German audit watchdog bans EY over Wirecard work

EY has been banned from taking on listed companies as new audit clients in Germany for two years over flawed work for disgraced payments company Wirecard, in a landmark ruling by the country’s audit watchdog Apas, according to people familiar with the matter.

The Big Four firm and five current and former employees have also been fined up to €500,000 each.

The regulator did not come to any formal decision over whether EY acted with intent or with negligence, dodging a contentious question over the firm’s criminal and civil liabilities.

Wirecard collapsed into insolvency in June 2020 in one of Europe’s largest postwar accounting scandals, after disclosing that half of its revenue and €1.9bn in corporate cash did not exist. The Munich-based company had received unqualified audits from EY for more than a decade.

EY has lost several large audit clients in the wake of the scandal, including Commerzbank, DWS and KfW, and has not won any significant new mandates since then.

Apas and the German economic ministry did not immediately respond to a request for comment on the decision, which was first reported by Handelsblatt.

EY said that it would only comment after Apas had issued an official statement. The firm stressed that it fully co-operated with the watchdog during the investigation and drew important lessons from the case.