Troubled Japanese electronics company Toshiba is believed to be seeking to replace its auditor after current incumbent Japan based PwC Arata said it was unwilling to sign off on the company’s accounts over issues related to its US nuclear reactor subsidiary Westinghouse Electric, which is filing for bankruptcy
Earlier in April, Toshiba was forced to reveal that PwC Arata has issued a disclaimer to its reporting of the company’s accounts for the third quarter of 2016, which had been considerably delayed, and that there were also concerns over the previous two quarters reporting.
PwC Aarata said that there were suggestions that the internal controls related to the purchase price allocation process for Westinghouse’s acquisition of Stone & Wester were inadequate.
Toshiba’s audit committee brought in a law firm to investigate, but PwC Arata said it was still evaluating the results of this.
According to information provided to the Tokyo stock exchange, evaluation items include the period when Toshiba and Westinghouse recognised the need for an impairment loss on construction costs, which affected Toshiba’s consolidated balance sheet.
Along with other items to be evaluated, PwC Arata was not able to define the impact, and was not able to evaluate the conclusion reached by the committee or determine whether there is any need for correction.
Toshiba says that its committee did not find evidence of any need to recognise an additional impairment loss in any accounting period prior to the third quarter of 2016, but admits that PwC Arata has said it cannot finalise its evaluation of this conclusion.
As its third quarter report is already severely delayed, Toshiba has gone ahead with submitting it without certification by PwC Arata and says it intends to announce its full-year financial results for 2016 in mid-May.
The company has taken a $6.3bn (£4.88bn) writedown on its US nuclear subsidiary, which filed for Chapter 11 bankruptcy protection in late March.
Toshiba has already been through a $1.3bn accounting scandal in 2015, as a result it replaced EY ShinNihon as its auditors with PwC. Media reports suggest the company is now looking for a mid tier auditor to take over, as it cannot reconcile its differences with PwC, and Deloitte Touche Tohmatsu and KPMG Azsa, the other two of the Big Four, faced potential conflicts of interest due to past business deals.
PwC has made no comment.
