ArrowArtboardCreated with Sketch.Title ChevronCrossEye IconFacebook IconIcon FacebookGoogle Plus IconLayer 1InstagramCreated with Sketch.Linkedin IconIcon LinkedinShapeCreated with Sketch.Icon Mail ContactPath LayerIcon MailMenu BurgerIcon Opinion QuotePositive ArrowIcon PrintRSS IconIcon SearchSite TitleTitle ChevronTwitter IconIcon TwitterYoutube Icon
Banking & Finance

Top accounting firms eyed to replace auditor

TOKYO -- Toshiba will talk with Deloitte Touche Tohmatsu, KPMG Azsa and PricewaterhouseCoopers Aarata about replacing Ernst & Young ShinNihon as its auditing firm to help clean up its image after a damaging accounting scandal.

     The Japanese company is expected to end its contract with EYSN after auditing of fiscal 2015 earnings is complete, making the switch for fiscal 2016. It has begun sounding out some firms about their interest in the position and expects to make a decision as early as spring.

     Toshiba's global network of roughly 590 consolidated subsidiaries effectively limits its options to the major players. Deloitte handles auditing for 915 companies publicly traded in Japan, putting it in second, behind EYSN's 960. KPMG Azsa has 692 listed clients and PwC Aarata 96. All of these auditing companies are affiliated with top foreign accounting firms.

     Toshiba paid 2.9 billion yen ($23.6 million) in total to EYSN and Ernst & Young in fiscal 2014. "A contract with one of Japan's leading companies is attractive," a source at a major auditor said.

     But Toshiba's internal control issues have led the Tokyo Stock Exchange to designate it a security on alert. Its auditing firm would also handle such responsibilities as improving disclosure, presenting a significant risk. The three candidates will take time to carefully consider whether to take the job.

     Listed Toshiba subsidiaries Toshiba Plant Systems & Services and Toshiba Tec also have contracts with EYSN. They, too, could switch auditing firms to the one selected by their parent.

     EYSN and forerunners have audited Toshiba for more than 60 years. The firm had around 70 employees assigned to Toshiba before the accounting scandal. This long-standing cozy relationship has been cited as a reason the profit manipulation slipped through the cracks. EYSN apparently harbors distrust of Toshiba for having lied to it about the company's books for years.

(Nikkei)

You have {{numberReadArticles}} FREE ARTICLE{{numberReadArticles-plural}} left this month

Subscribe to get unlimited access to all articles.

Get unlimited access
NAR site on phone, device, tablet

{{sentenceStarter}} {{numberReadArticles}} free article{{numberReadArticles-plural}} this month

Stay ahead with our exclusives on Asia; the most dynamic market in the world.

Benefit from in-depth journalism from trusted experts within Asia itself.

Try 3 months for $9

Offer ends September 30th

Your trial period has expired

You need a subscription to...

See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

See all offers
NAR on print phone, device, and tablet media