Members of the Securities and Exchange Surveillance Commission are calling for an investigation to be opened into Toshiba Corp.'s fiscal 2016 results, claiming they contain significant misstatements, sources close to the matter said Saturday.
They have distributed a statement urging its officials to quickly begin examining Toshiba's latest results, in which the scandal-ridden company booked huge losses from its now-bankrupt U.S. nuclear unit Westinghouse Electric Co.
Without an investigation, the members of Japan's securities watchdog warn that the credibility of Japan's securities market will be affected.
In August, Toshiba submitted its long-delayed financial results for fiscal 2016 after its auditor, PricewaterhouseCoopers Aarata LLC, issued an "opinion with qualifications" on its annual report, meaning the figures are presented fairly overall and that only minor problems exist.
The auditor, however, issued an "adverse opinion" on Toshiba's internal controls since the company overlooked massive losses related to Westinghouse.
PwC Aarata said in its auditor report attached to Toshiba's annual financial statement that the firm "should have booked a respectable degree or all" of the massive losses from the nuclear unit in fiscal 2015, not the following year.
The concerned SESC members insist that an "opinion with qualifications" should be interpreted as meaning Toshiba's accounts have "material misstatements partially." They also say such an opinion should not be left unquestioned, the sources said.
Members of SESC make the final judgment on whether it is necessary to recommend charges or criminal complaints. It is extremely rare for members to urge officials to open investigations, and the officials have taken a more cautious view toward quickly launching an inspection.