# These imploding, scandal-plagued companies shared a Big Four auditor
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These imploding, scandal-plagued companies shared a Big Four auditor
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Regulators are scrutinizing whether the accounting giant Ernst & Young — now widely known as EY — missed red flags or failed to pursue them
Wirecard, headquartered in Aschheim near Munich, this fall faced a parliamentary inquiry into the collapse of payments provider.
Christof Stache/Agence France-Presse/Getty Images
This year, $2 billion is missing at a German fintech company, $300 million of sales has been found to be fabricated at a Chinese coffee chain and $5 billion in undisclosed debt has been uncovered at two related companies listed in the U.K. Together, the incidents cost shareholders of the companies roughly $30 billion.
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‘We take all issues extremely seriously.’
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EY is one of the Big Four accounting firms, whose audits are meant to give investors confidence in companies’ figures. EY missed red flags or failed to aggressively pursue them at some of the companies ahead of their scandals, and for the most part it was outsiders who raised questions first, a review based on publicly available documents and interviews with people close to the events shows. Now, regulators are scrutinizing EY’s work.
The EY audit clients that faced financial issues were German payments processor Wirecard AG
WDI,
WCAGY,
; China’s Luckin Coffee Inc.
LKNCY,
; hospital operator NMC Health PLC
NMHLY,
; and NMC sister company Finablr PLC , which owned the Travelex currency service.
See: German parliament launches inquiry into fraud scandal at Wirecard, with government in crosshairs
EY says it stands by its work and has high global audit standards. The firm says it played key roles in uncovering fraud at two of the companies, and it says China’s regulator has found it to be prudent and independent.
An expanded version of this report appears at WSJ.com.
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