Japanese technology company Fujifilm Holdings Corp has admitted that the financial impact of accounting irregularities it has recently uncovered will be 70% higher than its original estimate, after it found problems at a second subsidiary, in Australia, as well as existing issues with its New Zealand operation
The company says losses arising from the incorrect treatment of leasing operations over a six year period now total ¥37.5bn (£270m), compared to the initial total of ¥22bn.
In April Fujifilm, which manufactures cosmetics and medical products as well as its copiers and photographic lines, postponed the release of its earnings reports for the year ended in March and set up an independent panel to investigate the lease transactions by Fuji Xerox New Zealand Ltd. in the business year to March 2016 and earlier.
This investigation has now found that its Australia unit also booked some leasing transactions inappropriately. The problem is believed to relate to the use of financial incentives which encouraged management and staff to book sales earlier than they should, which artificially inflated the company’s income.
Fujifilm said in a statement that the accounting issue affected profit booked from the year through March 2011 to the year ended March 2016, but that the impact on earnings for the year just ended ‘was minor’.
The company’s chief executive officer Shigetaka Komori and chief operating officer Kenji Sukeno are to have a 10% pay cut for three months, while senior executives at its New Zealand subsidiary will resign.
Fujifilm said it has plans to improve management practices and corporate governance, including increasing the proportion of outside directors on the board. It also said the investigation did not find evidence of inappropriate accounting practices beyond the New Zealand and Australia units.
This is the latest in a string of accounting scandals to touch top Japanese companies, with Toshiba and Olympus also reporting serious problems in recent years.
