This year, a German financial technology company lost US$2 billion, generated US$300 million in sales in a Chinese coffee chain, and discovered US$5 billion in undisclosed debt in two related companies listed in the UK. The shareholders of these companies need approximately $30 billion.
All of these have been audited by Ernst & Young. Last year, Ernst & Young also audited the office space company WeWork, which almost went bankrupt after conducting a planned initial public offering.
“We take all issues very seriously.”
Ernst & Young is one of the Big Four accounting firms, and its audit aims to make investors confident in the company’s performance. Ernst & Young’s missed the red flag, or did not actively pursue the red flag in some companies before the scandal, was largely based on outsiders’ concerns, which was a review of publicly available documents and interviews with people close to the event. Now, regulators are reviewing Ernst & Young’s work.
EY’s audit client facing financial problems is German payment processor Wirecard AG WDI,
; Luckin Coffee Inc. LKNCY of China,
; Hospital operator NMC Health PLC NMHLY,
; NMC’s sister company Finablr PLC, which owns Travelex currency services.
see: The German parliament begins an investigation into Wirecard’s fraud scandal, and the government turns a blind eye to it
Ernst & Young stated that it insists on its own work and has high global audit standards. The company said it played a key role in exposing the fraud of the two companies, and said that Chinese regulators consider it prudent and independent.
An expanded version of the report appears on WSJ.com.
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