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Japan-Update

Toshiba auditor faces probe over earnings dispute

Move follows decision not to sign off on group's latest figures

| Japan

TOKYO -- A self-regulatory body for Japan's accounting industry will look into PricewaterhouseCoopers Aarata after the auditor declined to certify Toshiba's results for the nine months through December 2016.

The audit review committee of the Japanese Institute of Certified Public Accountants will begin looking into PwC Aarata's auditing process shortly, deeming the case serious enough in terms of its impact on the public to warrant a review. This is expected to involve testimony from accountants assigned to Toshiba as well as a close examination of reports the firm has produced.

PwC Aarata took the unusual step of withholding an opinion on the struggling Japanese conglomerate's April-December earnings figures, as well as on reports for the April-June and July-September quarters. The auditor has said it is still evaluating the results of investigations into accounting practices and internal controls at the group's U.S. nuclear power operations, and therefore cannot confirm the conclusions reached by Toshiba's own audit committee.

If the JICPA's investigative panel gives PwC Aarata's practices the all-clear, the matter will be closed. But if a more detailed probe is deemed necessary, the group's disciplinary board could be called in to look into possible violations of rules for auditors and CPAs. Punishments range from from a simple warning to expulsion from the JICPA. If any violations are construed to be malicious, the organization will ask the Financial Services Agency impose its own penalties.

The JICPA continues to investigate Ernst & Young ShinNihon, Toshiba's previous auditor, for failing to detect years of improper accounting that came to light in 2015. No detailed results from that probe have yet been made public.

(Nikkei)

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