Leading accounting firm ChuoAoyama PricewaterhouseCoopers on Saturday suspended some of its operations through the end of August for failing to prevent Kanebo Ltd. from releasing falsified earnings reports.
ChuoAoyama was ordered May 10 by the Financial Services Agency to halt statutory auditing service for listed companies and those capitalized at 500 million yen or more for two months starting from July 1. The companies include insurance houses and credit unions.
The company now faces the challenge of convincing clients not to give up on its services, analysts say.
PricewaterhouseCoopers, ChuoAoyama’s longtime ally, set up a new auditing company in Japan in mid-June, prompting some of ChuoAoyama’s client corporations to think of seeking the new company’s services.
The new company, named Arata, was seen initially as becoming a sister company of ChuoAoyama, but it appears now that it will become a rival, analysts say.
Toyota Motor Corp., one of ChuoAoyama’s blue-chip clients, is considering moving on to the new firm, informed sources said, adding Sony Corp. may follow suit.
Millea Holdings Inc., the nation’s leading nonlife insurer, has already decided to go with Arata during ChuoAoyama’s suspension. Millea has not decided whether it will renew its contract with ChuoAoyama even after the penalty period is over.
The FSA found earlier this year that three accountants who worked at ChuoAoyama had certified Kanebo’s falsified financial reports for five business years through March 2003.
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