EY employee warned of Wirecard fraud four years before German firm’s collapse
EY was reportedly warned four years ago by one of its own employees that senior Wirecard employees had potentially committed fraud and one had attempted to bribe an auditor.
The auditor will face additional pressure following the revelation that a member of staff reported suspicious activity at the German payment firm four years before it collapsed, the Financial Times reported.
EY is under investigation by Germany’s auditing watchdog Apas and is facing legal action from Wirecard investors who lost billions of euros when the firm imploded earlier this year.
The Big Four firm had been Wirecard’s auditor for over a decade and has faced increased scrutiny over its involvement in the now collapsed firm.
A report by the FT in July claimed that between 2016 and 2018 EY did not check with Singapore’s OCC Bank to confirm it held large amounts of cash on Wirecard’s behalf. Instead, EY relied on documents and screenshots provided by Wirecard and a third-party trustee.
Apas reportedly started looking at EY’s audits in October 2019 and has the power to check earlier submitted accounts and audits.
“A formal professional oversight examination is underway into the Ernst & Young Audit Company,” the document said, adding that the review would examine “adherence to legal and professional standards.”
In June, EY said it was unable to verify €1.9bn in Wirecard’s accounts before it collapsed into insolvency. The German payments processing firm said there was a “prevailing likelihood” that the money did not exist.
City A.M has contacted EY for comment.