EY has lashed out at Germany’s audit watchdog for prematurely reporting suspected criminal misconduct by its partners to prosecutors in an escalating battle over the Big Four firm’s audit work at defunct payments company Wirecard.

Wirecard collapsed into insolvency in June in one of Europe’s biggest postwar accounting frauds after receiving “all clear” audits by EY for more than a decade.

Apas, the German audit watchdog, told criminal prosecutors in late September that three current and former EY partners may have acted criminally. It suspected that EY partners were aware of issuing a “factually inaccurate” audit for Wirecard in 2017.

On Thursday, EY accused Apas of rushing to conclusions. “In our opinion, we have not been sufficiently granted the legal right to be heard in this case so far,” EY Germany said in a public statement. “Up to this day, we have not been able to comment,” it added.

EY also stressed that the Apas letter to prosecutors only provided a “preliminary assessment” and “does not signify a conclusion or confirmation of any offences”.

Munich prosecutors are reviewing the allegations raised by Apas and have not yet decided whether they will open a formal criminal investigation. The potential misconduct that the watchdog flagged can be punished with up to three years in jail, if proved.

EY’s response to Apas marks the latest escalation of an increasingly acrimonious dispute among investors, politicians and regulators.

EY argued that it filed a 316-page document and more than 3,000 pages of “supporting documents” to Apas on September 17 in response to detailed questions it received in June. EY has criticised the fact that the watchdog sent its letter to prosecutors just six working days later, pointing out that its complex arguments could not have been taken fully into account within such a short period of time.

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Apas did not immediately respond to a request for comment.

Cansel Kiziltepe, an MP for the Social Democratic party, accused EY of “finger-pointing at others”. She said that instead of “blaming Apas and presenting itself as a victim, EY should rather evaluate its own mistakes”.

EY is facing an avalanche of lawsuits from Wirecard shareholders who lost billions in the company’s collapse.

EY last week came under fire from German MPs for refusing to give testimony to the parliamentary inquiry commission, as it argued it had not been properly released from confidentiality obligations.

Two EY partners were fined €1,000 each by the parliamentary committee and have this week appealed against that decision at Germany’s highest court.

EY said this move was intended to deliver “a legally effective release from [our] confidentiality obligations” as it was “keen to contribute comprehensively to the clarification of all facts”.

Florian Toncar, an MP for the liberal Free Democrats and a former lawyer at Freshfields, stressed that EY’s view on confidentiality laws was highly controversial and rejected by all members of the parliamentary committee. “As a consequence of EY’s [refusal to give testimony], others like Apas and KPMG are now shaping the auditor’s perception. This really cannot come as a surprise to EY,” he said.

Via Financial Times