Wirecard auditor EY prepares for backlash over scandal
EY has reportedly told partners how to prepare for any backlash over its audits of Wirecard, the German firm which filed for insolvency last week.
In an internal note to senior partners, seen by the Financial Times, the auditor advised they tell clients the “objective” of the fraud at Wirecard was to “deceive investors and EY”.
The Big Four firm said this month that it was unable to verify €1.9bn in its accounts. Last week the German payments processing firm said there was a “prevailing likelihood” that the money did not exist.
The FT also reported that EY has provided partners with “summary talking points” about the fraud. It advised partners should contact EY general counsel for Europe, Sajid Hussein, or the head of risk management Jonathan Blackmore, “to assist with client discussions”.
The firm reportedly advised partners to tell their clients: “There are indications that this was an elaborate and sophisticated fraud with the deliberate aim of deceiving our audit team in Germany.”
Last week it was claimed that the auditor had failed to carry out a standard procedure on Wirecard for more than three years.
A report by the FT 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.
A spokesperson for EY said it would not comment on any internal comms or pending litigations.
EY said: “We’ve established that third parties, with a deliberate aim to deceive, provided EY with false documentation in connection with its 2019 Wirecard audit. The extent and sophistication of these suggest a large-scale international fraud at Wirecard.”