After the Wirecard scandal, Deutsche Bank may abandon Ernst & Young as its auditor

After the Wirecard scandal caused the Big Four to leave the company under investigation and work to restore its reputation, Deutsche Bank may abandon Ernst & Young as its auditor.

This is an unusual move by Germany’s largest bank. Only two years after hiring Ernst & Young to replace KPMG, Germany’s largest bank invited the company to compete for its 2022 audit.

Deutsche Bank chairman Paul Achleitner told shareholders at the bank’s annual meeting on Thursday that given the “future uncertainty”, the bank wants to “maintain all the options of Ernst & Young.” He added that opening up tenders for the 2022 audit is a preventive step.

Nevertheless, this decision was a blow to Ernst & Young, which completed its first audit of the bank only this year. Since Wirecard collapsed in June last year, the company has been under siege. Wirecard is one of the largest accounting frauds in Europe in recent decades.

After Wirecard went bankrupt, Ernst & Young (EY) underwent a ten-year unqualified audit. The accounting firm has lost several well-known clients, including Deutsche Telekom, Deutsche Bank’s asset management unit DWS, and a Frankfurt-based lender. Commercial Bank (Commerzbank) and KfW Bank (KfW).

All three financial services companies lost hundreds of millions of euros in the Wirecard fiasco and said they may take Ernst & Young to court.Deutsche Bank’s loss situation 18 million euros The lender hedged most of the Wirecard risk.

Until last year, Ernst & Young had increased its market share in German blue chip companies and won commissions from Volkswagen, Lufthansa, and Deutsche Bank.

Organizing tenders for new auditors is a complex and costly process that companies tend to avoid. According to German law, banks are now obliged to change their auditors after 10 years.

Ernst & Young said in a statement: “The Deutsche Bank Supervisory Board keeps all options open through bidding, but this does not mean that the auditor will need to be replaced.” The company added that it will participate in the tender for the 2022 audit.

EY collected 580,000 hours from Deutsche Bank during the 2020 audit of Deutsche Bank.

“The first audit is of course very labor-saving, because they need to get familiar with [their client’s] System and process. Achleitner said.

The chairman added: “During the transfer of the authorization from KPMG to Ernst & Young, and during Ernst & Young’s review, the Board of Supervisors found no grounds for dissent. The dissenting council questioned Ernst & Young’s quality or independence.” Ernst & Young was reserved for the 2021 audit.

At the Deutsche Bank’s annual meeting, shareholders supported the retention of Ernst & Young’s majority stake in the bank’s 2021 audit. This action accounted for 99.3%.

Deutsche Bank poached Andreas Loetscher as its head of accounting in 2018, and Andreas Loetscher was a partner at Ernst & Young, and Andrews Loetscher Andreas Loetscher is the head of Andreas Loetscher, and Andreas Loetscher is the head of the recent Wirecard audit.Laucher for the time being Step aside After the Munich prosecutor conducted a criminal investigation into possible violations of professional duties during the Wirecard audit, he took up his position in December.

Deutsche Bank Chief Financial Officer James von Moltke told shareholders on Thursday that Lodge will continue to wait and see until the case is resolved. Von Moltke emphasized that the presumption of innocence applies to Loetscher, who has given up “avoidance of conflicts of interest or conflicts of interest.” Loetscher previously declined to comment.

Ernst & Young’s work as a Wirecard auditor is under review by the German Parliamentary Committee’s investigation into fraud.The commission commissioned a special investigator in two report Ernst & Young’s audit has been hit hard Disadvantage.

At a hearing this month, one of Ernst & Young’s anti-fraud experts told members of Congress that he had discovered the actions of audit colleagues. “Difficult to understand”.

Ernst & Young Germany announced a leadership change this year and announced a Quality improvement plan. The company stated that it was deceived by fraud.