TOKYO -- Toshiba will have its current auditor handle its earnings for the fiscal year ended March 31, as its search for a replacement has run aground while the reporting deadline looms, it was learned Wednesday.
PricewaterhouseCoopers Aarata has butted heads with Toshiba over issues related to massive losses at former U.S. nuclear unit Westinghouse Electric. The dispute forced the Japanese conglomerate to twice postpone releasing earnings for the April-December period. The statement finally came out April 11, but with a disclaimer of opinion from PwC Aarata, indicating the auditor cannot certify that the information is accurate.
This prompted Toshiba to look for a new auditor, focusing on second-tier firms with which it would have no conflicts of interest, but negotiations proved difficult. With the deadline for submitting full-year earnings swiftly approaching, the company apparently decided to have PwC Aarata handle the audit. It will continue searching for a replacement for fiscal 2017.
Toshiba plans to release on Monday an outline of last fiscal year's results and the state of its auditing problems. The Tokyo Stock Exchange requires listed companies to submit preliminary financial statements within 45 days of their fiscal year-end. These reports can be released without an auditor's opinion. Toshiba hopes to meet this deadline to help gain the understanding of investors, suppliers and customers.
Whether the announcement will take place as planned remains up in the air, however, as the company is believed to be consulting with PwC Aarata about the matter.
Even if the preliminary report is released on time, Toshiba will still have to get the auditor to sign off on an annual securities report due by the end of June. The company is on a TSE watch list due to concerns over the adequacy of internal control systems. The quarterly report on which PwC Aarata refused to sign off was a basic disclosure and thus relatively unimportant. But failing to get the auditor's approval for the full-year securities report would count more heavily against Toshiba in the bourse's decision on possible delisting.
PwC Aarata has reportedly agreed to audit Toshiba's earnings only under certain conditions, including further investigation into the Westinghouse problems. Ironing out these issues is likely to take some time. Toshiba may submit a request soon to the Financial Services Agency to extend the securities report deadline beyond June. Some company insiders say the final report may not come out until around September.