Wirecard defends accounting after report of delayed audit

Wirecard AG said it followed all reporting obligations properly amid renewed concerns about its accounting practices related to a delayed audit of the German company’s accounts in Singapore.

Ernst & Young couldn’t form a “final audit opinion” on the Singapore operations based on local SFRS accounting standards because the firm couldn’t access all documents due to restrictions from an ongoing investigation in the Asian country, Wirecard said in a statement Wednesday, rejecting a report by the Handelsblatt newspaper. The shares fell as much as 7.6 percent in Frankfurt trading.

The delay was not due to, “as mistakenly suggested in the article, by irregularities,” Wirecard said. “The local financial statements were duly audited within this scope.” Spokespeople for Ernst & Young in Germany and Singapore declined to comment, citing client confidentiality.

Wirecard headquarters in Munich, Germany
Wirecard headquarters in Munich, Germany

Wirecard’s shares have whipsawed this year after several media reports raised questions about accounting methods, all of which the company has rejected. The digital payments company is bolstering best practices by ramping up the number of employees in compliance by about 50 percent to 230 this year and by splitting its legal and compliance departments.

Not everyone’s convinced by Wirecard’s explanation. Ernst & Young didn’t just stumble over documents held by investigators, it also failed to attain “adequate explanation” for other transactions, Mirabaud analyst Neil Campling said Wednesday, citing the 2017 report of Wirecard’s Singapore unit.

‘Not reassuring’

“Wirecard’s statement isn’t reassuring at all,” Campling said by phone. “We’re still awaiting the outcome of the investigation in Singapore, and it’s highly unlikely that Wirecard will file the 2018 Singapore account anytime soon.”

Wirecard was down 5 percent at 115.15 euros at 10:28 a.m. The shares have fallen about 13 percent this year.

Ernst & Young can’t determine the adequacy, completeness and accuracy of the financial statements of Wirecard Singapore unit, German daily Handelsblatt reported late Tuesday, citing a statement from the auditor filed to the Singapore financial regulator.

Wirecard said the restrictions weren’t relevant for the audits of the consolidated financial statements in accordance with IFRS, adding that its annual reports for 2017 and 2018 aren’t affected.

“All reporting obligations have been followed properly including the auditor’s opinion on the local stand-alone Financial Statements 2017,” which has been filed with authorities in Singapore, Wirecard said. “The reporting of the stand-alone financial statements for the financial year 2018 is close to completion.”

— Stefan Nicola and Jan-Patrick Barnert, with assistance from Ameya Karve
Bloomberg News

Stefan Nicola and Jan-Patrick Barnert
Bloomberg News