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1Scan for outdated or missing drivers - takes under a minute2Repair Windows errors before they cause bigger problems3Fix the driver behind crashes, sound loss and screen glitchesIn 2020, Wirecard AG, one of Germany’s largest payment processing and financial service providers, filed for bankruptcy. This shocking event revealed an accounting scandal in which close to €2 billion had gone missing through fraudulent financial reports and corrupt business practices. The fallout from Wirecard AG has caused many to question the credibility of the Big Four – KPMG, Ernst and Young (EY), PriceWaterhouseCoopers, and Deloitte.
An audit is an annual review that is conducted by a separate third-party institution in order to verify the accuracy of a company’s financial statements. It also provides investors information about the company’s performance so they can better determine whether it is worth investing in or not. A successful audit result should lead to an “unmodified opinion” that signifies no discrepancies or concerns with the statements provided.
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Unfortunately, this wasn’t the case with Wirecard AG. Despite receiving an “unmodified opinion” from one of the Big Four auditors every year since 2014, it still went bankrupt due to fraudulence. This raises several questions; how did EY miss all signs of fraud? Did they make mistakes or were they purposely turning a blind eye? How many other companies are out there in similar situations?
The current system makes it difficult for proper audits to take place as companies pay for their audits and have a vested interest in ensuring they receive good reviews even if it means using misleading information. Conflict of interest issues arise when we consider that Big Four firms receive more revenue from consultation services than auditing services, raising questions over what kind of advice is being given when these firms are asked to review financial documents. Adding further concern is the fact that members of the Big Four are reportedly involved in helping draft regulatory bills and laws regarding finance matters which could potentially lead to them writing their own rules.
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The recent events involving Wirecard AG serve as a warning to us all about how important accurate and unbiased financial audits really are for protecting investments and keeping our economy stable – something that can only be achieved when we entrust these tasks with people who are held accountable for their actions rather than those who write their own rules without consequence. To better understand this issue further, why not check out BBC’s documentary ‘How They RobbedWirecard’ which investigates how this colossal fraud went unnoticed for so long?
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