EU watchdog to review Germany’s financial reporting setup after Wirecard

FILE PHOTO: The logo of Wirecard AG, an independent provider of outsourcing and white label solutions for electronic payment transactions, is pictured at its headquarters in Aschheim, near Munich, Germany, July 1, 2020. REUTERS/Andreas Gebert/File Photo

FRANKFURT (Reuters) – The European Union’s markets watchdog said on Wednesday that it was reviewing Germany’s financial reporting setup in the wake of Wirecard’s (WDIG.DE) collapse.

The assessment by the European Securities and Markets Authority (ESMA) will focus on Germany’s financial supervisor BaFin and the accounting watchdog – the privately-owned Financial Reporting Enforcement Panel (FREP).

BaFin and FREP have come under scrutiny for their oversight of Wirecard, which filed for insolvency last month owing creditors 4 billion euros ($4.58 billion) after disclosing a 1.9 billion euro hole in its accounts that its auditor EY said was the result of a sophisticated global fraud.

“High quality financial reporting is core to investor trust in capital markets and Wirecard’s collapse has undermined this trust,” ESMA said.

“Therefore, it is necessary to assess these events to help in restoring investor confidence,” it added.

ESMA said that it would complete the assessment by Oct. 30.

Reporting by Tom Sims; Editing by Riham Alkousaa and Thomas Escritt

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