A Lesson Learned From Wirecard Scandal
The German stock market was rocked by the scandal of the German digital payment platform company, Wirecard, which lost a quarter of the company’s assets, US $ 2.1 billion or equivalent to Rp 29.61 trillion to be exact. The search for missing funds have been focused on the Philippines, but the Central Bank of the Philippines said no money had entered the country, after the Philippine Islands Bank (BPI) and BDO Unibank said that the documents showing that Wirecard had deposited funds to them were fake. The two big banks in the Philippines stated that Wirecard is not their client.
The Wirecard scandal began with a bookkeeping check conducted by Ernst & Young’s consultant and business auditor when he was testing the balance sheet of this digital company based in Munich. Last week, EY rejected the 2019 Wirecard balance sheet report and said they could not find funds of 1.9 billion Euros.
The discrepancy was tracked by the KPMG business consultant when examining Wirecard’s bookkeeping for 2019. EY then continued KPMG’s investigation to reveal the existence of the 1.9 billion euro fund, which according to the company was deposited in several bank accounts in Asia, but apparently was not found.
As reported by CNN on Tuesday (6/23/2020), this scandal has made Wirecard (WCAGY) shares fall in early trading on Monday. The stock has dropped by more than 85% during three trading sessions and erased the market value of US $ 12.5 billion. In addition, Wirecard CEO Markus Braun resigned and was briefly detained by the German police.
The Mega Card Wirecard scandal that shook the German economy is a lesson learned for fintech companies to implement comprehensive risk management. Weak internal control is suspected to be one of the causes of fraud in this company.
Lack of internal control makes companies more vulnerable to fraud, as reported by Report to The Nation 2020, out of other factors for fraud it occupies the top position by as much as 32%. The company should implement internal controls with good risk management. Strong internal control can make a company more able to evaluate and manage the risks that will occur. In addition, strong internal controls can also regulate corporate culture and behavior to be more effective in dealing with corporate risk management.
Written by: Aqilla