The refusal by Ashikaga Bank's auditor to recognize deferred tax assets, or future tax credit, as part of the bank's capital was appropriate, a top public accountant said Thursday.
Ashikaga Bank's auditor had no choice but to reject all of the bank's DTA when it audited financial statements for the half year to Sept. 30, Akio Okuyama, president of the Japanese Institute of Certified Public Accountants, told a hearing of the House of Councilors Committee on Financial Affairs.
The hearing took place following the government's temporary nationalization of Ashikaga Bank last month, after the regional bank was deemed insolvent with a negative net worth. A similar hearing was held Wednesday at the House of Representatives.
Ashikaga Bank, based in Utsunomiya, Tochigi Prefecture, fell into negative net worth after the auditor refused to recognize all of its DTA as capital.
During the day's hearing, Yoshiaki Higano, former Ashikaga Bank president, reiterated his criticism of the auditor's decision, claiming that Ashikaga Bank had proper grounds for counting some 120 billion yen in DTA as part of its capital.
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