Ernst and Young, the multinational accounting and auditing firm, has been banned by the German auditory supervisory authority, APAS, from auditing companies of public interest in Germany for 2 years. This ban was imposed after an investigation by APAS revealed that EY breached its professional duty as the auditor of the now-defunct German financial services company, Wirecard.
The auditor oversight office (APAS) and the federal office of economics and export control (BAFA) issued a joint press release announcing that the auditing firm of Wirecard Limited and Wirecard Bank Limited for the years 2016-2018 had been sanctioned for violating professional duty.
Although the press release did not explicitly name Ernst and Young, the financial statements indicate that EY was the auditor of the financial company during that same time frame.
In addition to the prohibition, Ernst and Young has been fined 500,000 euros and five individual auditors have been sanctioned with fines ranging from 23,000 euros to 300,000 euros and a two-year ban. As of now, EY has not made any public comments on APAS’s decision, but the UK-based consulting company previously acknowledged that it had been informed of APAS’s ongoing investigation.
About Wirecard AG scam
Wirecard AG, is a financial service and payment processing company, which was established in 1999. In June 2020, the company filed for insolvency after it was discovered that nearly 1.9 billion euros were missing as part of an international financial scandal.
The company which began business by offering payment services to porn and gambling websites, had a history of controversy as numerous news agencies and investigative reporters had accused the company of engaging in accounting malpractices.
APAS investigation into Ernst and Young
After Wirecard’s CEO Marcus Braun’s arrest and the company’s subsequent insolvency, the auditor oversight office launched an investigation into Ernst and Young’s actions as the auditor of Wirecard Limited.
During the investigation, APAS scrutinized the audit firm’s working papers, communications between relevant parties, witness statements, third-party information, and statements from individuals involved.
According to the press release, the parties involved can appeal against APAS’s decision, which will then be determined by The Joint Committee of Decision-Making Chambers, comprised of two representatives from each of the “Inspection” and “Professional Supervision” decision-making chambers.
