“The payment service provider Wirecard has to postpone the presentation of its balance sheet again, this time for an indefinite period. This is due to doubts by EY’s auditors about the company’s documentation.
EY has not yet been able to obtain sufficient audit evidence for “bank balances in escrow accounts totalling 1.9 billion euros,” the company said in an ad hoc statement. This corresponds to about a quarter of the group balance sheet total.
The company’s stock slumped more than 50 percent and was temporarily suspended from trading. The company sees itself as a possible victim of a “gigantic fraud.” Chief Executive Markus Braun announced an ad against Unknown. “All parties involved are trying to clarify as soon as possible. It is currently unclear whether fraudulent transactions are taking place to the detriment of Wirecard AG,” he said, according to a statement from the company.
According to the company, there are indications that EY was “submitted inaccurate balance confirmations for deception purposes” by a trustee or bank. From this, the auditor obtains ‘incorrect idea of the existence of bank balances or the management of bank accounts in favour of Wirecard companies’.
For Wirecard, the balance sheet problem is now becoming an existential one. If the company is unable to present a tested balance sheet by 19 June, which is unlikely to happen, loans amounting to around EUR 2 billion can be cancelled.
Bitter day for shareholders
The glaring flaws in Wirecard’s documentation had already been disclosed by KPMG at the end of April. It said there was a lack of sufficient evidence of the billions in assets. Wirecard used the escrow accounts related to payment transactions that the company handles with partners, including in Dubai.
The trustee had changed hands last year. According to KPMG, the former administrator of the has broken off all communication with Wirecard and is also unreachable by the auditors.
For shareholders who believe in the high growth potential of the payment service provider, the new escalation in the Wirecard scandal is a major blow. Hope had reigned among them in the end. After the extreme crashes in March and April, the share price had risen again above 100 euros. Finally, the Dax Group should present its audited balance sheet.
But the balance sheet day began again with an embarrassment. Normally, the company puts financial reports on its website at 7:30 a.m. Other companies are also holding on to the stock market at similar times – so that the figures are known before the start of trading.
Today, however, hours after the start of stock trading, Wirecard said: nothing. Investor unrest was already spreading, with shares plummeting. A Wirecard spokesman said the figures would be presented later in the morning. Then came the cancellation at 10.44 a.m.
Obviously, the company does not manage to make reliable appointments with its own auditors. The special audit report of KPMG, which Wirecard had commissioned itself, had already been repeatedly delayed.
No more posses
The Group’s balance sheet was originally scheduled to be presented as early as 8 April. Wirecard then postponed the date to April 30. On the day of the KPMG report, a further delay came to 4 June; At the end of May, the postponement to 18 June.
As a posse, these date changes can no longer be dismissed. They have a serious background: the special audit had revealed glaring flaws in the company’s documentation. Detailed evidence appears to be missing for large parts of the business. EY has now also noticed this.
It is true that Wirecard itself, in a longer document, had raised the differences between auditing the balance sheet and the “forensic audit” carried out by KPMG. However, the EY auditors did not want to invoke this legal position in their test. A lawsuit against an earlier EY-Testat for Wirecard is already on the way to the Stuttgart District Court.