The review found that some procedures in place in both FREP and BaFin could use some improvement, as well as the selection and examination of issuers. The review also identified independence and conflict of interests in FREP and cooperation issues between the two authorities.
ESMA invited BaFin and the European Commission to investigate whether the TD is correctly applied by Germany, given BaFin’s inability to comply with the GLEFI due to a lack of enforcement powers.
ESMA’s actions followed Wirecard’s filling for insolvency in June after accounting firm Ernst & Young found that €1.9 billion were missing from the company’s accounts. Following the Wirecard scandal, Germany announced it will give company accounting responsibilities to the market regulator BaFin.
The German government decided to terminate its relationship with Financial Reporting Enforcement Panel or “Deutsche Prüfstelle für Rechnungslegung” (DPR), a quasi-government entity that investigates accounting issues on behalf of public authorities. The DPR has been examining financial reporting of publicly listed companies since 2005 and reportedly audited Wirecard in 2019 but failed to “notice” the company’s issues.
Following the events in Germany, the UK Financial Conduct Authority (FCA) suspended Wirecard’s UK subsidiary and left thousands of people in the UK unable to access their money. The FCA stated that it has taken actions to stop Wirecard’s UK business in order to protect its customers.
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