Frankfurt, Germany. Photo by Juv.
German authorities banned Ernst & Young (EY) from taking on new listed audit clients in the country.
The sanction, which will remain in effect for two years, was imposed
after one of EY's clients, Wirecard, became insolvent in June 2020.
- Wirecard went bankrupt
in 2020 after EY refused to sign off on its accounts citing a $2B
(€1.9B) gap in its finances, which was later attributed to a global
fraud scheme.
- Germany's auditor oversight body APAS filed a
criminal complaint against some of EY's audit partners after Wirecard
collapsed while still owing its creditors $4B.
- The filing cited evidence that EY may have "knowingly issued factually incorrect audit opinions."
- Prosecutors continue to investigate the issue but have not filed any charges against EY.
- APAS
said on Monday that EY had committed "violations of professional duties
during the audits of Wirecard and Wirecard Bank from 2016 to 2018."
- It issued EY with a fine of €500,000 and fined five current and former employees between €23,000 and €300,000 each.
- Klaus-Peter
Naumann, chair of Germany’s Institute of Public Auditors IDW, said that
the scale of the punishment was unprecedented in Germany.
