Wirecard: German audit watchdog imposes record fine on EY
The auditor watchdog has found massive breaches of duty at EY in connection with the Wirecard scandal.
German watchdog APAS impose draconian penalties on EY at the beginning of April. For example, the auditing firm is not allowed to take on any new audit mandates with public interest companies for two years. It will also be fined 500,000 euros. Never before has APAS imposed such a heavy fine.
EY had audited Wirecard’s balance sheets for more than ten years and issued an unqualified opinion. In June 2020, the billion-dollar fraud at the former payment service provider was exposed and Wirecard had to file for insolvency. Subsequently, investor lawyers mainly targeted the former auditors of the company, so also the law firm Schirp & Partner represents the largest number of the already pending lawsuits against EY.
Some time ago, the “Handelsblatt” had already reporte that the watchdog had found massive breaches of duty by EY employees in its investigation. Specifically, the Wirecard financial statements from 2015 to 2018 were investigated.
Dr. Wolfgang schirp of the law firm Schirp & Partner already commented last week, when the “Handelsblatt” previously reported: “Time is an important factor in the proceedings against EY. We have filed lawsuits against EY since 2020 and have pushed all proceedings full steam ahead. The evidence is good, all the prerequisites are in place to enforce claims for damages for the plaintiffs. Nevertheless, no jugements have been issued in favor of the plaintiffs to date. Our German and international clients are very concerned that the proceedings are dragging on for so long. The capital investor model proceedings now underway must not be the cause of further delays that give EY the opportunity to shift economic substance. Otherwise, the aggrieved parties would end up being left without rights. It would be very amaging for all plaintiffs an also for Germany’s international reputation if, after the failure of supervision in the run-up to the Wirecard scandal, the follow-up by the civil judiciary were to fail as well. All the players involved must do their best to ensure that this does not happen. Germany’s reputation and the reputation of the judiciary are at stake.”
All information on the model proceedings against Wirecar and EY as well as background information can be found here.
(03. April 2023)