Update: Final Report of the WIRECARD Committee of Inquiry
For more than a year, we have been dealing with the Wirecard collapse and its consequences.
(08/31/2021) In the process, it is becoming increasingly clear how serious the failings of the auditor EY actually were. Of particular interest in our investigations is also the final report of the Parliamentary Investigation Committee, which was published on June 22, 2021.
We have evaluated the report with the help of experts and would like to explain the most important findings below. EY itself, however, is taking legal action against the publication of the final report – contrary to its own statements that it wants to cooperate in clarifying the facts.
The lack of a critical attitude
EY’s auditors did not act with a critical basic attitude in their work – the members of the investigative committee also assume this. According to Section 43 (4) of the German Auditors’ Code and IDW Auditing Standard 400, a critical basic attitude must always be applied in the audit of annual financial statements, but this was obviously lacking in the case of EY and Wirecard.
Dealing with the “Project Ring
This is a forensic investigation by EY, which was, however, disregarded by the auditors in-house.
The audit of the 2016 annual financial statements
Here it must be assumed that audit evidence requested by EY was non-existent. Nevertheless, EY – after prior warning to Wirecard – issued the audit certificate. However, only on the basis of verbal assurances from the Wirecard Management Board.
The audit of the escrow accounts as part of the audit of the financial statements for the 2018 fiscal year.
EY did receive individual balance confirmations from the trustees, but these were simple forgeries. There is also evidence that EY advised Wirecard on the establishment of the escrow accounts in 2015 and played a key role in their design.
The audit of the third-party business
The “Concurrence Memorandum” demonstrates a basic understanding by the auditor of Wirecard AG’s business model. Nevertheless, EY must have omitted significant audit procedures regarding the third-party business. Otherwise, the non-existence of this business would have become apparent years ago.
The law firm Schirp & Partner has access to further extensive materials that prove a breach of duty by EY.