KPMG refuses to sign off Adler audit following allegations of wrongdoing
Big Four accountancy firm KPMG has refused to sign off the 2021 financial results of German property group Adler, after an investigation by the auditor last week unveiled widespread issues with the property firm’s corporate governance.
In a statement, the Berlin based real estate company, which owns 52,000 flats across Germany, said KPMG had “not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these annual accounts.”
KPMG’s refusal to sign off on Adler’s accounts comes after an investigation by the auditor last week revealed widespread issues with German property firm’s corporate management.
The investigation came after investment group Viceroy Research accused Adler Group of being “a hotbed of fraud, deception, and financial misrepresentation designed to hide its true financial position.”
The Delaware short selling group claimed Adler had “artificially inflated” its balance sheet as it alleged the firm’s management had engaged in “fraud” and “gross dishonesty.”
The KPMG probe showed “improper attempts” had been made by Austrian real estate tycoon Cevdet Caner to influence Adler’s decision making, as it found Caner had significant involvement in strategic decisions, recruitment of executives, and other operational matters.
Whilst Adler claimed Caner had not been involved in the day-to-day running of its business, the investigation found company strategy meeting had taken place on the property mogul’s personal yacht and that Adler executives used his private jet for business trips.
The investigation also said Adler’s property development portfolio was overvalued, as it claimed the real value is around 17 per cent lower than the €2.4bn sum stated on Adler’s accounts.
However, Adler chairman Kristen said the report shows no evidence of “fraud or deception,” and claimed the investigation cleared Adler of any “systematic and extensive enrichment at the expense of other stakeholders.”
The KPMG report also said there is no evidence that Adler’s main rental portfolio was overvalued. Kristen said any “financial misrepresentations” would be corrected, as he claimed they are “immaterial and therefore irrelevant to stakeholders”.