Germany is set to overhaul its accounting industry as part of measures to soften the fallout from the collapse of payments fintech Wirecard last week.

Wirecard, which premiered on Germany’s main Dax index with a €24bn (£21.8bn) valuation just two years ago, filed for insolvency last week after auditors found a €1.9bn black hole in its accounts.

The German government today said it will terminate its contract with the Financial Reporting Enforcement Panel – the country’s accounting watchdog — as early as tomorrow, the Financial Times reported, as the country seeks to cushion the damage of the Wirecard debacle.

Jorg Kukies, Germany’s deputy finance minister, told the FT that the Wirecard affair showed “self-regulation by the auditors doesn’t work properly”.

German regulators have faced criticism that they did not sufficiently supervise the German fintech, after auditor EY failed to request account information from a Singapore bank relating to the missing €1.9bn for more than three years.

Big Four accounting firm KPMG was hired to conduct a special audit into Wirecard’s finances last year, resulting in an inconclusive report. In April, KPMG failed to verify that large chunks of Wirecard’s business, in addition to €1bn in company cash, actually existed.

Chancellor Angela Merkel said the Wirecard case was “alarming”, while finance minister Olaf Scholz described it as “a scandal which is most unprecedented in the world of finance”.

Senior figures have long called for reform within the accounting industry, after a series of high-profile accounting blunders involving companies such as Enron, Tesco and Carillion.

The UK’s independent accounting regulator, the Financial Reporting Council, last year found that more than a quarter of UK audits fell short of quality thresholds.

Simon Bittlestone, chief executive of financial analytics technology firm Metapraxis, told City A.M: “Wirecard’s plunge poses a really broad question around how in 2020 we can still have accounting failures that orientate around cash at the bank not being present. It is just madness.”

“The solution requires the model to change, and become more technology-based,” he added. “Part of the problem is that the audit firms are still relying on people to do the audits. Until we see that we’ll still see fraud and accounting failures causing all sorts of challenges.”