Wirecard scandal is not only a failure of external auditors, but of internal compliance

EY failed to check Wirecard bank statements for 3 years.

Auditor of insolvent payments group under fire for failing to detect #fraud.

EY failed for more than three years to request crucial account information from a Singapore bank where Wirecard claimed it had up to €1bn in cash — a routine audit procedure that could have uncovered the vast fraud at the German payments group.

The accountancy firm, which audited Wirecard for a decade, has come under fire after the once high-flying fintech company filed for insolvency this week, revealing that €1.9bn in cash probably did “not exist”.

People with first-hand knowledge told the Financial Times that the auditor between 2016 and 2018 did not check directly with Singapore’s OCBC Bank to confirm that the lender held large amounts of cash on behalf of Wirecard. Instead, EY relied on documents and screenshots provided by a third-party trustee and Wirecard itself.

“The big question for me is what on earth did EY do when they signed off the accounts?” said a senior banker at a lender with credit exposure to Wirecard.

A senior auditor at another firm said that obtaining independent confirmation of bank balances was “equivalent to day-one training at audit school”.

Here's a link to a good FT article