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As the fallout from Wirecard<\/a>’s troubles unfold, Germany’s deputy finance minister has called for radical solutions to fix how accounting firms are regulated, the Financial Times reported<\/a>.<\/p>\n The government is expected to end its contract with the Financial Reporting Enforcement Panel (FREP), the country’s accounting watchdog, as early as Monday, sources told the Times.<\/p>\n “We have reached an agreement with the Finance Ministry to terminate the contract,” a Justice Ministry official told Reuters<\/a>.<\/p>\n FREP declined to comment.<\/p>\n Regulatory powers will be transferred to Federal Financial Supervisory Authority (BaFin), Germany’s financial regulatory agency, less than two weeks after Wirecard’s $2.1 billion in deposits went missing from two Philippines banks. Its founder and CEO Markus Braun, 51, resigned and was later arrested on charges of misrepresenting Wirecard’s accounts and market manipulation. He has been released on 5 million euros ($5.6 million) bail. Last week, the company filed for insolvency, owing creditors almost $4 billion.<\/p>\n German regulators have faced accusations that they failed to adequately supervise Wirecard, which has been audited by Ernst & Young<\/a>, the Times reported.<\/p>\n “What the Wirecard affair has shown is that…self-regulation by the auditors doesn’t work properly,” Jörg Kukies, Germany’s deputy finance minister, told the Financial Times. “So we will inevitably have to question whether the bodies that currently regulate the industry should continue to do so in their current form.”<\/p>\n German Chancellor Angela Merkel’s spokesman told the Times the case is “alarming,” while Finance Minister Olaf Scholz called it “a scandal which is almost unprecedented in the world of finance.”<\/p>\n “We should see the Wirecard story as a signal to address these problems, which have existed for quite a long time now, and to find radical solutions,” Kukies told the Times. “Only then can we contain the fallout from this affair.”<\/p>\n The former Goldman Sachs banker who joined the Finance Ministry two years ago, told the newspaper BaFin has very limited powers to oversee accountancy firms in Germany. “We have to think about how the regulatory regime should be changed,” he said. <\/strong><\/p>\n Last year, BaFin asked FREP to initiate an investigation into Wirecard after published reports about accounting manipulations, sources told the Times. But only one FREP investigator has been on the case and little progress was made, officials briefed on the matter told the FT.<\/p>\n “We’ve seen that FREP can really take its time when it investigates a company, and then the authorities can only intervene at a relatively late stage,” Kukies said.<\/p>\n Berlin attorneys Marc Liebscher and Wolfgang Schirp told the Financial Times on Sunday (June 28) they are preparing a class action lawsuit of investors against the Federal Republic of Germany seeking damages for an alleged failure of German regulatory authorities in the Wirecard case, the report said.<\/p>\n <\/p>\n Tags:<\/b> Pymnts<\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"See Campaign: <\/strong>https:\/\/www.pymnhttps:\/\/www.pymnts.com\/coronavirus\/2020\/how-pandemic-created-digital-first-customer-in-12-weeks\/ts.com\/digital-payments\/2020\/adp-pandemic-prompts-firms-replace-checks-with-pay-cards\/<\/a>
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As the fallout from Wirecard’s troubles unfold, Germany’s deputy finance minister has called for radical solutions to fix how accounting firms are regulated, the Financial Times reported. The government is expected to end its contract with the Financial Reporting Enforcement Panel (FREP), the country’s accounting watchdog, as early as Monday, sources told the Times. “We have reached … Continue reading Wirecard Forces ‘Radical’ Reboot Of German Accounting Regs<\/span><\/a> Continue Reading