AmazonScience/document-haystack

1Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Our responsibilities under 2those requirements and principles are further described in the "Auditor's Responsibilities for 3the Audit of the Consolidated Financial Statements and of the Summarized Management 4Report" section of our auditor's report. We are independent of the group entities in 5accordance with the requirements of European law and German commercial and professional 6law, and we have fulfilled our other German professional responsibilities in accordance with 7these requirements. In addition, in accordance with Article 10 (2) point (f) of the EU Audit 8Regulation, we declare that we have not provided non-audit services prohibited under Article 95 (1) of the EU Audit Regulation. We believe that the evidence we have obtained is sufficient 10and appropriate to provide a basis for our opinions on the consolidated financial statements 11and on the summarized management report.12Key Audit Matters in the Audit of the Consolidated Financial 13Statements14Key audit matters are those matters that, in our professional judgment, were of most 15significance in our audit of the consolidated financial statements for the financial year from 16January 1, 2023 to December 31, 2023. These matters were addressed in the context of our 17audit of the consolidated financial statements as a whole, and in forming our opinion thereon, 18we do not provide a separate opinion on these matters.19Impairment testing of goodwill20Please refer to note 2 in the notes to the consolidated financial statements for information on 21the accounting policies applied and the assumptions used. Disclosures on the amount of 22goodwill can be found under note 12 and information on the economic development of the 23asset management industry is presented in the section "Economic and Competitive 24Environment" in the summarized management report.25THE FINANCIAL STATEMENT RISK26As of December 31, 2023, goodwill amounted to EUR 2,867 million and, at 25% of total assets, 27accounts for a substantial share of assets.28Goodwill is tested for impairment annually at the level of the single operating segment. For 29this purpose, the carrying amount is compared with the recoverable amount of the business 30segment. If the carrying amount exceeds the recoverable amount, an impairment loss is 31recognized. The recoverable amount is the higher of fair value less costs to sell and the value 32in use of the business segment. The effective date for the impairment test is October 1, 2023.33Impairment testing of goodwill is complex and based on a range of assumptions that require 34judgment. These include the expected business and earnings development of the business 35segment for the next five years, the assumed long-term growth rates and the discount rate 36used.37Competition in the asset management industry continued to intensify in financial year 2022. 38Future business prospects continue to be negatively affected in particular by the continued 39compression of margins globally and rising costs of market entry. Nevertheless, DWS Group 40GmbH & Co. KGaA did not identify any need for impairment as a result of the impairment test 41carried out.42There is the risk for the consolidated financial statements that impairment existing as of the 43reporting date was not identified due to improper determination of the parameters relevant 44for the evaluation. Moreover, there is a risk that the existing impairment as of reporting date is 45not properly recognized because of inappropriate determination of the data relevant for the 46valuation. This includes the risk that improper application of the factors used to identify a 47single business segment led to an existing need to recognize impairment losses not being 48identified. There is also the risk that the related disclosures in the notes are not appropriate.49OUR AUDIT APPROACH50Based on our risk assessment of material misstatements we have performed audit procedures 51to assess the design and implementation as well as test of operating effectiveness of the 52Company’s processes and controls. Furthermore, we have performed substantive audit 53procedures. Hence, we have performed the following audit procedures:54We assessed the proper application of the factors used to identify the individual business 55segment, in particular with regard to the management and reporting structures of the Group, 56the structure of the variable remuneration components of all the members of the Executive 57Board as well as a peer group analysis of other listed asset managers. We also assessed, with 58the help of our valuation specialists, the appropriateness of the significant assumptions and 59the calculation method used by the Company. To this end, we discussed the expected 60development of business and earnings as well as the assumed long-term growth rates with 61those responsible for planning. In addition, we reconciled this information with other 62internally available forecasts, e.g. the budget prepared by the Executive Board and approved 63by the Supervisory Board. Furthermore, we evaluated the consistency of assumptions with 64external market assessments.65Further, we satisfied ourselves of the quality of the Company's forecasts to date by 66comparing the budgets from previous financial years with the actual results achieved and by 67         68To our 69Shareholders70Summarised 71Management Report72Consolidated 73Financial Statements Compensation Report Corporate Govern-74ance Statement75Supplementary 76Information DWS 2023 Annual Report77 78Confirmations79134 Independent Auditor’s Report