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September 25, 2023

EY Partners Told How to EYsplain Wirecard Mess to Clients

The Financial Times reported on Monday:

EY has told its partners how to prepare for difficult conversations with clients about its audits of Wirecard, the German payments company that has filed for insolvency after admitting that €1.9bn of cash probably never existed.

In an internal note to senior partners on Friday, EY advised them to tell clients that the “objective” of the large international fraud at Wirecard was to “deceive investors and EY”.

It also provided partners with “summary talking points” about the scandal — the largest accounting fraud in German postwar history — and said they should contact Sajid Hussein, EY general counsel for Europe, or Jonathan Blackmore, head of risk management for the region, “to assist with client discussions”.

The Financial Times revealed last week that Wirecard’s auditors in EY’s German office failed for at least three years to request crucial account information from a Singapore bank where Wirecard claimed it had up to €1bn in cash, a routine audit procedure that could have uncovered the fraud.

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