Germany must toughen audit rules after Wirecard scandal
Germany must toughen its rules for auditing and accounting
to prevent another billion-euro scam like the Wirecard scandal, Bundesbank
President Jens Weidmann said in a newspaper interview published on Monday.
Payment services company Wirecard filed for insolvency last
month after admitting that 1.9 billion euros supposedly held in trustee
accounts by overseas partners probably did not exist.
“Wirecard is a scandal, and we have to do more to prevent it
in the future,” Weidmann told Funke media group. German authorities must give
rules and procedures more bite, especially when it comes to auditing and
accounting, he added.
“For example, the audit process and the tasks, powers and
liability of auditors should be reconsidered,” Weidmann said, adding that
auditors should be able to better examine international business relationships.
Prosecutors last week arrested former Wirecard Chief
Executive Markus Braun and two other former executives on suspicion of
orchestrating a years-long criminal racket to inflate revenue and balances to
hide losses dating back to 2015.
This enabled the company to borrow 3.2 billion euros by
deception, prosecutors allege. That money is now almost certainly lost, making
the collapse of Wirecard Germany’s biggest accounting scandal.
Finance Minister Olaf Scholz on Friday proposed to toughen
financial oversight of companies, seeking to pre-empt an expected parliamentary
backlash over the failure of regulators to spot the unprecedented fraud.
Scholz rushed out a reform agenda that would give financial
watchdog BaFin greater investigative and enforcement powers, broaden its
mandate to cover non-banking financial institutions and toughen penalties
against lax auditors.
The Scholz plan was released ahead of a closed-door hearing
of parliament’s finance committee on Wednesday.
Opposition lawmakers are expected to grill Scholz and
Economy Minister Peter Altmaier over the German establishment’s failure for
years to heed warnings from journalists and market sceptics that Wirecard was
cooking the books.
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