Trade Receivables versus Cash and Cash Equivalents

Wirecard’s business with third-party acquirers (TPA) was operated using escrow accounts. Technically, the question arises as to how Wirecard was supposed to report the assets resulting from this transaction on the balance sheet. The dispute over the correct presentation often leads to misunderstandings in the definition of cash and cash equivalents. Above all, it is sometimes overlooked that collateral that is transferred still has to be accounted for by the security provider. The asset on balance remains the same. However, additional information in the notes is mandatory, which Wirecard has not complied with. We look at the question of accounting, assuming that Wirecard had control over the assets, and consider whether they should be recognized as trade receivables or as cash and cash equivalents.