WHEN Stefan Kirsten took over as chair of the stricken German real estate company Adler Group in February 2022 in the midst of an accounting scandal, he did not mince words. “The elephant in the room is named Wirecard,” the former chief financial officer of German blue chip Vonovia quipped.

It is not just shareholders that have become ever more cautious in the wake of one of Europe’s largest accounting scandals. Auditors have done so too. This has become a problem for Adler, as it battles waning investor sentiment in the wake of a short-seller attack in October 2021. Adler, ditched by its auditor KPMG last year after the Big Four firm issued a disclaimer opinion for the 2021 results, has so far been unsuccessful in its search for a replacement. The uncertainty has contributed to a 92 per cent drop in the company’s share price over the past year.

The experience of Wirecard’s longstanding auditor EY has turned into a cautionary tale for the whole industry. For close to a decade, EY issued unqualified audit opinions to Wirecard, failing to spot that half of the revenue and hundreds of millions of corporate cash were fake.