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TFA says >company’s cash was held in bank accounts it didn’t control I suspect that the accounts existed and had the cash, but the company wasn't the owner (o

TFA says >company’s cash was held in bank accounts it didn’t control I suspect that the accounts existed and had the cash, but the company wasn't the owner (or the sole owner) of the account.

mardifoufs 6y ago
Their excuse was that it was an escrow account for them and their payment "partners" which were basically subsidiaries that turned out to be shell companies. So I can't believe they wouldn't have had access to the accounts to just check if the fake statements were real. Also, keep in mind that this whole thing exploded when they finally tried to verify them after the KPMG audit, so they had the option to do it they just didn't. IIRC it turned out the accounts weren't even real.
diogenescynic 6y ago
Not sure why you're being downvoted. This is common for payments companies where you have to fund another company's bank account or digital wallet or whatever they call it. Otherwise you have to open a bank account and that can be a painful process depending on the country. It's definitely more risky because the funds aren't in your name, but usually you protect yourself by only funding the minimal amount to fund operations for a few days at a time. Still not seeing how Wirecard could have lost the amount they did without some form of scam going on for a longer period of time or they were stealing customer funds to pay for corp expenses and they finally hit the point where they couldn't keep it going any longer.
rojeee 6y ago
This is normal and doesn’t shed any light on the matter. Companies/individuals routinely hold cash in accounts they don’t control. For example; Client money accounts and collateral/margin accounts. Either way, the auditors would have known what the arrangements were and factored it into their opinion. Even the credit risk of the bank holding the nostro accounts is taken into consideration. Seems to me like Wirecard were running a large scale accounting fraud and EY were not “professionally sceptical” enough to see it. What’s not clear to me is whether any of the missing cash is client money or not. If it is then that’s a bit of a disaster.

TFA says >company’s cash was held in bank accounts it didn’t control I suspect that the accounts existed and had the cash, but the company wasn't the owner (or the sole owner) of the account.

mardifoufs 6y ago

Their excuse was that it was an escrow account for them and their payment "partners" which were basically subsidiaries that turned out to be shell companies. So I can't believe they wouldn't have had access to the accounts to just check if the fake statements were real. Also, keep in mind that this whole thing exploded when they finally tried to verify them after the KPMG audit, so they had the option to do it they just didn't. IIRC it turned out the accounts weren't even real.

diogenescynic 6y ago

Not sure why you're being downvoted. This is common for payments companies where you have to fund another company's bank account or digital wallet or whatever they call it. Otherwise you have to open a bank account and that can be a painful process depending on the country. It's definitely more risky because the funds aren't in your name, but usually you protect yourself by only funding the minimal amount to fund operations for a few days at a time. Still not seeing how Wirecard could have lost the amount they did without some form of scam going on for a longer period of time or they were stealing customer funds to pay for corp expenses and they finally hit the point where they couldn't keep it going any longer.

rojeee 6y ago

This is normal and doesn’t shed any light on the matter. Companies/individuals routinely hold cash in accounts they don’t control. For example; Client money accounts and collateral/margin accounts. Either way, the auditors would have known what the arrangements were and factored it into their opinion. Even the credit risk of the bank holding the nostro accounts is taken into consideration. Seems to me like Wirecard were running a large scale accounting fraud and EY were not “professionally sceptical” enough to see it. What’s not clear to me is whether any of the missing cash is client money or not. If it is then that’s a bit of a disaster.