Wirecard passes the third deadline to submit the special report

What’s new is that Wirecard didn’t provide information on the reasons for the postponement until after midnight. The group had justified the first postponement on March 12 with extensive testing and the rampant crown pandemic. On the occasion of the second postponement last Thursday, Wirecard referred to the data records that had yet to be seen and received at the last minute. However, each time the group announces a new end date. A corresponding ad hoc announcement is now omitted; No one was available in Aschheim upon request.

Wirecard had announced last Thursday “that KPMG will present the results of the ongoing special investigation on Monday, April 27, 2020.” As early as Monday morning, a Wirecard spokeswoman told Handelsblatt: “We will publish the KPMG report immediately. I receive it.”

Observers strongly criticized the renewed break of the deadline on Tuesday night. “We can only speculate on the exact reasons for the postponement. The idea is obvious that one discusses the central statements of the report,” said Volker Brühl, managing director of the Center for Financial Studies at Goethe University in Frankfurt, the Handelsblatt.

Regardless of this, the following applies to the finance professor: “That Wirecard doesn’t meet the publication deadline a third time and now doesn’t even comment on it is unacceptable and unprofessional for a publicly listed company and for a Dax company in particular”.

Angry shareholders also commented on the Twitter news service: “Thanks for NOTHING, Wirecard. Here the layoffs must continue. (…) It is enough for us shareholders! ”Wrote one user. “At least tell us what’s going on! Just saying nothing is the worst,” was another comment.

Serious accusations

KPMG has been reviewing Wirecard’s balance sheets since October 2019. This was preceded by an excruciating debate over the Group’s business practices, the reason for the special audit being serious allegations. Since January 2019, the British financial newspaper Financial Times (FT) has published a series of articles on opaque contracts and dubious partners of the group. Above all, inconsistencies in the important Asian business raised suspicions: Has Wirecard manipulated its balance sheet?

After the pressure mounted for months, Wirecard attempted the exemption and commissioned KPMG auditors to special audit the balance sheets for the years 2016 to 2018.

The special test was carried out with great effort. Meanwhile, around 40 auditors reviewed the balance sheets. These had already been approved by the former EY group auditor, whose care is in question. Auditing is complicated for KPMG: Society knows that its reputation is now at stake.

For weeks, Wirecard investors have been waiting for “Day X”, the presentation of the final report, which Wirecard wanted to publish “in its entirety” on the home page. The fact that the post has been postponed twice shows just how far Dax’s newcomer Wirecard is still far from the standard of other large corporations.

According to experts, KPMG also verified the incoming third-party numbers early last week. Additionally, Wirecard has struggled with KPMG in recent days to clarify the wording of the test report. There is relief on the most important points, on the balance sheet, such as the round-trip call allegation, the invention of sales. However, the auditors had made numerous negative findings, for example, regarding compliance and internal processes.

The question now was how serious were the corresponding complaints in the test report. KPMG’s auditors formulated significantly more negative than expected, it said late last week from corporate circles.

Double shift

The completion of the special audit had only been postponed until last Thursday. “In the remaining days, the incoming data will be processed and taken into account”, the group had justified the postponement and had already given the go-ahead for the most important accusation from the point of view of an investor: “They were not found evidence of published balance-manipulation allegations, “Wirecard had said Thursday. explained

Specifically, so far “there have been no substantive findings in all four third-party business areas, accounts receivable pre-financing and activities in India and Singapore, which would have required correction to the annual financial statements in the 2016 investigation period. , 2017 and 2018, “said the statement.

The group had already submitted a partial report of the test results late on March 12. At that time, however, the auditors only obtained partial information about the accounting methods at Wirecard.

They only brought light to three of the four subareas examined. The auditors made initial statements of relief on two company acquisitions in India in 2015, on financial irregularities at the Asian headquarters in Singapore and on the accounts receivable pre-financing area, also known as “Commercial Cash Advance” (MCA). The group defines MCA as loans to small retailers that use the Wirecard platform for their payment transactions.

Controversial third-party business

At the time, the auditors were not allowed to make a statement on the fourth particularly important point: the controversial third-party business – that is, the question of what parts of Wirecard’s sales were generated with the help of outside companies.

In a ten-page article in October, FT had posted clear doubts about cash flows through Wirecard partners. The gist of the allegations: According to FT, customer lists should go to major partner Al Alam of Dubai, a so-called “third-party acquirer” that handles payment processing in countries where Wirecard does not have its own licenses, and which already does not exist or cannot be found included. According to FT, approximately half of the Group’s earnings before interest, taxes, depreciation and amortization should have been achieved through Al Alam in 2016.

Wirecard chief Markus Braun had always denied this and all other allegations. Last Thursday’s statement that “no evidence of balance sheet tampering” was found in third-party businesses, either, seemed correct at the moment. The share price has increased significantly again in recent days to more than 130 euros; in March it had fallen to 85 euros.

A third extension of the review period beyond Monday was no longer possible: Wirecard plans to release its 2019 annual balance on April 30. And the EY group auditor apparently does not want to test this without KPMG’s final evaluation for the special audit.

Plus: Alleged balance sheet fraud, dubious partner: Wirecard has been at the center of criticism for over a year.