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German watchdog reports EY to prosecutor in wirecard audit

The German audit watchdog told prosecutors that EY may have committed a criminal offense while working at Wirecard. This is a step that significantly escalate the legal and reputational risk of accounting firms.

People familiar with the matter said the guard dog, Apas, sent a report to the prosecution. This is the first time a government agency has stated that EY may have violated the law during an audit of a German settlement group. The German payment group collapsed this year after revealing multi-year fraud.

A Munich prosecutor told the Financial Times that he was evaluating the evidence submitted by Apas and had not yet reached a conclusion. The prosecutor has not launched a criminal investigation into the current or former EY staff.

For more than a decade, EY Germany has submitted a clean health bill to Wirecard, and this year it has discovered that there is no € 1.9 billion in corporate cash. Wirecard then went bankrupt in one of Europe’s largest post-war accounting scandals.

The revelation precedes a fierce parliamentary hearing that may take place Thursday afternoon, and EY partners will reveal how much they can do with wirecards without violating strict confidentiality rules. You are supposed to clash with parliamentarians about what you can do.

Apas, an independent government agency that oversees the German audit industry, began investigating EY’s operations at Wirecard last year after FT reported that many of its key customers did not appear to exist. The body can be fined for illegal activities and, in extreme cases, can ban individual auditors.

Apas pointed out the rules of confidentiality and declined to comment.

According to people familiar with the matter, Apas submitted an interim assessment of the case to a criminal prosecutor in Berlin on September 29, requesting that the findings be shared with the criminal prosecutor in Munich. A Berlin prosecutor told FT that he had not launched an investigation into EY.

In the document, Watchdog said the auditor found signs during a wirecard audit that he may have violated his legal due diligence and reporting obligations. Under German law, an auditor convicted of such illegal activity can be punished with up to three years in prison. The German newspaper Handelsblatt first reported on the Apas document.

“We have no knowledge of such Apas documents,” EY Germany told FT. “Based on the current state of knowledge, our colleagues conducted professional and honest audits,” he added. “Signs of crime.” Wasn’t there at all. ” Related Illegal Acts by EY Auditors in Wirecard Cases “.

EY previously quoted Munich’s chief prosecutor, Hildegard Bäumler-Hösl, as saying, “Currently, there is not sufficient evidence of crime-related behavior by EY auditors in wirecard cases.”

However, a Munich prosecutor on Thursday disputed the statement, saying that EY had not mentioned Apas’ letter and therefore removed the quote from the context. “In the wirecard case, we cannot confirm EY’s assessment that there are no signs of criminal misconduct by EY, because it is still under scrutiny,” the prosecutor added.

In June, FT reported that EY did not request account information directly from a Singaporean bank that claimed Wirecard had a large amount of cash for at least three years. In KPMG’s special audit of wirecards, EY concluded that it did not adequately investigate whistleblowers’ allegations of alleged accounting operations in India.

Left-wing lawmaker Fabio de Masi ceases to “act immediately” to the German government and entrust EY with taxpayer funding obligations until potential criminal activity by the company is eliminated. I asked.

Several EY partners will be summoned as witnesses by the Parliamentary Investigation Commission and will be cross-examined in Berlin on Thursday afternoon.

EY may refuse to testify in Thursday’s parliamentary investigation into the collapse of wirecards because auditors may be held liable for confidentiality breaches with imprisonment or large fines Said. This is the stance that infuriated German lawmakers.

German watchdog reports EY to prosecutor in wirecard audit

Source link German watchdog reports EY to prosecutor in wirecard audit

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