- Chief Compliance Officer and VP of Legal Affairs, Arrow Electronics
By 
Kyle Brasseur2023-04-03T16:46:00
Big Four firm EY will be prohibited from taking on new public interest clients in Germany for two years following an investigation into its audit work at collapsed payment processor Wirecard.
EY was also fined 500,000 euros (U.S. $545,000) by Germany’s accounting watchdog APAS in its decision released Monday. The decision does not reference EY by name but focused on the audits of Wirecard from 2016-18, for which EY gave a clean bill of health. Five unnamed EY auditors were also penalized by the watchdog.
Wirecard filed for bankruptcy in June 2020, three days after acknowledging $2 billion in assets listed on its balance sheet likely did not exist. The company’s fraudulent financial reporting detailed through media reports resulted in a massive scandal in Germany involving Wirecard’s executives, auditor, and the regulators charged with overseeing the firm.
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The Wirecard fraud highlights the result of regulators and auditors failing to act properly and underlines the importance of encouraging and protecting whistleblowers, said the reporter who exposed the firm in speaking at Compliance Week’s Europe conference in London.
The U.K. Financial Reporting Council announced the launch of two separate investigations regarding audits performed by Big Four firm EY, including a probe into the 2021 financials of collapsed online furniture retailer Made.com.
Hubert Barth, head of EY’s Germany practice for the past five years, will step down and take on a “new role at the European level” as the firm seeks to restore its tarnished reputation following its missteps leading up to the collapse of Wirecard.
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