German regulator to examine auditor EY over Wirecard accounts: Handelsblatt

FILE PHOTO: The headquarters of Wirecard AG, an independent provider of outsourcing and white label solutions for electronic payment transactions is seen in Aschheim
FILE PHOTO: The headquarters of Wirecard AG, an independent provider of outsourcing and white label solutions for electronic payment transactions is seen in Aschheim near Munich, Germany, July 22, 2020. REUTERS/Michael Dalder/File Photo

August 3, 2020

BERLIN (Reuters) – The German body in charge of regulating auditors is examining EY in connection with the collapse of payment services firm Wirecard, Handelsblatt newspaper reported on Monday, citing a confidential Economy Ministry document.

The document said that the Auditors’ Regulator (Apas) was examining all audits that EY had conducted of Wirecard’s accounts since 2015. The regulator, which according to the document first began looking at the matter in October 2019, has the power to check earlier submitted accounts and audits.

“A formal professional oversight examination is underway into the Ernst & Young Audit Company,” the document said, adding that the review would examine “adherence to legal and professional standards.”

The Economy Ministry, which has oversight of the regulator, confirmed that an investigation was underway.

EY, Wirecard’s auditor for more than a decade, said it was assisting the authorities with their investigations.

“We too are interested in this matter being cleared up comprehensively, completely and quickly,” EY said in a statement.

Munich-based Wirecard collapsed in June after EY refused to sign off on its 2019 accounts because it could not verify 1.9 billion euros ($2.2 billion) supposedly held abroad in escrow by third-party partners.

The company subsequently filed for insolvency owing debts of 3.2 billion euros. Three former top managers have been arrested on suspicion of fraud and racketeering in Germany’s biggest accounting scandal.

(Reporting by Thomas Escritt, Christian Kraemer, Hans Seidenstuecker and Douglas Busvine; Editing by Caroline Copley)