The Yokohama-based accounting firm that audited the books of indicted Internet firm Livedoor Co. is planning to disband in late June, company officials said Tuesday.
A growing number of Koyo & Co.’s clients have declined to renew their contracts after it was revealed the company was responsible for certifying Livedoor’s earnings report for the business year through September 2004, which prosecutors suspect was fraudulent.
Koyo has agreed to terminate contracts with almost all of its clients by Tuesday, the officials said.
“We have lost our raison d’etre as an accounting company,” a Koyo official said.
Livedoor and five of its former executives were charged on March 14 with falsifying the company’s financial results.
According to the indictment, Livedoor stated it had a group pretax profit of 5.03 billion yen for the 12-month period in question, when it actually suffered a pretax loss of 312.78 million yen.
Koyo’s dissolution will be the first time since 2002 that an accounting firm has disbanded due to involvement in a criminal case.
In 2002, Kobe-based Mizuho Audit Corp. folded following a Financial Services Agency order to suspend its business for a year for certifying the books of Osaka-based trucking firm Footwork Express Co., which was determined by the financial watchdog to have posted bogus sales.
Investigative sources said prosecutors are considering filing criminal charges against Koyo’s accountants for allegedly certifying Livedoor’s financial report for the year to September 2004 despite knowing its figures were faked.
The Koyo case follows the indictment last October of three accountants at ChuoAoyama PricewaterhouseCoopers for certifying the doctored earnings reports at cosmetics maker Kanebo Ltd.