Bloomberg reported on Saturday:
A special parliamentary investigator lists far-reaching shortcomings in Ernst & Young’s audits of Wirecard AG before the German financial technology company collapsed last year, a person familiar with the report said.
The investigator lists about 11 incidences where EY failed to take measures to uncover the multibillion fraud, said the person, who spoke on the condition of anonymity because the report is classified as secret. It concludes the quality of the documents presented to EY were not very reliable as they came from the company’s verbal or written statements and not from neutral third parties such as the banks, the person said.
The investigator also comes to the conclusion that a systematic analysis of fraud patterns, particularly in relation to Wirecard’s third-party acquirers business, would have added more critical perspective and could have helped to uncover the fraud, the person said.
A team of auditors from professional services firm Rödl & Partner led by Martin Wambach, the parliamentary special investigator, examined 90 gigabytes of EY data that included internal working papers and 40,000 emails, according to the Financial Times. Wambach concluded that EY failed to spot fraud risk indicators, didn’t fully implement professional guidelines and, on key questions, relied on verbal assurances from executives, among other things.
EY’s Wirecard Audits Faulted by German Parliament Investigator [Bloomberg]
First of all audit firms provide reasonable assurance not a absolute . Sometime after performing substantive and analytical procedures there is remain fraud because of complexity and collusion of transaction.
But in this case EY failed to identify cash which is £ 1.9bn it is huage amount that caused a fleck on audit profession.
It means there is something fishy rather than to say that EY is failed to obtain external confirmation and rely on written and verbal presentation . It is matter for honour of valuable audit profession.