EY skipped a routine bank confirmation for three years while auditing Wirecard

In late June 2020 it emerged that EY's German office had failed for at least three years to request account information from a Singapore bank where Wirecard claimed to hold up to €1bn — a routine audit confirmation that could have uncovered the fraud. EY had signed off Wirecard's accounts for more than a decade. After KPMG's special audit could not verify key balances, EY told the board that €1.9bn supposedly held in Philippine accounts apparently did not exist, and Wirecard filed for insolvency. This is the auditor's side of that scandal.

EY's response was a damage-control memo to senior partners: talking points explaining that the 'objective' of the fraud was to 'deceive investors and EY', instructions to route client conversations through its European general counsel and risk heads, and a claim that EY deserved credit for discovering the fraud because third parties 'with a deliberate aim to deceive' provided false documentation. Wirecard's new CEO James Freis told board members that basic checks should have caught the scheme, and said he could not understand how it went undetected for so long.

Consequences mounted quickly: shareholder rights group VEB called EY's performance 'unacceptable' and demanded a BaFin-led investigation, saying it would seek compensation; Berlin lawyer Wolfgang Schirr filed suit for about 1,500 investors seeking up to €1bn from EY; and partners across Europe said the scandal had caused dismay and could accelerate calls to split audit from consulting.

A €1bn investor lawsuit with about 1,500 claimants, calls for a BaFin-led investigation, and partners warning of brand damage across Europe.

A basic third-party confirmation — asking the bank that supposedly held the cash — was skipped for at least three consecutive audits.

EY signed off Wirecard for over a decade amid public red flags, so its assurance was the product that failed, not just one client's honesty.

The internal messaging leaned on deception by third parties while investors organised around the one procedure never performed.

Audit quality lives or dies on routine scepticism: the confirmation letter skipped for three years was the difference between catching the fraud and cosigning it.

Wirecard said business would continue in insolvency — though it suspended June salaries in Germany, France and Luxembourg — while the Schirr lawsuit and VEB's compensation push put a potential €1bn liability and a regulatory probe in front of EY, whose non-audit partners began openly discussing separation of the audit business.