Wirecard the Biggest Financial Scandal of 2020 Told by an Auditor
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- Опубліковано 1 лип 2024
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Wirecard's complete timeline: www.ft.com/content/284fb1ad-d...
A detailed look into Wirecard’s scandal: www.ft.com/content/d51a012e-1...
WIRECARD
Wirecard (WDI) has gone from one of Europe’s most treasured financial technology firms to insolvency, all-but extinguishing the value of a company that was worth almost $20bn.
After years of suspicion, dogged investigative reporting and growing short interest, it was the company’s own admission on 18 June that auditors could not locate $2bn of cash which sounded the death knell.
Already, comparisons have been drawn with Enron, the energy group and one-time stock market darling whose systematic fraud and corruption rocked the US business establishment when it was uncovered in 2001.
For investors in 2020, the Wirecard scandal opens a vault of questions, chief among them concerning the integrity of market regulation and corporate audit process.
Wirecard is an insolvent German payment processor and financial services provider at the center of a financial scandal in Germany.
The company offers its customers electronic payment transaction services and risk management, as well as the issuing and processing of physical cards.
On 30 January 2019, Wirecard shares plunged after the Financial Times reported that a senior executive was suspected of “falsification of accounts” and “money laundering” and round-tripping in the company's Asia-Pacific operations.
Wirecard issued a statement calling the report “false, inaccurate, misleading and defamatory.” Wirecard also announced a lawsuit against the Financial Times for "unethical reporting" and a lawsuit for market manipulation.
In 2019, the accounting firm KPMG was hired by Wirecard for an independent audit to address the mentioned allegations. In March 2020, Wirecard claimed that KPMG concluded that no discrepancy was determined during the audit. However, on 28 April 2020, Wirecard shares tumbled 26% when the auditor announced that it had not received sufficient documentation to address all allegations of accounting irregularities.
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0:00 Part I: The Unbelievable Wirecard Fraud
3:56 Part II: A Glimpse into a System of Lies
7:12 Part III: The Future of EY and the Inside Scoop
#wirecard #enron #accountingfraud #EY #KPMG
Agreeing with Jeff
A most comprehensive summary, but the thriller music disturbs
Actually better coverage than most
I really hope you blow up on UA-cam. Your content is sooooooo insightful! Keep doing what you do brother and thanks for sharing!
Thank you bro. I appreciate the comment and I hope so too!
Really enjoyed the video and I think you've got well researched content. My one criticism is that many of the movie clips don't fit and this can be jarring - though some do, so I guess it's a balance. I'd personally prefer to see a heavier weighting of stock footage (storyblocks etc) rather than some out-of-context clips, or more screen grabs and graphics which you have in some sections (though I appreciate this is time consuming). Subscribed in any case, can see myself watching your vids in future! Thanks.
Like I mentioned in my video, I have attached links about the scandal in this comment for those who are interested. Hope it helps!
Wirecard's Complete Timeline:
www.ft.com/content/284fb1ad-ddc0-45df-a075-0709b36868db
A Detailed Look into How the Wirecard Scandal Work:
www.ft.com/content/d51a012e-1d6f-11e9-b126-46fc3ad87c65
Thank you for the upload
I landed a job at wirecard in June 2020. The day before I was supposed to hand over my resignation, they filed for insolvency. Thank God that was a near miss
Brilliant and thanks for this excellent video.
Amazing man! Very helpful with an auditing assignment.
No problem! Best of luck!
The explanation is good but the background music is overpowering your voice. Along with your pace and intonation, it ruins the conveyance of the suuposed to be interesting story. Despite all these, I still gave this video a thumbs-up for well researched facts.
Thank you for the honest feedback! I will make sure to lower the volume of the music in the future and work on the audio part, which is always a pain for me to master tbh. I am always hungry to make my content better for people so I appreciate this!
I am not sure what you are really trying to say; are you implying that an auditor's job is to pretend there is nothing wrong in order to meet the deadline, and that "assuming the company wasn't lying" then everything works out?
Then your job isn't auditing; your job is to pretend you do something so that a company can defraud more people.
I am sorry, i am not trying to offend you. But what you are telling me, in your own words, is that your job has no reason to exist at all. If you can't really catch systemic fraud until after the fact, then you have no reason to be paid to audit anything. If i can't count on an auditor's work to be useful in determining the financial health of a company, then hiring an auditor is in itself a waste of time and money.
I understand that you are working within the law and that a dishonest company that is being audited would lie to you. But if the audit report is not at least some kind of assurance then why would anyone pay to get such a thing done?
I am not offered. I think it's more of a critique of the system. The incentives we have aligned right now do not maximize investor protection. This is one of the reasons wide eye accounting student go into the field and realize that it might not be for them. The facts are auditors are paid by their clients, retaining relationships with clients help you move up the corporate ladder, and some times self-interest trumps doing a better job.
Staffs are often overworked during busy season or the 2 to 3 months they have to audit a company from scratch and some times doing the minimum is just survival and other times you just don't have the options. Public accounting firms are also profit maximizers and this means retaining the least amount of staff and completing as many audits as possible. This is why most auditor leave within 2 years of starting full-time, out of exhaustion, sickness of the systems, etc.
If a company really wanted to, I have no doubt that they could get away from fraud. In the context of less regulated Chinese companies, you have high systemic risk, which requires more manpower than what auditing firms can provide. For example, if a company choose to go the extra step of faking a bank statements, bank locations, records, etc, this is almost NO chance to catch that fraud.
A fun fact is that most frauds are uncovered by insiders who decide to whistleblow not from auditors. We simply trace paperwork back to the source and our main job is to make sure the financial statements presented by *management* are fair, accurate, and complete.
If a company is willing put in the extra work, then investors are out of luck. But luckily for auditors, frauds like this are rare just because it takes a large team to do so.
P.S I also left public accounting a while back :)
@@Notjimmymaio thank you for taking your time replying. I guess then we are in agreement, that standard yearly audits are simply incapable of catching intentional fraud and, at best, is only useful for finding accidental errors.
I honestly feel like crypto.com is engaging in illegal activity as well.