German audit watchdog Apas has banned EY from taking on any new listed audit clients in the country for two years because of failures in work carried out for Wirecard.

The regulator has also imposed a fine of €500,000 ($547,000) on the audit giant, alongside fines of between €23,000 ($25,000) and €300,000 ($328,000) on five current and former EY employees.

The penalty is a severe one, and will undoubtedly affect EY’s reputation. Apas said it “considered violations of professional duties during audits of Wirecard and Wirecard Bank from 2016 to 2018 as proven”.

Largest scandal

Wirecard collapsed in 2020 after admitting that half its revenue and billions of dolars of corporate cash did not exist. It is one of the largest accounting scandals in post-war European history.

Charges of fraud, embezzlement and manipulation of accounts and markets have been levelled in hearings currently taking place in Munich.

It is as yet unclear whether the German regulator thinks EY acted with intent or was simply negligent. If it decides there was intent, the door could be opened for EY to face criminal or legal liability.

The auditor has said it will examine the decision with care, saying “EY Germany is a different organization today” after “significant action” to improve risk management and the quality of audit.