Due to its mistakes as Wirecard’s auditor in the years preceding the company’s demise, EY, one of the biggest accounting firms in the world, has been prohibited from auditing enterprises of public interest in Germany for two years.
Without mentioning EY, the German auditor supervisory authority, APAS, fined Wirecard’s auditor for “breach(es) of professional responsibility” between 2016 and 2018.
Before declining to certify Wirecard’s 2019 final results and causing the company to go out of business, EY had audited the company for more than ten years.
In addition to the suspension, the supervisory authority penalised the Wirecard auditor €500,000 ($544,000) and handed out minor fines totaling between €23,000 ($25,000) and €300,000 ($326,000) to five different auditors at the company. Only brand-new auditing mandates are prohibited.
Insolvency proceedings were initiated by Germany’s Wirecard in 2020 following the discovery of a $2 billion accounting scam that had gone undetected by authorities, the company’s supervisory board, and its longstanding auditor, EY.
For years, wary investors, whistleblowers, and journalists had questioned Wirecard’s accounting, but the German banking regulation retaliated vehemently against these parties.
Finally, Wirecard acknowledged that around 25% of its assets, or $2.1 billion in cash, probably never existed. Markus Braun, the company’s CEO, resigned and was detained on suspicion of fabricating transactions to inflate the company’s revenues and balance sheet.
Braun is presently facing a fraud prosecution in a German court and has vehemently denied any wrongdoing. Due to its mistakes as Wirecard’s auditor in the years leading up to the company’s collapse, EY was penalized €500,000 ($544,000) and given a two-year auditing ban from public interest corporations in Germany in March 2022.
