbH would have been able to continue as a going concern at the time of the respective (balance sheet) audits,” the lawsuit continues.

No third-party comparison

But even without an insolvency scenario, BDO would be liable. Wagner argues that the loans granted by the subsidiaries to the parent company Signa Holding do not stand up to a so-called arm’s length comparison. The shareholder “Signa Holding received something that an outside third party (…) would never have been granted in this form,” it continues. Therefore, a violation of the ban on the return of deposits must be affirmed.

The BDO audits were also “worthless and damaging”, which is why Wagner is suing BDO for repayment of fees amounting to 249,600 euros.

No comment

Meanwhile, the KURIER has asked BDO Assurance for a statement on the lawsuit.

“Unfortunately, I’m not allowed to tell you anything about that,” said Carina Fuchs, spokeswoman for BDO Vienna. “We auditors are subject to very strict confidentiality obligations.”

By Editor