30 June, 2020 | AtoZ Markets – Wirecard, a German payments group, filed for insolvency after disclosing €1.9 billion ($2.1 billion) that is missing from the account. FREP audited Wirecard in 2019 but reportedly failed to detect company's accounting issues. The Financial Reporting Enforcement Panel (FREP) is a private organization with quasi-public authority. It oversees the financial reporting of listed companies on behalf of the government.
Besides, the country's official cancelled the contract with FREP, effective from 31 December, 2021. Germany's deputy finance minister, Jorg Kukies said:
"What the Wirecard affair has shown is that self-regulation by the auditors doesn't work properly. So we will inevitably have to question whether the bodies that currently regulate the industry should continue to do so in their current form."
Wirecard Scandal Investigation Transferred to BaFin
From now, BaFin will handle the company's financial reporting investigations. "The power to launch investigations into companies' financial reporting would then hand to BaFin", the officials said.
BaFin can also ask FREP to investigate the company's financial reporting, but it does not affect the actual process. The regulator needs to wait for the FREP findings before initiating its own investigations.
While Wirecard has been growing and prospering for years, BaFin is also under pressure, knowing that the underlying financial inconsistencies have been revealed. German financial supervisor Felix Hufel admits that he shares responsibility. The FCA is also working with Wirecard UK to give people access to their money. It said:
"We have been working closely with Wirecard UK and other authorities over the last few days to ensure that the firm was able to meet certain conditions required to lift the restrictions we imposed on it. We are now in a position to allow Wirecard to resume operational activity."
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