Germany: EY Fined €500,000 & Banned For Two Years Over Audit Lapses In Bankrupt Payments Firm
The German arm of EY, one of the world's Big Four accounting firms, has been fined 500,000 euros ($544,630) after acting as the auditor for collapsed payments company Wirecard and barred from auditing companies of public interest for two years. Germany's accounting oversight watchdog, APAS, said it imposed the fine for breach of professional duty in auditing German payments firm Wirecard from 2016 to 2018.
The German arm of EY, one of the world's Big Four accounting firms, has been fined 500,000 euros ($544,630) after acting as the auditor for collapsed payments company Wirecard. And that's not all. EY has also been banned from auditing companies of public interest for two years.
EY's Audit Lapses In A German Firm
indiatimes
Also Read: How The Stock Market Crash Of 1929 Led To World War II
Germany's accounting oversight watchdog, APAS, said it imposed the fine for breach of professional duty in auditing German payments firm Wirecard from 2016 to 2018. It said the decision can be appealed in court, and while it bars EY from taking on new companies "of public interest," it does not prevent it from servicing existing clients, as per an Associated Press report.
Wirecard filed for bankruptcy protection in June 2020 after 1.9 billion euros ($2.1 billion) in cash balances on the company's books could not be verified. Its former CEO, Markus Braun, is on trial on charges of defrauding creditors. He has denied the charges, maintaining he acted in good faith and was not aware of the machinations of others.
afp
The fraud cost banks 3.1 billion euros in loans and writedowns, prosecutors say. The case exposed flaws in German financial oversight and embarrassed then-Chancellor Angela Merkel, who had lobbied for the company during a visit to China.
Wirecard's accountant and the head of a subsidiary based in Dubai, United Arab Emirates, are also reportedly on trial in Munich.
APAS said in a statement that it had imposed sanctions on Wirecard's auditing company and five individual auditors, without referring to EY by name. Wirecard's annual report names EY as the auditor for that period (2016-18).
As per a Reuters report, EY said in an email that it had been informed by watchdog APAS that an investigation into the company had been completed, but that it had not been briefed on the details of the decision.
EY, previously known as Ernst & Young, said it has not been provided with details of the APAS investigation, "which will be carefully examined when they are finalised and formally communicated."
Also Read: EPFO Begins Probe Into Rs 1,000-Crore Jet Airways Fraud
EY's Largest Penalty Of $100 Million In 2022
ey
Last year in June, EY agreed to pay a mammoth $100 million fine after U.S. securities regulators found that numerous auditors had cheated on exams required to obtain and maintain Certified Public Accountant (CPA) licences and for withholding evidence of this misconduct from the SEC¡¯s Enforcement Division during the Division¡¯s investigation of the matter.
This is the largest penalty ever imposed by the SEC against an audit firm.
As per the Securities and Exchange Commission's (SEC) press release, EY had admitted the facts underlying the SEC¡¯s charges and agreed to pay a $100 million penalty and undertake extensive remedial measures to fix the firm¡¯s ethical issues.
For more such interesting content and the latest financial news, keep reading Worth. Click here.
