K+S Group’s auditor Deloitte GmbH on March 9 issued an unqualified audit opinion on the group’s 2020 consolidated financial statements, according to a K+S disclosure.
The impairment loss on assets in the Europe+ operating unit now amounts to €1.86 billion in the consolidated financial statements as of Dec. 31, 2020, around €140 million lower than previously expected, according to the disclosure.
“On balance, the lower impairment was mainly the result of more specific assumptions for the individual calculation components in the course of preparing the financial statements. In addition, exchange rate effects occurred in the fourth quarter,” said K+S.
However, the unqualified audit opinion confirms that the impairment loss should not have been recognized earlier. K+S had made the special impairment for the third quarter (GM Nov. 6, 2020)
The audit opinion is a first step in K+S resolving potential issues being investigated by the German Financial Reporting Enforcement Panel.
K+S disclosed last month its financial statements as of Dec. 31, 2019, together with the related interim group management report and the abbreviated financial statements as of June 30, 2020, were to be examined at the request of the German Federal Financial Supervisory Authority (BaFin) (GM Feb. 19, p.35).
BaFin cited the reason for the probe – which is being undertaken by the German Audit Office for Accounting (DPR), a separate financial watchdog on its behalf – as assets reported in K+S’ consolidated financial statements as of December 31, 2019, and the abbreviated financial statements as of June 30, 2020 – in particular non-current assets – may be overstated. The examination relates to a K+S statement on Nov. 4, 2020, that it had adjusted its long-term assumptions for the potash business (GM Nov. 6 & Nov. 13, 2020).
K+S said in this week’s statement while the examination by the German Financial Reporting Enforcement Panel has not yet been completed, the company is “firmly convinced that the impairment was made by us properly and in compliance with all relevant accounting standards, and the probe will be able to invalidate the indications for the examination. The unqualified audit opinion supports our assessment.”