Wirecard says KPMG could not review all data for audit

Frankfurt

WIRECARD AG said an independent audit by KPMG wasn't able to obtain all the data it needed to confirm past revenues, but that it didn't uncover a reason to restate earnings.

KPMG was unable to check 1 billion euros (S$1.54 billion) in transactions with third parties, the auditor said in a report posted on Wirecard's website. Wirecard said the data needed to conclusively approve revenues from 2016 to 2018 is "primarily in the control of third parties", but the company provided its own numbers to the auditor. Those didn't reveal "any deviations between the reported revenues and account balances", the German fintech said in a statement on Tuesday.

Wirecard hired the accounting firm in October to look into its third-party partner business as well as its operations in India and Singapore following a series of reports by the Financial Times that accused the company of accounting fraud in several countries. Since then, the German fintech has drip-fed parts of the report to the market, including a statement last week that said KPMG had not made any substantial findings of questionable accounting methods in all four areas of the audit.

Shares dropped as much as 22 per cent, the biggest intraday decline since February 2019. The stock fell 18 per cent to 108.08 euros at 10.29 am in Frankfurt on Tuesday.

The report was plagued by delays. The company failed to supply some of the documents KPMG requested in the course of the investigation, or didn't supply them until several months after they had been requested, which delayed the investigation overall, according to the report. Wirecard also postponed individual agreed interview appointments several times, KPMG said. The company said complications from the Covid-19 pandemic were behind the late submissions.

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Wirecard said the data needed to conclusively approve revenues from 2016 to 2018 is "primarily in the control of third parties" and added that its 2019 accounts will not be released on April 30, due to the Covid-19 virus and the audit report.

Wirecard's revenue soared in 2018 after it bought more than 15 companies in a few years. The company's technology helps its customers accept online payments and use its banking licenses to issue their own payment instruments.

The company had previously hired law firm Rajah & Tann to investigate its Singapore subsidiaries. A final report from the firm in March 2019 acknowledged accounting oversights and potential criminal liability among some Singapore staff, but didn't find evidence that it was linked to Wirecard headquarters.

The Financial Times also reported that substantial sales and profits were processed by Wirecard's Dubai-based partner company Al Alam Solutions in the names of several clients that didn't exist or had no record of a relationship with the firm. The company "categorically rejects" the allegations, calling them "nonsense," a spokeswoman said in October. BLOOMBERG