Japanese company, Toshiba, which has been restructuring after admitting accounting failures in 2015 has published its annual report for 2016 after receiving a qualified opinion from its auditor, PWC Arata, which meant the firm avoided being delisted from the Tokyo Stock Exchange.
Toshiba stated that the auditor gave its qualified opinion because it said it had limited information over certain accounting issues. The auditor also gave a qualified opinion to the first quarter results published by the company because it said comparison with the same period in previous years could lead to errors. Toshiba said it was disappointed by the opinion of the auditors which related specifically to the timing of the recognition of losses incurred in relation to the acquisition of CB&I Stone & Webster by its former subsidiary Westinghouse Electric. Toshiba said it believes it reported all the information it had by March 2016 in its 2015 annual results but this is questioned by PWC Arata. There was also a dispute about the figures relating to the building of nuclear plants.
The company has also submitted its internal control report to the Kanto Local Finance Bureau believing that its internal control processes for the financial reporting worked well but the auditor did not agree producing an adverse opinion on this.
Toshiba has been struggling to rebuild its business credibility since it admitted internal control problems relating to the reporting of infrastructure projects in 2015, following a Securities and Exchange Surveillance Commission investigation, which led the Tokyo Stock Exchange (TSE) to place its stock as a security on alert in September 2015. This followed the publication of a report of a independent investigatory committee which reported in July that year. The TSE said the committee had found multiple failings with the company due to management’s pursuit of short-term profits. With Toshiba’s business divisions under pressure to deliver these profits the TSE said they responded by conducting inappropriate accounting. At the same time the TSE said the divisions that should have monitored this activity, such as the finance division and the corporate audit department, did not function adequately. In December 2016 the TSE said Toshiba remained as a security on alert and had ordered the company to release its annual report by March 2017 but then gave the company an extension until August.
Toshiba, meanwhile has restructured with former in-house companies now operate as independent corporations. Toshiba’s website stated: “The new companies are focused on maximizing value and enhancing direct accountability to the market and customers, and strengthening cooperation with their group companies…In parallel with this, Toshiba Corporation is now focused on maximizing the corporate value and enhancing governance for Toshiba Group as a whole.”
Last Updated: 13 August 2017