Skip to content
Corruption — Document — file inspection — Finances — German Federal States — Germany — serious & young — services — Stuttgart — Stuttgart Regional Court — Wirecard

Wirecard scandal: EY's appeal largely rejected

Wirecard scandal: EY's appeal largely rejected

,   and  ASMedia
3 min read
Wirecard scandal: EY's appeal largely rejected
Wirecard scandal: EY's appeal largely rejected

Unraveling the Wirecard Saga: EY's Appeal Dismissed, Not Entirely

In a recent ruling, the Wirecard insolvency administrator has been granted the right to access documents and files related to the company's annual and consolidated financial statements from 2014 to 2019. This decision, made by the Stuttgart Regional Court, largely rejected an appeal by Ernst & Young (EY), as announced on Tuesday. EY admitted defeat in the Stuttgart Regional Court last year and subsequently filed an appeal.

However, the Stuttgart Regional Court of Appeals has granted EY the chance to appeal the decision to the Federal Court of Justice, as the extended implications for auditors regarding information disclosure and file preservation remain unclear, according to a press release. As of now, EY remains tight-lipped about the matter.

The Wirecard case gained notoriety when the company, which was once part of the DAX, admitted in the summer of 2020 that 1.9 billion euros that were allegedly held in escrow accounts could not be located. EY had been auditing Wirecard's alleged falsified financial statements for several years prior to this.

The German legal system is currently investigating the roles of auditors and financial services in upholding financial transparency. This investigation is of considerable concern not only in Germany but worldwide due to the potential fallout from such scandals.

  • The Wirecard insolvency administrator will now have the authority to examine documents and access files related to the company's annual and consolidated financial statements from 2014 to 2019, as per the ruling from the Stuttgart Regional Court.
  • Despite EY's appeal, the Stuttgart Regional Court's decision, which leaned in favor of the insolvency administrator, primarily stood since then.
  • The Stuttgart Regional Court of Appeals granted EY an opportunity to appeal the decision to the Federal Court of Justice, due to unresolved concerns about the auditors' responsibilities and the destruction of files, as reported in the press release.
  • The Wirecard scandal, which involved apparent falsifications of financial statements, caused the company to crumble in the summer of 2020, and EY had been auditing those financial statements for several years beforehand.
  • In the wake of the Wirecard scandal, the German legal system is examining the role of auditors and financial services in maintaining financial transparency, which is a crucial issue in Germany and beyond.

Source:

Enrichment Insights:

  1. The Stuttgart Higher Regional Court's decision in the Wirecard scandal primarily focused on the legal actions against Ernst & Young (EY) regarding their role in auditing Wirecard. While there are no specific rulings mentioned, the broader context of the Wirecard scandal and subsequent legal actions against EY highlight the critical need for auditors to provide accurate and transparent information and maintain rigorous file preservation practices in order to prevent similar scandals in the future.
  2. The Wirecard scandal also prompted regulatory bodies to take action in addressing auditor oversight. EY was banned from taking on newly listed audit clients in Germany for two years, a ban that was lifted in March 2026, and a €500,000 fine was imposed by Germany's Auditor Oversight Board. EY has since been mandated to engage external reviewers to assess the effectiveness of their internal auditing processes.
  3. In a controversial move, DWS Group, Deutsche Bank's asset management arm, decided to hire EY as their group auditor after initially filing a lawsuit against EY over their alleged role in the Wirecard scandal. DWS explained that subsidiaries involved in lawsuits against EY would be audited by another firm, such as Mazars.
  4. The Wirecard scandal underlined the importance of robust risk assessment and compliance mechanisms in financial institutions. Internal controls and scrutiny of third-party relationships were found to be insufficient, leading to fraud. Auditors must be diligent in assessing these risks to prevent falsified financial statements and future scandals.

[1] [2] [3]

Latest