Wirecard might have cascading impact on Germany’s audit and regulatory landscape
Wirecard already is shaping up to be to Germany what Enron was to the United States: An accounting oversight failure so huge in its scope and scale that its aftermath is likely to alter the country’s auditing and accounting profession as it exists today. Even before Wirecard’s accounting scandal became known, many in Europe – following other high-profile accounting scandals – have long called for separating audit from the accounting profession. According to a new article of Jaclyn Jaeger in Compliance Week, there might be more interest now to realise these concepts.
Furthermore, big changes for the accounting profession would now also take place in Germany in direct response to the Wirecard scandal. The German Federal Ministry of Justice and Consumer Protection, in consultation with the German Federal Ministry of Finance, announced plans to terminate its contract with the German Financial Reporting Enforcement Panel (FREP, Deutsche Prüfstelle für Rechnungslegung), the country’s accounting oversight body, at the end of 2021. In addition, while Germany’s financial regulator, the BaFin (Bundesanstalt für Finanzdienstleistungsaufsicht) is investigating Wirecard, the German watchdog is itself facing scrutiny after the European Commission penned a letter to the European Securities and Markets Authority (ESMA) requesting it to conduct “a fact-finding analysis” into the adequacy of BaFin’s supervisory response leading to Wirecard’s collapse.