Fujifilm's accounting headache spreads to Australia
More irregularities at Fuji Xerox raise governance concerns
TOKYO -- Questions over Fujifilm Holdings' corporate governance have deepened with the discovery of accounting irregularities at an Australian unit, highlighting the possibility of inadequate internal controls at the Japanese multinational.
The Japanese imaging group launched an independent investigation after discovering questionable bookkeeping of equipment leases at Fuji Xerox's New Zealand arm. Accounting problems have now been found at Fuji Xerox Australia and in Japan, according to a source.
As of mid-April, Fujifilm estimated that the New Zealand unit's accounting irregularities had masked 22 billion yen ($200 million) in losses. But the expanded investigation suggests a figure closer to 30 billion yen to 50 billion yen when similar hidden losses at the Australian unit and other operations are included. In light of the recent discoveries, the company has postponed the release of its full-year results.
Because of the complex nature of lease agreements, the exact losses have not yet been pinned down. But the irregularities in New Zealand are expected to impact not only results from last fiscal year but from earlier years as well. The group is expected to revise some past earnings statements.
Some Fujifilm directors will likely be reprimanded over the improprieties at a key subsidiary. Tough sales quotas imposed by the group's regional management company drove the book-padding, some contend.
The investigative committee is expected to submit its findings to Tokyo-based Fujifilm soon. Given that the problem was not isolated to New Zealand, the committee could highlight shortfalls in the group's overall governance structure.
Fujifilm hopes to release full-year results after receiving the report, and to hold its shareholders meeting as planned on June 29.