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Economic Fraud

EY Faces 2-Year Audit Ban, €500k Fine Over Wirecard Scandal



EY Faces 2-Year Audit Ban, €500k Fine Over Wirecard Scandal

BERLIN: Germany’s accounting watchdog, APAS, has imposed a fine of €500,000 ($541,650) on EY, the auditor of Wirecard for the years 2016-2018, and has banned it from taking on new audits for companies of public interest for two years.

The decision was made in connection with the scandal that erupted after Wirecard filed for insolvency in June 2020, owing creditors almost $4 billion. Wirecard had disclosed a €1.9 billion hole in its accounts, which EY had called a result of a sophisticated global fraud.

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In a statement, APAS said that it had found breaches of duty by the auditor in connection with the scandal, but did not refer to EY by name. However, Wirecard’s annual report names EY as the auditor for that period.

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EY has said that it had been informed by APAS that an investigation into the company had been completed, but that it had not been briefed on the details of the decision. The ban prohibits the auditor from participating in tenders for audits of certain companies for two years, including all listed companies as well as the majority of the financial sector consisting of banks and insurance companies.

Wirecard, which was founded in 1999, began by processing payments for gambling and pornography websites before becoming a fintech star and a member of Germany’s blue chip DAX index. This decision by APAS is expected to have significant implications for EY’s operations in Germany and could have serious consequences for its reputation globally.

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