EY to 'raise bar' in spotting fraud after Wirecard accounts scandal
Global accounting firm EY said on Tuesday it regretted not spotting fraud at German payments company Wirecard sooner and that it would improve how it verifies information from clients through greater use of technology.
German regulators are examining EY's role as auditor for
Wirecard, which collapsed in June after a 1.9 billion euro (£1.7 billion) hole
was discovered in its books.
"Many people believe that the fraud at Wirecard should
have been detected earlier and we fully understand that. Even though we were
successful in uncovering the fraud, we regret that it was not uncovered
sooner," EY's Global Chairman and Chief Executive Carmine Di Sibio said in
a note to clients.
EY said it will mandate the use of data analytics for fraud
testing, use more outside data such as social media and match banking
transaction records with those provided by the bank.
It said that using innovative technologies can help detect
management-led fraud faster in future.
"All of these raise the bar significantly and go beyond
currently accepted professional standards," Di Sibio said.
Auditors are not primarily responsible for detecting fraud,
but pressure on accounting firms to up their game has increased in Britain
following corporate scandals at builder Carillion, retailer BHS, and cafe chain
Patisserie Valerie.
A British government-sponsored report last year recommended
that auditors should be required to look for fraud.
EY said Germany's investigations into audits it carried out
are likely to go on for several months.
"The collusive acts of fraud at Wirecard were
implemented through a highly complex criminal network designed to deceive
everyone – investors, banks, supervisory authorities, investigating lawyers and
forensic auditors, as well as ourselves," Di Sibio said.
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