EY Wirecard – Are Big Accounting firms ripping you off?
- January 2021
- 5 minutes
- Business entertainment
- coronavirus
- furlough
- Outsourcing
- payroll
- Subcontractors
Most people think that if you go to a big brand, the services will be better which is true. However, it is not always the case. Can you believe it that EY failed to carry out the most basic audit test for three consecutive years? They were paid over the odds to do the work which was never carried out by the firm. We have come across clients from well known accounting firms where the clients were neglected and businesses suffered as a result.
EY failed for more than three years to request crucial account information from a Singapore bank where Wirecard claimed it had up to €1bn in cash — a routine audit procedure that could have uncovered the vast fraud at the German payments group. The accountancy firm, which audited Wirecard for ten years has come under fire after the once high-flying tech company filed for insolvency, revealing 1.9 bn Euros in cash which probably didn’t exist.
The auditor between 2016 and 2018 did not check directly with Singapore’s OCBC Bank to confirm that the lender held large amounts of cash on behalf of Wirecard. Instead, EY relied on documents and screenshots provided by a third-party trustee and Wirecard itself. One person told that Wirecard has no banking relationship with OCBC and that the firm’s former trustee doesn’t have an escrow account with the bank.
Additionally, the lender did not receive any query from EY in relation to Wirecard between 2016-2018. EY is facing massive legal action after the German shareholders association SDK said it had filed a criminal complaint against Wirecard’s auditors. A Japanese company called Softbank also said it will sue EY after in invested in Wirecard last month. Wirecard was filing for insolvency after auditors refused to sign off the 2019 accounts after discovering billions missing from the balance sheet.
The Big Four accounting firm has issued unqualified audits of Wirecard for a decade despite increasing questions over suspect accounting practices from journalist and short sellers. The German accounting watchdog FREP is probing Wirecard’s balance sheet and the country’s auditor oversight body APAS has begun looking into EY’s work. EY declined to comment on the regulatory investigation and details of its work.
The accounts at Asian banks play a role in Wirecard’s accounting fraud that culminated in the group filing for insolvency. According to the company’s former management, the accounts were used to settle transactions with partners who acted on behalf of Wirecard in countries where it didn’t have its own licenses to process electronics payments.
A special audit by KPMG could not obtain original documents from the banks to prove deposits existed ( moved to banks in the Philippines). EY was told by the banks that the paperwork it had previously seen on the Philippines accounts was ‘’spurious’’ and they did not exist. It wasn’t sufficient for an auditor to rely on account confirmations that were provided by the third parties. The auditor needs to have full control over the delivery of account information.
Accounts published by Wirecard showed five different EY partners signed their accounts over five years. EY is already facing a class-action lawsuit in Germany brought by Wirecard investors. A Berlin-based lawyer who is working on the case against the audit firm said ‘’it is frightening how long Wirecard was able to operate without being objected to by auditors. We have been monitoring Wirecard since 2008 and collected very extensive material- it was always clear that something was wrong.’’
EY failed for more than three years to request crucial account information from a Singapore bank where Wirecard claimed it had up to €1bn in cash — a routine audit procedure that could have uncovered the vast fraud at the German payments group. The accountancy firm, which audited Wirecard for ten years has come under fire after the once high-flying tech company filed for insolvency, revealing 1.9 bn Euros in cash which probably didn’t exist.
The auditor between 2016 and 2018 did not check directly with Singapore’s OCBC Bank to confirm that the lender held large amounts of cash on behalf of Wirecard. Instead, EY relied on documents and screenshots provided by a third-party trustee and Wirecard itself. One person told that Wirecard has no banking relationship with OCBC and that the firm’s former trustee doesn’t have an escrow account with the bank.
Additionally, the lender did not receive any query from EY in relation to Wirecard between 2016-2018. EY is facing massive legal action after the German shareholders association SDK said it had filed a criminal complaint against Wirecard’s auditors. A Japanese company called Softbank also said it will sue EY after in invested in Wirecard last month. Wirecard was filing for insolvency after auditors refused to sign off the 2019 accounts after discovering billions missing from the balance sheet.
The Big Four accounting firm has issued unqualified audits of Wirecard for a decade despite increasing questions over suspect accounting practices from journalist and short sellers. The German accounting watchdog FREP is probing Wirecard’s balance sheet and the country’s auditor oversight body APAS has begun looking into EY’s work. EY declined to comment on the regulatory investigation and details of its work.
The accounts at Asian banks play a role in Wirecard’s accounting fraud that culminated in the group filing for insolvency. According to the company’s former management, the accounts were used to settle transactions with partners who acted on behalf of Wirecard in countries where it didn’t have its own licenses to process electronics payments.
A special audit by KPMG could not obtain original documents from the banks to prove deposits existed ( moved to banks in the Philippines). EY was told by the banks that the paperwork it had previously seen on the Philippines accounts was ‘’spurious’’ and they did not exist. It wasn’t sufficient for an auditor to rely on account confirmations that were provided by the third parties. The auditor needs to have full control over the delivery of account information.
Accounts published by Wirecard showed five different EY partners signed their accounts over five years. EY is already facing a class-action lawsuit in Germany brought by Wirecard investors. A Berlin-based lawyer who is working on the case against the audit firm said ‘’it is frightening how long Wirecard was able to operate without being objected to by auditors. We have been monitoring Wirecard since 2008 and collected very extensive material- it was always clear that something was wrong.’’