There is an old saying in financial statement analysis: A good balance sheet is mostly even better, and a bad balance sheet is mostly even worse in reality. The reason for this observation is that accounting rules keep preparers of financial statements within a certain range but also that preparers have some incentive to mean revert in their reporting. While not so well-known in practice, the same observation (positive -> even better, negative -> even worse) also relates to most professional expertises. A reader of these expertises often has to identify the little nuances in order to understand what is really behind. In particular if it is about opinions. In the case of expertises the reason for this phenomenon is that preparers often fear that their work would not be seen as ‘professional’ enough if opinions are clearly (and without any major disclaimers) articulated. Bearing this in mind, we should have a closer look at the report that German auditing company KPMG has handed over to the supervisory board of Wirecard after finishing their investigations, and which was published at 27 April 2020. The original German version can be found HERE, and the English version (translated by Wirecard) can be found HERE .
The idea is not to recapitulate all the findings of the KPMG report but rather to highlight some of the – as we think – rather weak points of the report. This is important as it gives us a better feeling of what we could have known (and what we could not have known) earlier in this process.
Important: We comment on the KPMG report here without taking into account the new information since 18 June 2020. It is not about bashing KPMG with our hindsight know-how but rather to look at the report from the viewpoint of when it was published.
