One German investigation found that over the years, Wycard’s neglected payments group, Wycard’s EY’s audits, had fallen into serious flaws.
It is said that Big Four Firm failed to identify fraud risk indicators, did not fully implement professional guidelines and relied on verbal assurances from executives, on key questions.
According to people with first-hand knowledge of the report, a special investigator who examined the EY audit brought a disgusting verdict on the quality of the work. The Bundestag parliamentary committee in Berlin commissioned the investigator to investigate the accounting scandal and gained access to internal EY documents.
The report, which was filed with the Bundestag later this week, will significantly increase the number of problems faced by accountants. YY is already facing lawsuits from wirecard shareholders and creditors. There is also the possibility of legal action being taken by the administrator of the wirecard.
The EY partners who signed the Wicard accounts are already under criminal investigation for possible violations of the rules on professional performance. Earlier this year, the accounting firm replaced its leadership in Germany and announced an organizational reshuffle.
“The report outlined the failures during the EY audit because professional standards were not met,” Matthias Hower, a member of parliament from the Conservative CDU / CSU parliamentary group who suggested hiring a special investigator, told FT. He confirmed in the report that “YY has an important responsibility not to expose the scandal”.
Wirecard received unqualified audits from YY for a decade and was once hailed as a success story of Germany’s rare technology. It is It burned down last summer That পরে 1.9bn in cash was “not present” after the disclosure.
A team of auditors from Rod & Partners, led by Martin Wambach, a parliamentary investigator, dug up Y0GB of YY data that contained internal worksheets and 40,000 emails.
The review found that YY made a detailed assessment of Warcard’s outsourcing operations in Asia, which is at the heart of the fraud. However, the auditor did not consider the day-to-day operations of the so-called third party acquisition business (TPA) “substantially deviating from the contractually defined business process.”
Moreover, EY failed to identify various fraud risk indicators, including an unusually close connection with its Asian partners as well as a business with higher and rising margins that had lower value added than the core business of Wirecard. Riddle and Partner reject the cablecard argument that TPAs carry higher risks in business as a result of higher profits; This indicates that higher risk never leads to financial loss.
“From our point of view, there were many indicators of the risk of fraud related to the TPA business that could have raised critical attitudes and led to more surveillance work,” the special investigator concluded.
In a special audit by KPMG last year, Roddle & Partner also raised the issue of whether the money deposited in the Asia Escrow account was treated as wirecard cash. It notes that EY’s assessment of the issue was “contradictory” because internal documents show that the firm primarily intends to consider this money as “other financial assets.”
WYCARD later changed its mind on the grounds that WYCARD could access the funds on the condition that it could receive a bank guarantee within three months. This offer was not checked during the inspection.
Rod & Partner has repeatedly mentioned inconsistencies for escrow accounts, such as balancing balances for individual wirecard assistants for the same accounts.
“The [Rödl & Partner] The report on EY is equivalent to the KPMG report on wirecards. Its language is technical, but its content is destructive, “said Social Democrat MP Jens Zimmermann.
Fabio de Massey, an MP from the left-wing Die Link, said: “YY had a deep understanding of TPA’s Maya and was at least somewhat the mastermind behind it,” adding that it was not surprising that the business was not properly monitored. “To me, the question is if YY doesn’t want to reveal anything.”
Riddle and Partner did not immediately respond to FT requests for comment.
YY said its German arm did not provide a copy of the Rod & Partner reports and was therefore unable to comment on their content.
“All of Wiccard’s fraudulent activities were carried out through a highly complex criminal network – designed to defraud investors, banks, supervisory authorities, investigating lawyers and forensic auditors, investigators as well as everyone,” YY said.
“We have supported across the Parliamentary Inquiry Committee (PIC) and will continue to do so. We also welcome the decision of the PIC to consult with the monitoring experts and fully cooperate with the special investigators in their work.
“Based on our information, YY Germany auditors performed their monitoring procedures on the wirecard professionally with the best and best confidence of their knowledge.”