breach of duty
Ernst & Young sanctioned in Wirecard scandal
4/3/2023 3:34 p.m
The auditing company EY has examined Wirecard’s allegedly forged balance sheets for years without finding any inconsistencies. Now the auditor oversight is taking action: EY is not allowed to accept any new mandates for two years, and fines are also being imposed.
The auditor supervisory authority APAS has sanctioned the auditing company Ernst & Young (EY) and individual auditors in connection with the Wirecard scandal. When examining the financial statements of the former payment service provider in the years 2016 to 2018, they see breaches of professional duty as proven, the APAS announced.
EY confirmed that it had been informed about the completion of the APAS test, but details of the decision are not yet known. EY will examine these carefully. According to the APAS, the auditing company has to pay a fine of 500,000 euros. In addition, she was not allowed to carry out any statutory audits for companies of public interest for two years.
The APAS announced that these were so-called new mandates. Existing mandates are excluded. According to the APAS, five auditors were also fined between EUR 23,000 and EUR 300,000. A spokesman for the Federal Office of Economics and Export Control, to which APAS belongs, did not provide any information on the total fines.
EY wants to strengthen risk management
In the next step, the notifications from the APAS are to be prepared, and those affected can then lodge an objection against them, it said. This is the most extensive procedure carried out by APAS to date.
EY cooperated fully with APAS throughout the investigation, a company spokesman said. One regrets that the fraud at Wirecard was not uncovered earlier. The company has learned important lessons from the case and has taken comprehensive measures to strengthen audit quality and risk management.
Wirecard collapsed in the summer of 2020 after the board admitted that 1.9 billion euros allegedly booked in escrow accounts could not be found. The former Wirecard boss Markus Braun is currently being tried in Munich. EY had audited the allegedly falsified balance sheets of the former DAX group for years.