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In the ongoing scandal of Wirecard<\/a>, under fire for fraud, the focus is now turning to auditors Ernst & Young<\/a> (EY), which reportedly failed to report Wirecard’s “unorthodox financial arrangements” as far back as 2016, The Wall Street Journal<\/a> (WSJ) reported.<\/p>\n According to emails seen by WSJ, the auditing firm knew of and had questions about the arrangements and was signing off on Wirecard’s financial results for years anyway.<\/p>\n Marc Liebscher, a lawyer with the Berlin firm representing private Wirecard investors, called EY’s auditing “a disaster” and said the firm “should stand trial” as well, WSJ reported.<\/p>\n The controversy is centered around a missing $2 billion from Wirecard, which was said to be stored in Philippines banks, but an investigation turned up nothing. The money represented around a quarter of the total revenue the company had between 2016 and 2019.<\/p>\n Wirecard employed an unconventional measure in which it used third-party partners to process payments in countries where it wasn’t licensed. The revenue from those businesses was deposited in trust accounts rather than paid straight to the company. Wirecard explained that the money was kept that way for risk management, saying it could be saved to provide refunds or chargebacks if needed.<\/p>\n According to WSJ, emails show that EY had knowledge regarding the way that money was handled back in 2016 and onward. There were allegedly multiple instances in which investors sent detailed complaints that seemed to be ignored by EY. WSJ reported on one instance in which an EY senior manager left a note for a Wirecard executive saying EY was preparing to ask questions about a trustee account.<\/p>\n Additionally, EY reportedly failed to request<\/a> information for years from a Singapore bank about 1 billion euros ($1.12 billion) that Wirecard claimed to have stored there, which a report said could have shown more clearly what was going on in terms of Wirecard’s mismanagement of funds.<\/p>\n Earlier this year, EY said it had refused to sign off<\/a> on Wirecard’s 2019 accounts due to the discrepancies and false statements around the missing money.<\/p>\n EY has been auditing for Wirecard since 2008 when it was hired to conduct a special audit over allegations that there were deficiencies in the company’s financial statements, and then EY continued as the company’s regular auditor from 2009 onward.<\/p>\n Wirecard, once a darling of the tech scene, has seen its value almost totally erased by the scandal, and Founder and CEO Markus Braun<\/a> was arrested and later released on charges of manipulating the market.<\/p>\n Tags:<\/b> Pymnts<\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"See Campaign: <\/strong>https:\/\/www.pymnts.com\/news\/security-and-risk\/2020\/ernst-young-accused-missing-alleged-wirecard-frau<\/a>
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In the ongoing scandal of Wirecard, under fire for fraud, the focus is now turning to auditors Ernst & Young (EY), which reportedly failed to report Wirecard’s “unorthodox financial arrangements” as far back as 2016, The Wall Street Journal (WSJ) reported. According to emails seen by WSJ, the auditing firm knew of and had questions about the arrangements and was … Continue reading EY Accused Of Missing Alleged Wirecard Fraud<\/span><\/a> Continue Reading