EY auditors escape potential Wirecard sanctions after leaving profession

Germany’s audit watchdog closed investigations against four current and former EY auditors involved in inspecting collapsed payments firm Wirecard after they handed back their professional licences and left the profession earlier this month.

Under German law, Apas can only probe and sanction potential misconduct by active accountants who are enrolled in the country’s register of public accountants.

As the watchdog’s delayed ruling into EY’s controversial audit for the disgraced German payments firm approaches, four current and former employees this month resigned from the country’s chamber of public accountants, the WPK.

According to people familiar with the matter, the three EY audit partners who were in charge of the Wirecard audit since 2016 were among those who resigned: Martin Dahmen, who is still employed by EY, as well as Andreas Budde and Andreas Loetscher, who have both left the firm. While Budde retired, Loetscher in 2018 became Deutsche Bank’s head of accounting, but later left the bank. The fourth individual was a less senior auditor who worked a lot on the Wirecard mandate.

The four were part of a group of 12 current and former EY employees who were under investigation by Apas since Wirecard collapsed into insolvency in June 2020. The company received a clean bill of health from EY for close to a decade, but eventually had to disclose that €1.9bn in corporate cash and half of the company’s reported revenue did not exist.

If the watchdog finds serious wrongdoing it can temporarily, or permanently, ban accountants and fine them up to €500,000.

Apas told the Financial Times that the case against four individuals who handed back their licenses was closed. It declined to confirm their identities but told the FT that the number of individuals under investigation had recently dropped from 12 to eight.

The watchdog added that any sanctions levied require that individuals be a member of the audit profession. “If the appointment as an auditor is waived for whatever reason, for legal reasons the professional oversight ends as well,” Apas told the FT in a statement, adding that and “ongoing investigation is automatically closed.”

In a statement to the FT, the WPK referred to its publicly available database of licensed accountants, adding that four former members resigned in early 2023.

EY confirmed that “individual auditors have decided to renounce their licenses as auditors”, declining to comment further.

A lawyer for Dahmen told the FT that his client’s step was “a personal decision” but was discussed with EY.

“Mr Dahmen wanted to draw a line under the matter and to look forward,” he said, adding that his client was still certain that he conducted the audits to the best of his knowledge and beliefs and that the auditors were deceived by Wirecard.

A lawyer for Budde declined to comment, and Loetscher did not immediately respond to a request for comment.