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View attached explanation and answer. Let me know if you have any questions.BUSINESS ETHICS1Business EthicsStudent’s NameInstitutional AffiliationInstructor’s NameCourseDue DateBUSINESS ETHICS2Business Ethics: Wirecard CollapseIntroductionBusiness ethics is vital in enhancing law in businesses by stipulating acceptablebehaviours beyond the government’s control (Nelson, 2021). Organizations follow businessethics to improve integrity among their workforce and gain knowledge from stakeholders,including consumers and investors (Nelson, 2021). Throughout history, several scandalsinvolving financial organizations have happened. A memorable scandal is the Wirecard thathappened in 2020. The Wirecard company offered electronic payment transaction services, riskmanagement, and virtual and physical cards.Details of the Wirecard ScandalThe Wirecard scandal involves a series of accounting issues that occurred in theinsolvency of the Wirecard company (Jha, 2019). The irregularities in the scandal include marketmanipulation, accounting malpractices, fraud, money laundering, and E#038;Y and BaFin’s breachof trust.Wirecard AG experienced several alleged marketplace manipulations for some time. Oneof the marketplace manipulations resulted when the company made an Ad-hoc announcement on12th march and 22nd April 2020 (Mollers, 2020). The suspicions were grounded on the fact thatWirecard’s managers released misleading signals for its stock market price during the ad-hocreleases (Mollers, 2020). Investigators probed the Headquarters of the Wirecard companyfollowing a series of suspicion. Bafin, Germany’s Federal Financial Supervisory Authority, fileda criminal complaint against the company about fears of market manipulation (Jo et al., 2021).BUSINESS ETHICS3The financial watchdog revealed aimed to mislead markets by disclosing its $2.1 billion financialholes (Betz, #038; Kim, 2021). In addition, the information presented in the company’s financialreports gave false signals for Wirecard’s market share price, therefore, violating a ban on marketmanipulation (Jo et al., 2021). It also engaged in short-selling malpractices and providing falseinformation about its real scale.Wirecard also faced a sequence of complaints regarding accounting malpractice from thetime of its incorporation. Until 2019, parties such as whistleblower and Financial Timespublished a succession of investigations citing accounting errors (Engelen, 2021). Thecompany’s management sought protection citing that Wirecard was unable to cover all its debts.Instead of publishing audited statements for 2019, the company announced that $2.1 billion was“missing” (Engelen, 2021). The Financial Times launched an investigation into the claim andfound out that the said amount, €1.9, never existed after about two banks based in the Philippinesthat were supposed to keep the money told the investigators they had never worked withWirecard (Christensen #038; Latifa, 2021). The management of the payment company also revealedthat the said amount might not be reliable. This led to the arrest of Mr. Braun, the CEO, on falseaccounting.Fraud was evident in Wirecard, for exle, in 2016 when Zatara Research gave anegative report on short-selling, stating that senior executives at Wirecard had defraudedMastercard and Visa. On 30th January 2019, Wirecard denied a report by Financial Times thatthe executive used forged and backdated contracts to facilitate suspicious transactions(Langenbucher et al., 2021). The acts raised a series of questions on Wirecard’s accountingpractice integrity. The company termed the report as false, misleading, defamatory, andBUSINESS ETHICSinaccurate. The management sued the Financial Times for successive investigative reports usingmisrepresented business secrets (Christensen #038; Latifa, 2021). Though Wirecard hired anindependent auditor to trace reports made by Financial Times, the auditor said that Wirecardfailed to avail sufficient records to address all accounting allegations made by the FinancialTimes. Wirecard filed insolvency upon owing creditors about $4 billion when the gaping holeswere confirmed in its books. On 6th July, the German prosecutor confirmed that the accountingproblem at the company was a massive criminal act.Wirecard used the advantage of being a listed company to practice money laundering byshowing a large “legitimate’ by profiting from fake transactions. Fintech could easily convertmoney from criminal parties into transactions and benefit the service provider. The executive atWirecard used such transactions to make legitimate profits. In 2020, Wirecard Fintech filed forinsolvency, owing creditors $4 billion after revealing a $2.1 billion hole in its accounts. Thismoney laundering act involved individuals at Wirecard following a sequence of criminalsuspicions. The Wirecard never commented on the reports and the investigations on the raid ofthe Dublin office.Ernst and Young (E#038;Y) and Bafin breached trust in the Wirecard scandal. First, sinceE#038;Y was the company’s internal auditor and therefore had a moral duty to oversee the Fintechand ensure it acted fairly and transparently, but it happened that E#038;Y had a conflict of interest.E#038;Y failed to request Wirecard to produce crucial account details from the Singapore bank,where the giant Fintech claimed to have approximately one billion euros in cash. Ban auditorshould exercise more regulation to ensure clients uphold ethical standards. The EY auditorsnegligently signed off accounts without considering their specific audit duties and encouraged4BUSINESS ETHICS5Wirecard’s fraud (Voss, 2020). If the auditor could have done so, this might have helped uncoverthe massive accounting scandal. BaFin, Germany’s financial regulator, also had an obligation toensure transparency within Wirecard. Though BaFin banned short-selling in 2019, it failed toconduct a parallel Wirecard investigation (Voss, 2020). Therefore, both EY and BaFin breachedtrust by failing to act according to their roles and responsibilities as financial authorities.Question 2Using Kant’s ethics to evaluate whether or not E#038;Y and Bafin should be heldaccountable for the scandalFrom the scenario of the Wirecard scandal, Both EY and BaFin are guilty due to theirunethical and unprofessional acts. The two entities, therefore, should be held accountable for themassive scandal due to the reasons discussed hereinafter. I, therefore, use Kantian ethics toassess and justify whether the behavior of each organization, that is, EY and BaFin, should beheld accountable for the Wirecard’s massive scandal.Kant’s ethics is a duty-based or deontological ethical theory developed by ImmanuelKant to enlighten rationalism (Kačerauskas, 2019). The theory is anchored on the view that theuniversally good thing is goodwill, and a deed can only be presumed good if the principle behindit adheres to the moral law (Kačerauskas, 2019). Kant considered the categorical imperative thatoccurs on all persons, regardless of their desires or actions. Each ethical act should happenwithout contradiction. Briefly, people should engender to do the right thing, perform it since it isthe right thing to do, stop doing wrong things, and avoid wrong or bad things because they arewrong (Scharding, 2019). Using this theory, one cannot justify an occurrence or action byBUSINESS ETHICS6judging by revealing that it yielded good consequences. Deontologists are guided by moral rules,including it is wrong to steal, tell lies, kill innocent persons, but it is right to fulfil promises(Scharding, 2019). Hence, Deontologists start by identifying the right actions and proceed fromthere.Wirecard Fintech was a revolutionary company in Germany (Mock, 2021). Traditionally,Germany, like other countries, relied on ancient industries, including chemicals and automobiles.From an in-depth analysis and approach, Wirecard confirms the ability of Germany to innovate(Mock, 2021). It is also a symbol of global transformation from old to new. According toKantian ethics, Ernst and Young (EY) had a moral duty to oversee and ensure that Wirecardpracticed fair and transparent business operation (Mock, 2021). EY was the internal auditor ofthe fintech for about a decade, thus a good opportunity to cultivate a moral culture within theorganization. On the contrary, EY clearly showed a significant conflict of interest in the auditwork.The Ernst and Young company helped Wirecard cover up a series of shady accountingexercises for a long time. The failure of the internal auditing company through negligence inidentifying Wirecard’s misconduct highlights the interest of conflict involving different auditfirms and their clients (Zeranski #038; Sancak, 2020). The interest of conflict in auditing requirespractical regulation to foster ethical standards in both public and private corporations. Otherreports in 2020 also confirm EY’s misconduct with Luckin Coffee and NMC Heath (Zeranski #038;Sancak, 2020). Therefore, conflict of interest is prevalent in Ernst and Young firms across theirtransactions.BUSINESS ETHICS7Specifically, EY failed to act morally by not practicing due diligence, for instance, failingto confirm if there is internal controls. It is absurd that for a sophisticated organization like EY tooperate without ensuring the availability of controls (Voss, 2020). EY should have implementeda time-dependent systematic process checking to get information and exclude subjectiveevaluations. It is also surprising that EY could not ask Wirecard, an organization dealing withonline transactions, to produce minutes or additional records to support its decision-making(Voss, 2020). EY also never addressed this sensitive matter, as well as verifying the $2.1 billion.Another misconduct by EY is failure to independently confirm the Wirecard’s cashbalance in Singapore for about three years. The firm instead relied on screenshots and documentsgiven by a third-party trustee and Wirecard. Therefore, EY is accountable for the Wirecardscandal since it was appointed to perform special audits.Bafin, Germany’s mandated financial regulator, held a moral duty to foster Wirecard’stransparency (Jakubeit, R. (2021). Being a state watchdog, the government and the public expectBaFin to put the public interest first while also improving national reputation and pride infinancial activities (Jakubeit, R. (2021). According to Kant’s ethics, the regulator practicedimmoral behavior by launching investigations on stakeholders and left Wirecard itself. If onlyBaFin could investigate Wirecard during the suspicions, it would have identified its falseaccounting scandal as misconduct. In addition, BaFin investigated short-sellers in 2016 without adetailed investigation into Wirecard’s compliance issues (Jakubeit, R. (2021).BaFin also indicated a lack of good judgment as regulators when it neglected variousreports published by the Financial Times in 2015. Felix Hufeld, the president of BaFin, is alpersonally accountable to ensure it upholds moral behavior. On the other hand, the financeBUSINESS ETHICS8minister of Germany also has a moral obligation to ensure public regulatory authorities,including BaFin, fulfil their duty. Therefore, my evaluations reveal that BaFin and EY should beheld accountable for the Wirecard scandal.Suggest a course of action (s) to prevent discrepancies in the financial resultsreporting to ensure that such scandal will not arise in the near futureEvery scandal in the corporate world is a learning opportunity. Scandals also act asreminders to the parties involved in running corporate businesses about something that needs tobe amended Ludwig, 2021). Therefore, governments and businesses must adjust and reflect onthe practices in the market to identify loopholes and find solutions for them.The German government can adopt various techniques to curb discrepancies in financialreporting, like in the Wirecard scandal (Ludwig, 2021). First, the count…
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