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Ernst & Young No Longer Has Any Equity On Its Balance Sheet

Agencies

Auditors have been making double-digit million losses for years.

At Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft (EY) in Germany, “equity” is on the assets side, namely as a “deficit not covered by equity” in the amount of € 62,715,000. The provisions, liabilities, deferred income as well as deferred taxes and fiduciary obligations exceed the company’s assets by an eight-digit amount in euros within a year. Receivables against this company are therefore no longer fully covered by assets on the balance sheet.

The trend line that had to be shown here for equity and equity ratio for EY on March 3, 2021, continues as expected. According to the consolidated financial statements and group management report as of June 30, 2020 of the Stuttgart-based parent company, the company no longer has any equity. Turnover was weaker than that of the other large auditors in Germany.

Under the chairman of the supervisory board, Georg Graf Waldersee, the German company has only made losses for years. This is also the case in the current reporting period. In the consolidated income statement for the financial year from 07/01/2019 to 06/30/2020, the consolidated net loss for the year is stated at € 49,608,000.

The billions in damages from the Wirecard scandal are not included: “In connection with the Wirecard case before and after the balance sheet date, claimants attempted to assert civil claims against us with out-of-court letters. On June 30, 2020, we were served complaints from investors that were judged to be unfounded both internally and by the law firms commissioned to defend us.”

Georg Graf Waldersee also chairs the supervisory board of Scope SE & Co. KGaA. In the case of the Berlin rating agency, the losses have been accumulating since the early 2000s, despite the exhaustion of numerous options under company law. The “Scope Group” has been writing a story of ongoing reported equity destruction for almost two decades. To reach break-even, the takeover of other rating agencies was also unsuccessful. The group currently includes two rating agencies registered by the European Securities and Markets Authority (ESMA), which currently operate under the name “Scope Ratings GmbH” or, more recently, “Scope Hamburg GmbH” and have various websites on the Internet. Scope Ratings GmbH has already been reported in connection with the Greensill scandal.

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