Four years after the world's fifth-largest accounting firm was toppled by the Enron scandal, one of the "big four" is racing to avert a crisis of confidence in Japan over a case of financial fraud.
ChuoAoyama Pricewater-houseCoopers, one of Japan's leading accounting firms, was ordered by the financial watchdog to halt statutory auditing services for its largest clients for two months from July.
The unprecedented penalty is to punish the firm for certifying the earnings results of Japanese cosmetics company Kanebo, which admitted last year that it had falsified financial statements for several years.
Japan's Financial Services Agency on Wednesday ordered ChuoAoyama PwC to halt auditing services for listed companies and those capitalized at ¥500 million (US$4.56 million) or more, affecting some 2,300 client companies.
The fallout has revived memories of the collapse of the case of Arthur Andersen, the Chicago-based accounting firm shut down after its 2002 conviction for shredding documents related to Enron, the scandal-hit energy giant.
If the ChuoAoyama PwC fails, Japan will be left with just three major accountancy firms.
US-based Pricewaterhouse-Coopers, which has linked up with ChuoAoyama, has said it will set up a new auditing firm in Japan.
However, the Japanese Institute of Certified Public Accountants has urged its members to refrain from poaching customers or accountants away from ChuoAoyama PwC.
Experts say it will also be difficult for companies to switch auditors in any case, not least because of a shortage of qualified accountants in Japan.
Even so the embattled auditing firm faces an uncertain future.
"It is a big issue that the credibility of the accounting was lost as people who have interests in a company have to rely on professionals such as accountants or audit corporations," said Toshiaki Katsushima, a professor at Waseda Graduate School of Finance, Accounting and Law in Tokyo.
The choice of July and August for the suspension appeared to have been aimed at minimizing the impact on major companies' earnings reports, he said. Most big Japanese companies end their financial year in March.
"The companies that ChuoAoyama PwC audits may be exposed to the risk of losing trust as they continue to be audited by ChuoAoyama," Katsushima said.
One of the auditor's largest clients, Toyota Motor Corp, has said it will consider whether to terminate its contract after studying the effect of the suspension order on auditing work.
ChuoAoyama PwC's chairman and chief executive Akio Okuyama has announced he will resign to take the blame for the firm's role in the Kanebo scandal.
A Japanese court in March convicted a former president of the cosmetics company and his deputy for lying to cover up massive debts but let them walk free with suspended prison terms.
Three accountants who worked at ChuoAoyama at that time pleaded guilty in March to falsifying Kanebo's financial statements.
"A capitalist economy is based on trust," said Tatsuya Mizuno, a director at the credit ratings agency Fitch Ratings. "The measure taken by the financial authority signals that betraying that trust cannot be forgiven and aims to send a warning to all the others."
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained