Toshiba switching auditors to file earnings that pass muster
Conglomerate scrambling to reduce delisting risk
TOKYO -- Toshiba has decided to drop its current auditing firm in an effort to avoid having to submit a full-year financial statement without the auditor's blessing.
Toshiba has clashed with PricewaterhouseCoopers Aarata over governance at Westinghouse Electric and massive losses stemming from the American nuclear subsidiary that came to light in December. At the auditor's request, Toshiba's auditing committee commissioned a third-party law firm investigation into the issues.
The roughly three-month probe found nothing necessitating revisions to earnings from previous fiscal years. But PwC Aarata contends that further investigation is needed, expressing doubts regarding the sudden discovery of the massive nuclear-related losses.
The auditor declined to sign off on Toshiba's earnings for the nine months ended Dec. 31, giving the Tokyo Stock Exchange potential grounds for delisting Toshiba. The bourse will look into PwC Aarata's reasoning and the circumstances surrounding its decision not to approve the earnings. This comes on top of a TSE examination of Toshiba's internal controls to determine whether to take the troubled company off a watch list.
Toshiba will face delisting if the results of either review prove unsatisfactory. Failing to receive auditor approval for full-year results would certainly not help the company's case. Toshiba hopes to avoid a delisting by working with a new auditor toward getting its stamp of approval. The company is in talks with second-tier auditing firms with which it has no potential conflicts of interest.