Auditor EY Expresses ‘Regret’ Over Failures After Wirecard Collapse

(Bloomberg) -- The collapse of Wirecard AG prompted accounting firm Ernst & Young to send a letter to clients expressing “regret” that it failed to uncover fraud at the company sooner.

EY Chairman Carmine Di Sibio told clients that the firm was attempting to “raise the bar” to improve its standards.

The accounting firm has faced widespread criticism over its failure to properly scrutinize Wirecard’s accounts over several years. The payment processor filed for bankruptcy in June after acknowledging that 1.9 billion euros ($2.25 billion) it had listed as assets probably didn’t exist.

“While we were successful in uncovering the fraud at Wirecard, we regret that it was not uncovered sooner,” according to an extract of the letter provided by EY. “A key part of our commitment to quality is a policy of continuous improvement.”

The Financial Times was first to report the letter to clients. EY confirmed the report in a statement.

In June, EY was sued in Germany by Wirecard investors. The lawsuit alleges that EY failed to flag that 1 billion euros in assets were improperly booked on the payment processor’s 2018 accounts.

The EY letter said that while “the primary responsibility for the prevention and detection of fraud is with the management and supervisory boards, audits should play more of a role in the future to detect material frauds.”

©2020 Bloomberg L.P.