24 Jul 2020
EY drafted an unqualified audit opinion of Wirecard’s accounts in early June despite public concerns that the fintech firm had not been forthcoming about its assets, the Financial Times reported Thursday.
The Big Four auditor sent the draft opinion to Wirecard executives just weeks before the Germany company collapsed in one of the biggest accounting frauds in Europe. In the draft, EY rejected whistleblower allegations as well as the findings of a KPMG special audit published in late April that questioned the existence of half of the payment firm’s business and its claim to some €1 billion in cash that could not be found, the FT said.
Wirecard had scheduled a press conference for June 18 to disclose EY’s findings but the company collapsed into insolvency and became the subject of a criminal probe before the planned announcement, according to the report.
While the draft opinion did not cite any conditions for its conclusions, individuals familiar with the matter told the newspaper that the auditor had predicated its findings on the transference of €440 million in four tranches from escrow accounts in the Philippines into Wirecard’s accounts in Germany. Separate documents show that EY had demanded such a transfer in May, following the release of KPMG’s audit, the FT said.
In late June, Wirecard’s third-party acquiring business TPA was found to be fraudulent. The EY opinion drafted earlier that month had found no evidence that TPA’s activities were problematic, however, according to the report.
“Within the scope of the audit, we satisfied ourselves that the accusations [regarding third-party acquiring] of which we became aware were followed up and assessed by measures taken by the management board of Wirecard,” EY concluded.
EY said in a statement last month that third parties had provided it with false documentation related to Wirecard’s 2019 audit.
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