financial scandals

Auditor EY facing probe in Wirecard scandal – German prosecutor

Agence France-Presse

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German auditing watchdog APAS is cited as saying that EY's reports 'might have been incorrectly reported or significant elements might have been concealed'

An investigation has been launched in Germany against auditor Ernst & Young (EY), which was responsible for checking accounts at the disgraced electronic payments company Wirecard, the Munich prosecutor’s office said on Friday, December 4.

The preliminary investigation follows notification by the German auditing watchdog APAS regarding EY, which had approved Wirecard’s accounts, a spokeswoman for the office told Agence France-Presse.

Wirecard was placed in liquidation in August, with debts of 3.2 billion euros ($3.9 billion).

The company and its directors are already under investigation by the Munich prosecutor.

APAS drew attention in particular to the period from 2015 to 2017, according to the German business daily Handelsblatt.

It cited the APAS as saying that the “auditor’s reports might have been incorrectly reported or significant elements might have been concealed.”

A series of scandals has hammered the auditing sector, which is dominated by 4 major firms, including EY.

The auditing giant is also the target of many other legal actions on the part of investors in Germany and elsewhere.

Wirecard collapsed in June after it was forced to admit 1.9 billion euros missing from its accounts did not exist.

The affair has drawn comparisons with the Enron accounting scandal in the US in the early 2000s.

The fallout has prompted plans to overhaul finance watchdog Bafin, accused of lax oversight of Wirecard, and stricter rules for auditing firms.

Founded in 1999, Bavarian startup Wirecard rose from a company piping cash to porn and gambling sites to a respectable electronic payments provider that edged traditional bank Commerzbank out of Frankfurt’s blue-chip DAX 30 index in 2018.

A rising star in the fintech sector, Wirecard boasted a market valuation of more than 23 billion euros at one point – outweighing giant Deutsche Bank.

Its shares have since lost around 98% of their value. –

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