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Auditor EY failed in case of fintech that disappeared with $ 3 billion

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The company EY failed a further three years of auditing on an alleged account that Wirecard held with the OCBC bank in Singapore. German Fintech maintained that it had up to one billion euros ($ 2.94 billion) and EY did not discover that that amount might not have existed at the time, according to information from the Financial Times.

The result is that the company is responding to a collective action by investors in Berlin.

The point is that recently EY, upon discovering the flaw, refused to sign the 2019 company's accounts and forced Wirecard president Markus Braun to admit that $ 2.1 billion of cash probably didn't exist. The crisis at the company would then occur seven days after this, according to Reuters.

The accounting firm, which audited Wirecard for a decade, was frowned upon after the top German fintech filed for bankruptcy last week, revealing that the 1.9 billion euros probably did not exist.

The auditing firm, according to the Financial Times, between the years 2016 and 2018, did not directly consult the OCBC Bank of Singapore to confirm that the lender held large amounts of money on behalf of Wirecard.

EY billionaire error

EY, unlike that, had relied on documents and screenshots provided by an external administrator and even data provided by Wirecard itself.

Had EY adopted the correct procedure, it could have discovered the major fraud in the German payments group. The problem, however, only broke out when the truth came out and it was discovered that Wirecard might not have that value.

In the same article, it appears that the bank did not comment on the matter. However, other people were heard by the Financial Times.

One of the interviewees who did not have his identity revealed by the newspaper was someone well informed about the situation. He mentioned that the former Wirecard administrator doesn't even have a guarantee account with the OCBC bank in Singapore.

Experienced bankers and auditors strongly criticized EY's performance. One of them mentioned that this would be a primary error, since obtaining independent confirmation of bank balances is basic.

Another, also heard by the London newspaper, stated:

"The big question for me is what the hell did EY do when she signed the bills?"

Revised EY audit

The same newspaper pointed out that the German EY's work is being reviewed by another team of auditors. The German FREP accounting officer is said to be investigating Wirecard's balance sheet and the country's audit oversight body, APAS, is said to have already started analyzing EY's work.

EY did not speak about the regulatory investigation, as reported in the English newspaper. Instead, she limited herself to saying that "even the most robust audit procedures may not discover this type of fraud".

The mistake is costing EY a class action lawsuit in Germany, filed by investors from Wirecard. German lawyer Wolfgang Schirp, who is working on the case against the audit firm, was also heard by the newspaper.

In his statement, he said he disagreed with EY's view that it was not possible to avoid.


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