EY said it plans to cut jobs and eliminate costs in Germany after its failure to detect suspected fraud at Wirecard AG, the electronic payments company that collapsed in 2020, shook confidence in the auditor.
The management board of EY Germany has decided to make “various structural changes subject to co-determination,” the company said in response to questions from Bloomberg. “The focus is on personnel measures and reductions of non-personnel costs.”
The Financial Times reported earlier that EY Germany plans to cut 40 partners and fire 380 staff to improve profitability.
EY has lost several mandates in the wake of Wirecard’s collapse, which left investors with billions of euros of losses. The payments company imploded after saying cash amounting to a quarter of its balance sheet probably never existed. The scandal exposed shortcomings at auditors, regulators and banks who failed to catch Germany’s biggest corporate fraud in decades.
German companies tend to consult worker representatives when eliminating jobs for reasons other than individual conduct. EY Germany has started talks with the relevant body and “the planned adjustments should preferably take place in form of voluntary solutions under a mutual understanding,” the firm said.
“The planned measures are intended to put EY Germany in the strongest possible position for future success,” the company said.