By Paul J. Davies 

Shares of Wirecard AG, the German electronic payments company whose accounting practices in Asia are under investigation, fell Wednesday after it emerged that an auditor hadn't fully signed off on its Singapore arm's most recent accounts.

The company, which denies all allegations of improper accounting practices, said the lack of a final opinion from Ernst & Young for Wirecard Singapore Pte's accounts didn't affect the audit of the parent firm for 2017 and 2018.

Wirecard is among Europe's biggest and fastest-growing fintech companies. Last year, it broke into the DAX 30 index of Germany's top firms, displacing local lender Commerzbank AG.

However, its rapidly appreciating share price -- at its peak last September, the stock had more than quadrupled in value over the previous two years -- along with a string of acquisitions and limited financial disclosure have helped make it a target for short sellers, who borrow stock and sell it with the goal of buying back the securities later for less money.

Its shares dropped 3.3% in European trading, after having declined more than 7% earlier in the day.

The company has been dealing with questions over its Asian accounting practices following a series of articles in the Financial Times this year. The company has denied the allegations, which related to how it records revenue and fictitious invoicing. The Singaporean police's Commercial Affairs Department later opened an investigation and seized files from the company's local offices.

The Singapore arm reported S$40 million in revenue for 2017, a relatively small part of the group, but Singapore is more important as a hub for Wirecard's business throughout Asia.

Wirecard attracted what initially appeared to be a $1 billion confidence-boosting investment from SoftBank Group in April. The Wall Street Journal reported last week that the Japanese group put no money into the deal.

Ernst & Young in October issued a so-called disclaimer of opinion for Wirecard's Singaporean accounts for 2017, as first reported by Germany's Handelsblatt newspaper on Tuesday. The subsidiary's accounts for the year ended Dec. 31, 2018, have not been filed.

The auditor said it was unable to obtain sufficient and appropriate evidence to provide a basis for an audit opinion on the 2017 statements because of the police investigation, staff turnover at Wirecard Singapore, and work by other external firms appointed to conduct an independent review.

"The outcome of these investigations may uncover other information which might require adjustments and/or additional disclosures," the disclaimer in the 2017 accounts said. The extent of any potential required adjustments isn't known, it said.

Another Singaporean unit, Wirecard Asia Holding Pte, posted 2017 accounts in February with an unqualified opinion from local auditor RSM Chio Lim.

The Singaporean issues come at an awkward time for Wirecard, which like other payments companies in the Southeast Asian city-state must apply for a license to operate next year under new regulations that come into force in January.

Wirecard and some observers expect existing operators to get a grace period to obtain that license.

Wirecard said it had no doubt the Monetary Authority of Singapore will issue it a license. It also expects to be given until the end of 2020 to complete its application.

"We do not see any direct correlation between the investigation and the license approval process, nor has the MAS made any statements to us in that regard," a Wirecard spokeswoman said.

The MAS said it was unable to comment on whether a company would qualify for a license without a full review of its application.

Wirecard added that the reporting of its 2018 financial statements for Singapore was close to completion. The Wirecard Asia Holding unit also has not filed 2018 accounts yet.

Write to Paul J. Davies at paul.davies@wsj.com

(END) Dow Jones Newswires

November 20, 2019 12:36 ET (17:36 GMT)