5 ms·

EY believed the documents shown to them. Sloppy for sure, and EY got their amount of flak for it. People litteraly went to the banks in Asia during the extraor

by hef19898 3y ago

EY believed the documents shown to them. Sloppy for sure, and EY got their amount of flak for it. People litteraly went to the banks in Asia during the extraordinary audit, something that is not usually done during "normal" audits. And yes, I also hate when I misplace my billions. Especially since I have yet to relocate them...

omega3 3y ago
> EY believed the documents shown to them. Sloppy for sure, and EY got their amount of flak for it. There are strict rules and guidelines around verifying an asset. The auditor isn't supposed to "believe the documents" - they need to form an independent opinion.^1 If the auditor is unable to obtain sufficient appropriate audit evidence to verify the asset, they can issue a qualified opinion due to a scope limitation. ^1 https://www.accaglobal.com/gb/en/member/discover/cpd-articles/audit-assurance/specific-considerations.html https://www.accaglobal.com/gb/en/member/discover/cpd-article...
- hef19898 3y ago
  Good nitpick. Thing is, the proof EY got from Wirecard was good enough to meet these thresholds, at least I never read or heard anything else. All that evidence was fabricated, of course. What EY did was ignoring all the warning signs they had: money laundering, making up business, fraud and all that. EY also wanted the proof the standards it seemingly met, that was the failure. But then those audits are not really meant to find organized fraud at a company to begin with.
  - omega3 3y ago
    > Thing is, the proof EY got from Wirecard was good enough to meet these thresholds It objectively wasn't. I've never heard of a case where the auditor doesn't independently verify the bank account balance with the bank itself. More reliable evidence reduces the need for additional corroborating evidence. In general the evidence obtained from the company itself wouldn't be considered reliable by itself. https://www.ft.com/content/db9fa3d7-11da-476e-beea-d5ed0ad137ed https://www.ft.com/content/db9fa3d7-11da-476e-beea-d5ed0ad13... This wasn't some hard to uncover marvel of accounting fraud using complex financial engineering.
    - hef19898 3y ago
      Always happy to be corrwcted and learn something new, unfortunately the FT link is behind a paywall... If memory serves well so, it is quite a while I read Dan McCrum's book, Wirecard produced documents from the Asian banks (fake ones, as we now know). Of course, and I couldn't agree more, they should have at least called the banks up. Especially since a German fin-tech start-up, with on-going bad press, claims to hold billions with some Asian banks from business activities directly related to said accussations circulating in the press. EY deserves all the flak it got. That being said, again, if a company wants to defraud its auditors, they can for surprisingly long periods if they try hard enough. I think, we basically agree.
      - ArnoVW 3y ago
        From what I gather they not only called the bank, but actually went to a branch in the Philippines. They spoke to a clerk, took a picture of a screen showing a balance. But the branch office was fake. https://www.ft.com/content/bcadbdcb-5cd7-487e-afdd-1e926831e9b7 https://www.ft.com/content/bcadbdcb-5cd7-487e-afdd-1e926831e...
    - naasking 3y ago
      > I've never heard of a case where the auditor doesn't independently verify the bank account balance with the bank itself Didn't they setup a whole fake bank branch? Sufficiently motivated actors can circumvent any preventative measures.
hermitdev 3y ago
> And yes, I also hate when I misplace my billions. Especially since I have yet to relocate them... I think you're joking, but I'm not sure. I work in trading, and I've been on the receiving end of that phone call. As I recall, it was around 9PM in the US, my work phone rang and could see from the caller ID that it was from our London office. There were no greetings, first words I hear were "We're missing over a billion dollars. You need to find it...NOW." When I received that call, it was in the middle of the 2008 financial crisis. The daily PnL swings were wild, and it wasn't always clear on the cause. FX volatility was insane. We did all of our PNL reporting in USD, but held a lot of foreign assets. There was no malfeasance; I'd just taken ownership of the system a week or two before, and a nightly job had silently failed. Perl job on Windows, extracting data from a 3rd party trading system that wasn't built w/ integrations in mind, feeding it into in-house systems. It was a very flimsy house of cards. A gentle breeze in the night would knock it over. Rewrote the integration in Python, hooked everything up into our monitored job scheduler. Had to do some janky UI automations in Python until we got the vendor to add a proper CLI-based reporting mechanisms. It was a "fun" ride, but I eventually got my evenings back. Did cause the end of a relationship, though, so there's that.
- Andrex 3y ago
  Would have been nice to have seen some of that billion you found, I'm sure.
  - pas 3y ago
    it was not lost after all, so it couldn't even have been found. how ironic.
  - mistrial9 3y ago
    welcome to your new career in professional finance services
- hef19898 3y ago
  I was joking, the max I ever "lost" was a couple 100k of inventory, the majority of it was recovered and the reminder, as far as I know, covered by insurance. Also a, surprisingly similar, fun story involving just slightly different interpetation and handling of messages between our and the service providers WMS, which screwed up things in ways I never thought possible. And almost went unnoticed, after all even with top notch metrics and my borderline paranoia the issue went on for almost three weeks before we caught it. I can only imagine so the slight shock you had after that phone call so! I love those stories from the trenches so you hear on HN, thanks for sharing!
aragonite 3y ago
Off-topic, but I can't help but notice you've been spelling 'literally' as either 'litterally' or (less frequently) 'litteraly' for 5 years! Occurrences of 'litterally' your comments: https://hn.algolia.com/?dateRange=all&page=0&prefix=false&query=litterally%20hef19898&sort=byDate&type=comment https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu... Occurrences of 'litteraly' in your comments: https://hn.algolia.com/?dateRange=all&page=0&prefix=true&query=litteraly%20hef19898&sort=byDate&type=comment https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...
- sonofhans 3y ago
  You’re the comment stalker everyone needs :)
- hef19898 3y ago
  I did not know one could pull that kind of data from my posts here, I am equally impressed and terrified... Usually, I comment on mobile. And if I realized one thing, my orthography takes a very serious hit when typing on a phone, compared to a proper keyboard or handwriting.
  - int_19h 3y ago
    The entire HN story and comment history can be retrieved via the API, so you should generally assume that anyone who might be interested in somehow indexing/querying/analyzing what you post has already done so. I wonder sometimes how much of it is in the training sets for various LLMs by now.
- tomatovole 3y ago
  This is litterally the best comment I've seen today!

omega3 3y ago

> EY believed the documents shown to them. Sloppy for sure, and EY got their amount of flak for it. There are strict rules and guidelines around verifying an asset. The auditor isn't supposed to "believe the documents" - they need to form an independent opinion.^1 If the auditor is unable to obtain sufficient appropriate audit evidence to verify the asset, they can issue a qualified opinion due to a scope limitation. ^1 https://www.accaglobal.com/gb/en/member/discover/cpd-articles/audit-assurance/specific-considerations.html https://www.accaglobal.com/gb/en/member/discover/cpd-article...

hef19898 3y ago
Good nitpick. Thing is, the proof EY got from Wirecard was good enough to meet these thresholds, at least I never read or heard anything else. All that evidence was fabricated, of course. What EY did was ignoring all the warning signs they had: money laundering, making up business, fraud and all that. EY also wanted the proof the standards it seemingly met, that was the failure. But then those audits are not really meant to find organized fraud at a company to begin with.
- omega3 3y ago
  > Thing is, the proof EY got from Wirecard was good enough to meet these thresholds It objectively wasn't. I've never heard of a case where the auditor doesn't independently verify the bank account balance with the bank itself. More reliable evidence reduces the need for additional corroborating evidence. In general the evidence obtained from the company itself wouldn't be considered reliable by itself. https://www.ft.com/content/db9fa3d7-11da-476e-beea-d5ed0ad137ed https://www.ft.com/content/db9fa3d7-11da-476e-beea-d5ed0ad13... This wasn't some hard to uncover marvel of accounting fraud using complex financial engineering.
  - hef19898 3y ago
    Always happy to be corrwcted and learn something new, unfortunately the FT link is behind a paywall... If memory serves well so, it is quite a while I read Dan McCrum's book, Wirecard produced documents from the Asian banks (fake ones, as we now know). Of course, and I couldn't agree more, they should have at least called the banks up. Especially since a German fin-tech start-up, with on-going bad press, claims to hold billions with some Asian banks from business activities directly related to said accussations circulating in the press. EY deserves all the flak it got. That being said, again, if a company wants to defraud its auditors, they can for surprisingly long periods if they try hard enough. I think, we basically agree.
    - ArnoVW 3y ago
      From what I gather they not only called the bank, but actually went to a branch in the Philippines. They spoke to a clerk, took a picture of a screen showing a balance. But the branch office was fake. https://www.ft.com/content/bcadbdcb-5cd7-487e-afdd-1e926831e9b7 https://www.ft.com/content/bcadbdcb-5cd7-487e-afdd-1e926831e...
  - naasking 3y ago
    > I've never heard of a case where the auditor doesn't independently verify the bank account balance with the bank itself Didn't they setup a whole fake bank branch? Sufficiently motivated actors can circumvent any preventative measures.

hermitdev 3y ago

> And yes, I also hate when I misplace my billions. Especially since I have yet to relocate them... I think you're joking, but I'm not sure. I work in trading, and I've been on the receiving end of that phone call. As I recall, it was around 9PM in the US, my work phone rang and could see from the caller ID that it was from our London office. There were no greetings, first words I hear were "We're missing over a billion dollars. You need to find it...NOW." When I received that call, it was in the middle of the 2008 financial crisis. The daily PnL swings were wild, and it wasn't always clear on the cause. FX volatility was insane. We did all of our PNL reporting in USD, but held a lot of foreign assets. There was no malfeasance; I'd just taken ownership of the system a week or two before, and a nightly job had silently failed. Perl job on Windows, extracting data from a 3rd party trading system that wasn't built w/ integrations in mind, feeding it into in-house systems. It was a very flimsy house of cards. A gentle breeze in the night would knock it over. Rewrote the integration in Python, hooked everything up into our monitored job scheduler. Had to do some janky UI automations in Python until we got the vendor to add a proper CLI-based reporting mechanisms. It was a "fun" ride, but I eventually got my evenings back. Did cause the end of a relationship, though, so there's that.

Andrex 3y ago
Would have been nice to have seen some of that billion you found, I'm sure.
- pas 3y ago
  it was not lost after all, so it couldn't even have been found. how ironic.
- mistrial9 3y ago
  welcome to your new career in professional finance services
hef19898 3y ago
I was joking, the max I ever "lost" was a couple 100k of inventory, the majority of it was recovered and the reminder, as far as I know, covered by insurance. Also a, surprisingly similar, fun story involving just slightly different interpetation and handling of messages between our and the service providers WMS, which screwed up things in ways I never thought possible. And almost went unnoticed, after all even with top notch metrics and my borderline paranoia the issue went on for almost three weeks before we caught it. I can only imagine so the slight shock you had after that phone call so! I love those stories from the trenches so you hear on HN, thanks for sharing!

aragonite 3y ago

Off-topic, but I can't help but notice you've been spelling 'literally' as either 'litterally' or (less frequently) 'litteraly' for 5 years! Occurrences of 'litterally' your comments: https://hn.algolia.com/?dateRange=all&page=0&prefix=false&query=litterally%20hef19898&sort=byDate&type=comment https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu... Occurrences of 'litteraly' in your comments: https://hn.algolia.com/?dateRange=all&page=0&prefix=true&query=litteraly%20hef19898&sort=byDate&type=comment https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...

sonofhans 3y ago
You’re the comment stalker everyone needs :)
hef19898 3y ago
I did not know one could pull that kind of data from my posts here, I am equally impressed and terrified... Usually, I comment on mobile. And if I realized one thing, my orthography takes a very serious hit when typing on a phone, compared to a proper keyboard or handwriting.
- int_19h 3y ago
  The entire HN story and comment history can be retrieved via the API, so you should generally assume that anyone who might be interested in somehow indexing/querying/analyzing what you post has already done so. I wonder sometimes how much of it is in the training sets for various LLMs by now.
tomatovole 3y ago
This is litterally the best comment I've seen today!