KPMG has refused to sign off the 2021 financial reports of German property giant Adler following an inquiry by the auditor last week that revealed flaws with the property firm's corporate governance.

According to the Berlin-based real estate company, which owns 52,000 flats across Germany, KPMG had "not been able to gather sufficient appropriate audit evidence to establish a foundation for an audit opinion on these annual accounts."

KPMG's reluctance to sign off on Adler's financial statements comes after the auditor's probe last week identified problems with the German property firm's corporate management.

Viceroy Research, an investment firm, accused Adler Group of being "a hotbed of fraud, dishonesty, and financial misrepresentation meant to mask its true financial status," prompting the investigation.

The Delaware short-selling group said Adler's balance sheet had been "artificially inflated" and that the firm's management had committed "fraud" and "gross dishonesty."

The KPMG investigation revealed that Austrian real estate tycoon Cevdet Caner had extensive participation in strategic decisions, executive recruitment, and other operational matters, indicating "improper attempts" to influence Adler's decision-making.

While Adler stated that Caner was not involved in the day-to-day operations of the company, the investigation discovered that corporate strategy meetings were held on the real estate mogul's personal yacht and that Adler executives utilised his private plane for business trips.

According to the study, Adler's property development portfolio was similarly inflated, with the real worth being roughly 17% lower than the €2.4 billion shown on Adler's accounts.

The report, however, shows no evidence of "fraud or deception," according to Adler chairman Kristen, who claims the probe absolved Adler of any "systematic and significant gain at the detriment of other stakeholders."

There is no evidence that Adler's major rental portfolio was overvalued, according to the KPMG study. Any "financial misrepresentations," Kristen stated, will be remedied because they are "immaterial and so irrelevant to stakeholders."

Source: City A.M.