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EY hit with German audit ban over Wirecard work

EY hit with German audit ban over Wirecard work

Accounting firm EY has been banned from accepting companies "of public interest" as new auditing customers in Germany for two years over its failures relating to collapsed payments firm Wirecard.

German auditor supervisory authority APAS imposed the ban for “breaches of professional duty” between 2016 and 2018. APAS also fined EY €500,000 and hit five staffers with small penalties.

Wirecard was a rising blue chip star before its collapse in 2020 following the discovery of a gaping €1.9 billion hole in its balance sheet.

The company received unqualified audits from EY for more than 10 years, before the Big Four firm refused to sign off its 2019 results.

EY has since lost a number of major clients in Germany, including Commerzbank, DWS and KfW. In January, it emerged that Commerzbank is suing EY for the recovery of €200 million in losses related to the collapse.

Former Wirecard boss Marcus Braun is currently on trial, facing charges of fraud, misappropriation of corporate assets, accounting fraud and market manipulation. He has pleaded not guilty.

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Comments: (4)

A Finextra member
A Finextra member 05 April, 2023, 14:291 like 1 like

When do the German regulators get named and shamed - they looked the other way too!

A Finextra member
A Finextra member 06 April, 2023, 08:53Be the first to give this comment the thumbs up 0 likes

Anybody who knew the merchant acquiring market understood that something was wrong with the claimed business results of WC. Not possible for them to acquire the payment volumes with profit margin they claimed, unless other acquirers lost business even though WC indicated that they were acquiring gambling and adult entertainment payments not touched by global market leaders. This should have been understood by the auditors as well as by regulators and political leaders in Germany. 

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 06 April, 2023, 11:211 like 1 like

I totally agree that regulators need to be held responsible.

The common thread we're seeing in the failures of Wirecard in Germany, SVB in USA, and YES Bank and PMC Bank in India is that tightly regulated companies suddenly end up collapsing. 

High time sinecure bureaucrats were penalized for incompetence, dereliction of duty, or worse.

A Finextra member
A Finextra member 06 April, 2023, 12:03Be the first to give this comment the thumbs up 0 likes

Gaming and Adult is always high risk - but investors didnt understand that  - Regulators did and looked the other way - even though the stench rising from the WC business must have been overpowering