Wirecard, headquartered in Aschheim near Munich, this fall faced a parliamentary inquiry into the collapse of payments provider.
Christof Stache/Agence France-Presse/Getty Images
This year, $ 2 billion is missing at a German fintech company, $ 300 million of sales has been found to be fabricated at a Chinese coffee chain and $ 5 billion in undisclosed debt has been uncovered at two related companies listed in the U.K. Together, the incidents cost shareholders of the companies roughly $ 30 billion.
All had been audited by Ernst & Young. Last year, EY also audited office-space company WeWork, which nearly collapsed after fumbling a planned initial public offering.
“ ‘We take all issues extremely seriously.’ ”
EY is one of the Big Four accounting firms, whose audits are meant to give investors confidence in companies’ figures. EY missed red flags or failed to aggressively pursue them at some of the companies ahead of their scandals, and for the most part it was outsiders who raised questions first, a review based on publicly available documents and interviews with people close to the events shows. Now, regulators are scrutinizing EY’s work.
The EY audit clients that faced financial issues were German payments processor Wirecard AG WDI,
See: German parliament launches inquiry into fraud scandal at Wirecard, with government in crosshairs
EY says it stands by its work and has high global audit standards. The firm says it played key roles in uncovering fraud at two of the companies, and it says China’s regulator has found it to be prudent and independent.
An expanded version of this report appears at WSJ.com.
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