August 11, 2020

Friday Footnotes: LOL, EY; ‘That’ KPMG Girl; SEC Enforcement Slowdown | 6.26.20

EY failed to ask for Wirecard bank statements for 3 years [Financial Times] EY failed for more than three years to request crucial account information from a Singapore bank where Wirecard claimed it had up to €1bn in cash — a routine audit procedure that could have uncovered the vast fraud at the German payments group. [T]he auditor between 2016 and 2018 did not check directly with Singapore’s OCBC Bank to confirm that the lender held large amounts of cash on behalf of Wirecard. Instead, EY relied on documents and screenshots provided by a third-party trustee and Wirecard itself.

Wirecard Auditors Say ‘Elaborate’ Fraud Let to Missing Billions [Bloomberg] Wirecard AG’s long-time auditors, Ernst & Young, accused their client of “an elaborate and sophisticated fraud” that allowed more than $2 billion to go missing. Now that Wirecard has filed for court protection from creditors, the accountants who signed off on the fintech firm’s books for a decade are rejecting responsibility for their role in the debacle and preparing for the inevitable avalanche of lawsuits.

CPA firms down, but not out, from COVID-19, survey finds [Accounting Today] Inovautus surveyed 109 firms and received 95 unique responses. Of the firms polled, 31% had revenues between $10 million and $30 million, 16% had revenues over $30 million, and another 16% of firms had less than $1 million in revenue.

Accounting and Auditing Enforcement Activity Declines Slightly in 2019 [National Law Review] The U.S. Securities and Exchange Commission (SEC) and the Public Company Accounting Oversight Board (PCAOB) publicly disclosed a combined 81 accounting and auditing enforcement actions during 2019, down slightly from the previous year, according to a Cornerstone Research report released today. Monetary settlements totaled approximately $628 million, $626 million of which was imposed by the SEC.

Your peer review has been extended — now what? [Journal of Accountancy] The AICPA Peer Review Board (PRB) has granted CPA firms with original due dates between Jan. 1 and Sept. 30 a six-month peer review deadline delay option to provide them with relief during the coronavirus pandemic. If your firm was the beneficiary of this extension, you should have received an email from the peer review program. Be aware, though, that the delay is not a license to ignore peer review responsibilities.

EY and PwC face investigation over mini-bond audits [FTAdvisor] The Financial Reporting Council today [June 24] announced it was investigating three audits carried out by Oliver Clive & Co, PwC and EY. The probes relate to audits carried out between 2015 and 2017, years before London Capital & Finance fell into administration in January 2019 owing more than £230m and putting the funds of more than 14,000 bondholders at risk.

Deloitte CEO lauds its Big 4 dominance as firm axes thousands [Consulting.us] Deloitte Global CEO Punit Renjen has planted his foot firmly in his mouth, lauding his firm’s “undisputed” financial dominance. The comments come at a delicate time – more than 10,000 people have been axed across its international operations, surely leaving a bitter taste in the mouths of many now-former employees.

Trainee accountant was sacked from KPMG after accusing her boss of ‘mansplaining’ and showing him her bra when he asked her to wear smarter clothes to work, filling up containers with free food and taking a meeting room as her own private office [Daily Mail] Zhihui Lu, 26, joined KPMG as an audit assistant in 2015 after graduating from Durham with a degree in accounting and finance – but within two years bosses were raising concerns about her performance as well as her erratic behaviour. On one occasion Miss Lu asked manager Matt Brunton ‘who was he as a man to be telling her what she can and cannot wear?’ after she turned up at the firm’s Canary Wharf office in London wearing jeans and a jumper.

Have something to add to this story? Give us a shout by email, Twitter, or text/call the tipline at 202-505-8885. As always, all tips are anonymous.

Related articles

Grant Thornton U.K.’s Latest Audit Inspection Report Is Out, and It’s Almost as Bad as Last Year’s

Welp, Grant Thornton’s 2019-20 audit quality inspection report from the Financial Reporting Council shows that GT hasn’t really gotten much better at audit quality in the past year. That’s kind of a problem when you’re the sixth-biggest accounting firm in the U.K. Last year the FRC was pretty unhappy with Grant Thornton after the firm’s […]