The Financial Services Agency has issued a business-suspension order to ChuoAoyama PricewaterhouseCoopers, a major auditing firm, over its failure to check three of their certified public accountants involved in falsifying accounting reports for Kanebo Ltd., once a leading textile and cosmetics maker.
ChuoAoyama is the only one of the nation's top four auditing firms to receive such an order so far.
The FSA's action came at a time when CPAs' involvement in a series of report-falsification episodes with firms listed on the stock market has led to public loss of trust in auditing firms and the nation's auditing services in general. The role of auditing firms is important in ensuring the accuracy and credibility of financial statements, which are the basis for the healthy operation of the stock market and the market economy. The agency's decision is reasonable.