The german review watchdog has told prosecutors that ey could have acted criminally during its benefit wirecard, a step that somewhat escalates the legal and reputational dangers the accounting firm.
People acquainted with the problem said that apas, the watchdog, had sent a written report to prosecutors. it's the very first time a federal government company states ey could have broken what the law states during its audits associated with german payments team, which collapsed this season after exposing a multiyear fraud.
Munich prosecutors informed the financial instances these people were assessing the data that was submitted by apas and had perhaps not yet visited a summary. prosecutors never have established a criminal examination into existing or former ey staff.
For more than ten years, ey germany had offered wirecard a clear costs of health before discovering this current year that 1.9bn in business money did not exist. wirecard consequently collapsed into insolvency in one of europes biggest postwar bookkeeping scandals.
The revelation comes ahead of a potentially fiery parliamentary hearing on thursday afternoon, which ey lovers are set to clash with mps over exactly how much they're allowed to expose about their benefit wirecard without violating strict privacy guidelines.
Apas, a completely independent government human body managing germanys auditing industry, last year launched an investigation into eys just work at wirecard after the ft reported that many important customers for the company seemed to not occur. the human body can issue fines for misconduct as well as in acute cases can disbar individual auditors.
Apas declined to comment, pointing to privacy guidelines.
According to folks acquainted with the problem, apas submitted an interim assessment of this case to criminal prosecutors in berlin on september 29 and asked them to generally share the findings with criminal prosecutors in munich. berlin prosecutors told the ft they own maybe not established an investigation against ey.
When you look at the document, the watchdog stated it found indications your auditor potentially violated its legal homework and reporting responsibilities during the wirecard audits. under german law, auditors discovered guilty of these misconduct is punished with as much as 36 months in prison. german newspaper handelsblatt very first reported on the apas document.
Ey germany informed the ft so it had no knowledge of such an apas document, adding that based on our current state of real information, our peers carried out the audits expertly and in good-faith and that there have been zero indications for criminally relevant misconduct by ey auditors in the wirecard situation.
Ey had earlier answered by quoting the munich chief prosecutor hildegard bumler-hsl as stating that, we presently cannot see sufficient proof for criminally appropriate behavior by ey auditors within the wirecard case.
But munich prosecutors on thursday took problem using the declaration, saying that ey had taken the estimate out of context whilst did not relate to the apas letter. we can not confirm eys assessment that we now have no indications for criminally appropriate misconduct by ey in wirecard situation as this continues to be being scrutinised, the prosecutors added.
The ft reported in june that ey, for about three-years, did not request account information directly from a singapore lender where wirecard claimed it presented large sums of money.
At a parliamentary hearing in berlin on thursday, ey ended up being criticised because of its audit work. alexander geschonneck, someone at rival firm kpmg, just who led a special audit into wirecards bookkeeping, informed mps that ey had been asked to ensure it had used normal processes in checking banking account balances. he stated the firm hadn't verified this.
There was no-account information no bank documents, he stated, discussing the records where considerable amounts of cash had been supposed to be held. for 2016 to 2018, there was simply absolutely nothing, he stated.
Mr geschonneck remarked that such documents would have to be acquired by the auditor straight from lender. you can't rely on proof this is certainly given by the only you may be auditing, said mr geschonneck.
Danyal bayaz, a mp the green party, said that mr geschonnecks testimony ended up being devastating for ey.