PwC's Baywa audit mandate looks to be in doubt
The mandate of auditors PriceWaterhouseCoopers (PwC) at the crisis-ridden agricultural trading company Baywa is in doubt. According to Börsen-Zeitung sources, the supervisory board of the Munich-based conglomerate, which belongs to the co-operative banks, is increasingly critical of PwC's performance.
This wary stance on the board emerged in particular in November, when the Federal Financial Supervisory Authority (BaFin) gave instructions for an audit of the consolidated financial statements and management report for 2023.
BaFin justified its decision by stating that there were „concrete indications“ of breaches of accounting regulations in accordance with the German Securities Trading Act. For example, the financial position and financing risks presented were possibly incorrect. In addition to the company's management, the Management Board and Supervisory Board, PwC could also be partly responsible for these shortcomings, since the auditor issued an unqualified opinion on the consolidated balance sheet for 2023 at the end of March last year, and omitted any references to the already strained financial position of the former SDax member.
In such cases of suspicion by BaFin, the Auditor Oversight Authority (Apas) also gets involved. As a result of the Baywa case, Apas initiated a supervisory procedure looking at PwC.
Damage to image
The damage to the image of the auditor, which is one of the big four on the international stage, is already considerable. PwC has previously made headlines in China. The authorities there fined the company millions due to audit deficiencies found in connection with the troubled property group Evergrande.
PwC has been auditing Baywa since 2021; Deloitte previously held the audit mandate. PwC was also mandated for the 2024 consolidated financial statements, which are due on 27 March. On 11 June 2024, the Annual General Meeting (AGM) approved the Supervisory Board's proposal to appoint PwC again for the audit by a more than 99% vote. This was done in particular with the votes of the two major shareholders. The shareholding vehicles of credit cooperative primary banks from Bavaria (33.8%) and cooperative banks from Austria (28.1%) together account for 62% of the share capital.
Audit committee
However, it is now questionable whether the Supervisory Board will once again propose PwC as the auditor for 2025, for the shareholders meeting to be held on 27 May. A recommendation from the Audit Committee of the Supervisory Board regarding the invitation to the AGM is likely to be decisive. The Audit Committee usually proposes auditors who can be mandated to audit the annual financial statements.
As a result of the financial disaster at Baywa, however, the chances of PwC being awarded the contract again have decreased significantly. Due to the high pressure it is under, Baywa could appoint a different firm for the next audit cycle.
Key role for committee chairman
The Chairman of the Audit Committee has a key role to play in the process. This is Wilhelm-Josef Oberhofer. The 56-year-old is a full-time member of the Board of Management at Raiffeisenbank Kempten-Oberallgäu, and at Baywa's largest single shareholder, Bayerische Raiffeisen Beteiligungs-AG.
Oberhofer, who has been a member of the Supervisory Board since 2015 and was re-elected in 2024, is considered to be partly responsible for Baywa's difficulties.
Unlike his colleague Wolfgang Altmüller, who resigned from the Supervisory Board in November, Oberhofer does not appear to be prepared to draw personal conclusions from the miserable situation. Since the beginning of May, fellow banker Gregor Scheller has headed the Baywa Supervisory Board.
