Germany will give the power to start investigations into company accounts to the nation’s financial regulator BaFin, the Financial Times reported, as the fallout from an accounting scandal at payments company Wirecard AG widens.
The newspaper cities German deputy finance minister Joerg Kukies as saying that the affair has shown that “self-regulation by the auditors doesn’t work properly.” The government will end its contract with the country’s accounting watchdog on Monday, Bild am Sonntag newspaper reported separately without revealing its sources.
The Financial Reporting Enforcement Panel, or FREP, is a private institution that has been responsible for examining financial reporting of publicly-listed companies in Germany since 2005.
Kukies told the Financial Times that the ministry “will inevitably have to question whether the bodies that currently regulate the industry should continue to do so in their current form.”
Once lauded as one of Germany’s fintech stars, Wirecard filed for insolvency last week after saying that 1.9 billion euros ($2.1 billion) previously reported as cash on its balance sheet probably doesn’t exist.
BaFin, along with auditors and other institutions, has come under intense criticism for failing to prevent one of the biggest scandals at a major German company, notably for its decision to ban short-selling Wirecard shares.
A spokeswoman for BaFin declined to comment on the reports regarding a possible transfer of responsibilities from FREP. The regulator made multiple requests related to Wirecard to the auditing group in 2019 but has yet to receive a report.
(Adds Bafin declines to comment in seventh paragraph.)
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