Following the massive €1.9 billion Wirecard scandal, Germany will hand the company’s accounting responsibilities to the market regulator BaFin.
Reported by Financial Times on Sunday, the decision was made due to the lapses in the part of the Ernst and Young, one of the big-four private audit firms, and will end the contracts with it on Monday.
BaFin will put the responsibility of overseeing the company accounts to the Financial Reporting Enforcement Panel (FERP), a private-sector body with quasi-official power, and is examining financial reporting of publicly-listed companies since 2005.
“What the Wirecard affair has shown is that…self-regulation by the auditors doesn’t work properly,” Jörg Kukies, Germany’s deputy finance minister, told the publication. “So we will inevitably have to question whether the bodies that currently regulate the industry should continue to do so in their current form.”
A financial scandal rocked the payments industry
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The auditor could not receive details of Wirecard’s Singapore bank account for three years, which might have alarmed about the scandal at a much earlier stage.
The fallout of the payments has turned out to be an embarrassment for the country, and even the spokesperson of German Chancellor Angela Merkel called it “a scandal which is almost unprecedented in the world of finance.”
Many are also pointing at BaFin blaming for the massive scandal and also for banning the short-selling Wirecard shares.
BaFin already asked FERP to open up an investigation on Wirecard in early 2019 for acquisition by a whistleblower of accounting manipulation, but it had been revealed that only one official was overseeing the case with hardly any progress.
Meanwhile, Filipino lawyer Mark Tolentino recently claimed that he is being falsely accused in the Wirecard fraud case and told media that he is a “victim of a frame-up.”