Business

Misuzu Audit disbands after 39 years, scandals

Kyodo News

Misuzu Audit Corp. terminated operations at midnight Tuesday, ending the 39-year history of a firm that has had several name changes, in the wake of several major accounting scandals in which some of its employees were involved.

The surviving liquidator entity will take care of ongoing litigation and other remaining work.

Of some 2,400 certified public accountants and other employees who were with Misuzu at the end of March, 1,000 will work at Ernst & Young ShinNihon, 400 at Deloitte Touche Tohmatsu Japan, and 280 at KPMG Azsa & Co. Most have already been transferred to their new employers, according to Misuzu.

The firm was founded in December 1968 and used to be one of Japan’s top four accounting firms.

In 2005, however, some of its accountants were arrested on suspicion of cooperating with cosmetics and textile maker Kanebo Ltd., which window-dressed its accounts. Consequently, the Financial Services Agency ordered Misuzu to suspend part of its operations in 2006.

The company subsequently adopted its current name in an effort to start afresh following the scandal. Its name until then was ChuoAoyama PricewaterhouseCoopers.

Misuzu’s credibility was hurt again by another accounting fraud that came to light later that year at its client Nikko Cordial Corp.

The brokerage had inflated its consolidated earnings for its business year through March 2005 even though Misuzu had put a stamp of approval on Nikko’s financial statement for the year.

The situation triggered an exodus of staff from Misuzu and the company decided in May that it should disband.