Wirecard issues

https://www.wsj.com/articles/wirecards-former-ceo-markus-braun-is-arrested-11592901759 * Summary: * “Wirecard AG, one of Europe’s biggest and fastest-growing fintech companies, said auditors can’t locate more than €1.9 billion ($2.1 billion) of its cash.” The company has delayed publication of its 2019 annual report after auditors EY could not obtain confirmations from banks holding deposits in trust accounts. Problems obtaining confirmations from these banks had previously been discussed by KPMG LLP in connection with their engagement to perform a special audit in October [2019] “in response to a string of allegations about fake revenues, falsified accounting and other matters, including some made in an unsigned report posted on the internet.” * Classroom Application: * The article may be used in an auditing class discussing confirmations or responsibility to detect fraud. Many articles have been published since this announcement about the inability to obtain confirmations, most recently that the former CEO Markus Braun has been arrested, and released on bail, located at https://www.wsj.com/articles/wirecards-former-ceo-markus-braun-is-arrested-11592901759 * Questions: * · What is a fintech company? Try to glean the definition from the article, but also cite any source you use for the definition. · What is the importance of confirmations as audit evidence in an attestation engagement over financial statements? · Describe the process for obtaining audit confirmations. · What happened to confirmations of the cash balances held by Wirecard AG? · As described in the article, what is the implication for Wirecard AG if its auditors cannot provide an opinion on the company’s financial statements? "Payments Giant Wirecard’s Shares Plunge on $2 Billion Audit Deception," by Paul J. Davies,* The Wall Street Journal*, June 18, 2020 https://www.wsj.com/articles/payments-giant-wirecards-shares-plunge-on-2-billion-audit-deception-11592474551