The automotive industry is on the move and keeps society on the move. It started 4000 years ago with the invention of the wheel and accelerated in 1886 with the first internal combustion engine passenger car. Despite the dynamism, the industry shows a high degree of consistency in its basic processes. Characteristics of this are a wide range of coordinated business processes with many participants and a pronounced quality standard. This claim means that processes are accompanied by various types of controls. Today we are talking about manual or IT controls.
In practical work, we tend to observe an increase in controls with a simultaneous shift from manual controls to controls that are implemented in the IT system. In addition, controls are distinguished intended to prevent or detect errors or discrepancies. Commercial expertise says plausibly that controls prevent deviations from the defined process are better than controls that can only detect a deviation or an error afterwards. Our professional focus as auditors for the automotive industry is on accounting-related controls. This means controls that are intended to ensure that business transactions are recorded correctly and completely in the company's accounts. From many years of experience as a tax consultant or auditor in the automotive sector, we can use best practice to make a reliable assessment of processes with regard to the appropriateness of the effectiveness of the controls.
In addition to the process characteristics, inventories and inventories are of essential importance for companies in this industry. Why is that? The supplier companies continue to deliver physical objects to the automobile manufacturers (OEM). The production usually takes place directly in the supplier company. In addition to employees, the raw materials required for production are of the utmost importance. The quality of these raw materials can range from materials of the most varied types, shapes and states of aggregation to intermediate products purchased from upstream suppliers. In addition, auxiliary materials and operating materials are usually used. The manufacturing process itself leads to unfinished and finished products or services. In addition, there are often goods and advance payments made for inventories, which complement the variety of balance sheet items within inventories. For many companies, the evaluation of unfinished and finished inventories is an important process for determining performance. Have you ever thought about how different capacity utilization affects this and what role planned costs, target costs and actual costs play? Beck's Balance Sheet Commentary is a standard work of commentary on the German Commercial Code (HGB) and provides a framework for solutions to such issues.
Our auditors for the automotive industry use this commentary as the basis for their advice or examination of the facts. Have you ever thought about how different capacity utilizations affect this and what role planned costs, target costs and actual costs play? Beck's Balance Sheet Commentary is a standard work of commentary on the German Commercial Code (HGB) and provides a framework for solutions to such issues. Our auditors for the automotive industry use this commentary as the basis for their advice or examination of the facts. Have you ever thought about how different capacity utilizations affect this and what role planned costs, target costs and actual costs play? Beck's Balance Sheet Commentary is a standard work of commentary on the German Commercial Code (HGB) and provides a framework for solutions to such issues. Our auditors for the automotive industry use this commentary as the basis for their advice or examination of the facts.
Approximately 40 pages of comments are dedicated to the question of production costs according to § 255 HGB. For this reason, we are of the opinion that the position of inventories in their complexity is being misjudged for accounting purposes. Especially in the case of final audit services, it is absolutely necessary for our auditors to deal with the operational service processes before participating in the inventory. Inventory observations are only carried out at addVALUE by really experienced auditors or audit seniors who know the "pitfalls" of the annual inventory for companies. Ultimately, this should strengthen the responsibility of the management for the preparation of the annual financial statements and represents a valuable opportunity for feedback. Use our professional experience as an auditor for your inventory for a reliable inventory. As an expert in the automotive industry, we would also be happy to talk to you about alternative storage options, e.g. B. a permanent inventory or a random inventory. Participate in our knowledge of the advantages and disadvantages of different inventory methods.
Inventories are exchanged for trade accounts receivable and profits are only recognized in accounting at the time sales are realized. Do you know criteria for when revenue is to be recognized? Do you know that the sale of an item can be sales when it leaves the factory premises or when it arrives at the buyer, depending on the delivery condition? Especially against the background of the correct period delimitation, the observance of delivery conditions plays a major role. As a tax adviser and auditor for the automotive industry, we would be happy to advise you on the interaction between the sales department and accounting in order to reduce the risk of incorrect accounting. Another classic of accounting is the distinction between research costs and development costs. In particular, the accounting of intangible assets has gained in importance in recent years.
In practice, supplier companies often carry out intensive calculations to evaluate the inventory of unfinished and finished products or services. The sales price is used as a reference point and compared with the production costs.
In our experience, less attention has been paid to future losses from adverse delivery obligations. The obligation to deliver parts or components in the future at a sales price that has already been fixed in advance and below the future production costs represents a typical imminent loss from pending transactions with the obligation for accounting by a prudent businessman according to Section 249 (1) sentence 1 HGB. It is important at this point also the note that a provision for impending losses according to § 5 para. 4a EstG may not be formed in the tax balance sheet. Have you ever considered whether your inventory of supply contracts may contain impending losses from pending deals? Talk to us as an auditor and adviser with expertise in the automotive industry.
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