Friday 26 June 2020 2:28 pm

EY 'failed to request Wirecard bank statements for three years'

EY failed to carry out a standard audit procedure on Wirecard for more than three years that could have uncovered colossal fraud at the fintech, it is claimed.

The accounting firm, which has audited Wirecard for over a decade, has come under fire after the German fintech disclosed a €1.9bn black hole in its accounts.

It is now reported that EY failed to request crucial account information.

Read more: Softbank plans to sue EY over its role in Wirecard scandal

A report by the Financial Times claims that between 2016 and 2018 EY did not directly check with Singapore’s OCBC Bank to confirm the lender held huge amounts of cash on Wirecard’s behalf.

Instead, the auditor relied on documents and screenshots provided by Wirecard and a third-party trustee.

One person told the FT that Wirecard has no banking relationship with OCBC and that the firm’s former trustee does not have an escrow account with the bank.

Additionally, the lender did not receive any query from EY in relation to Wirecard between 2016 and 2018.

In a statement on Thursday, EY said “even the most robust audit procedures may not uncover this kind of fraud”.

EY is facing mounting legal action after the German shareholders’ association SdK said it had filed a criminal complaint against Wirecard’s auditors.

Japanese company Softbank has also said it will sue EY after it invested in Wirecard last month, according to Der Spiegel.

On Thursday Wirecard said it was filing for insolvency after auditors refused to sign off the 2019 accounts after discovering billions missing from the balance sheet.

Read more: FCA orders Wirecard to cease all regulated activities

Earlier this month, Wolfgang Schirp filed a class action lawsuit against the firm on behalf of Wirecard’s investors.

In a statement today, EY Germany said: “EY has previously disclosed that it was provided false bank confirmations and statements pertaining to Wirecard escrow accounts. We are currently reviewing all new and emerging information relating to the relevant financial statements and accounts.”

“Due to market disclosure and confidentiality rules, we are unable to comment on Wirecard accounts. With knowledge that 2019 bank statements, confirmations and other routine documentation were falsified, we cannot rule out that prior years’ documents and confirmations are suspect.”