Wirecard’s auditors EY say they were victims of an ‘elaborate’ fraud by their client that ended in US$2 billion of missing funds

Wirecard’s long-time auditors, Ernst & Young, accused their client of “an elaborate and sophisticated fraud” that allowed more than US$2 billion to go missing.

Now that Wirecard has filed for court protection from creditors, the accountants who signed off on the fintech firm’s books for a decade are rejecting responsibility for their role in the debacle and preparing for the inevitable avalanche of lawsuits.

“Ernst & Young bear responsibility for this,” said Neil Campling, an analyst with Mirabaud who has had a price target of zero on Wirecard since March 2019. “They were defrauded like everyone else but, as auditors, they should have looked through it. It is amazing that they signed off on the 2018 account.”

EY, as the accounting firm is officially known, finally sounded the alarm last week, when they refused to sign off on Wirecard’s 2019 financial report. (The firm remains the auditor of record). That set off a cascade of events that started with Wirecard admitting it couldn’t locate billions of euros in cash, followed by the ousting and arrest of former Chief Executive Officer Markus Braun before Thursday’s insolvency filing.

Wirecard declined to comment. In its statement, Ernst & Young said Wirecard provided “false confirmations and statements with regard to escrow accounts” in the audit for 2019.