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Shiseido plans to dump ChuoAoyama as its auditor

Shiseido Co, Japan's biggest cosmetics maker, said it plans to change its auditor to KPMG Azsa & Co from Pricewaterhouse-Coopers' local unit after that accounting firm was penalized by regulators.

The company will seek to win approval for the change at a shareholders' meeting in June, Tokyo-based Shiseido said in a released on Friday.

Shiseido recognizes it's important for its auditor to maintain "independence and impartiality," the company said in the statement.

The Financial Services Agency on Wednesday ordered ChuoAoyama PricewaterhouseCoopers to halt part of its operations from July to Aug. 31, citing the accountancy firm's audit of Kanebo Ltd, a cosmetics maker which last year had to restate profits as losses for four of the five years through March 2004.

Three of its former accountants pleaded guilty in March to falsifying financial statements.

Toyota Motor Corp, the world's biggest automaker by market value, Sony Corp and Nippon Steel Corp are some of the 5,500 companies that use ChuoAoyama. Under the terms of the suspension, the company will be allowed to audit clients that close their books last month and this month.

The Sankei newspaper said yesterday that Shiseido was the first major client to drop the auditor since the punishment was announced.

PricewaterhouseCoopers, the world's largest accounting firm, said on Wednesday that it would create a new Japanese unit to retain clients such as Toyota.

In April 2004, KPMG International, the world's fourth-biggest accounting firm, formed Azsa with the addition of Asahi & Co, a former unit of Andersen Worldwide. Azsa's auditing clients include NTT DoCoMo Inc, Japan's biggest mobile-phone company, and Sumitomo Corp, Japan's third-biggest trading company.
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