untancy firm, EY refused to sign off Wirecard’s 2019 books after discovering1.9billion euros (US$2.1 billion) of cash had gone missing from its balance sheet. Munich-based Wirecard filed for insolvency, marking a tumultuous fall for the group. Wirecard, which is still listed on the DAX 30, has seen its share price capitulate since the accounting black hole was revealed. EY told CNBC that there were “clear indications that this was an elaborate and sophisticated fraud, involving multiple parties around the world in different institutions, with a deliberate aim of deception.” In an attempt to defend its reputation, the group added that “even the most robust and extended audit procedures” couldn’t uncover what it called a “collusive fraud.”Source:
Question 2
Wirecard’s auditors are being faced with legal action after the collapse of the scandal-hit
German payments firm. The German shareholders’ association SdK said it had filed criminal complaint against auditors at Ernst & Young (EY). The accountancy firm, EY refused to sign off Wirecard’s 2019 books after discovering1.9billion euros (US$2.1 billion) of cash had gone missing from its balance sheet. Munich-based Wirecard filed for insolvency, marking a tumultuous fall for the group. Wirecard, which is still listed on the DAX 30, has seen its share price capitulate since the accounting black hole was revealed. EY told CNBC that there were “clear indications that this was an elaborate and sophisticated fraud, involving multiple parties around the world in different institutions, with a deliberate aim of deception.” In an attempt to defend its reputation, the group added that “even the most robust and extended
Browne, R., 2020. ‘Wirecard auditors face legal action after collapsing of scandal-hit payments firm. Available from: https://www.cnbc.com/2020/06/26/wirecard-investor-group-files-criminal-complaint-against-ey-auditors.html [Accessed 22 February 2022]
Required
1) Read the above article. 2) Discuss the benefits of performing an external audit on financial statements. 3) In the context of Wirecard., identify and explain the threats to independence faced by its auditors, EY, which might have impaired their objectivity, resulting in the accounting scandal. Appropriate and relevant examples and other case studies may be used to justify your arguments. Reading and References – Your assignment should be supported by an appropriate number of academic references, as well as references to technical literature such as ISA’s and other regulatory references. Please indicate all references clearly in your assignment
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