Toshiba narrowly escapes delisting as PwC finally signs off on accounts

PwC has signed off on Toshiba’s accounts, ending a prolonged period of uncertainty during which the auditor withheld its opinion on the Tokyo-based tech giant’s financial statements. With this sign off, Toshiba has avoided being delisted from the Tokyo Stock Exchange.

Toshiba missed the deadline for submitting its financial results in May and received an extension from regulators.

In April, Toshiba filed its results for October – December 2016 without PwC’s sign off when the auditor said it was unable to form an opinion on the results.

This stemmed from a disagreement over loss recognition of one of the company’s subsidiaries, US nuclear power engineering company Westinghouse Electric Co, which led to a multi-billion dollar writedown.

Although the tech giant’s financial statements for the year ending in March and quarter ending in June have now been signed off on, PwC gave a “qualified opinion”, meaning it found some minor problems. PwC’s “adverse opinion” related to Toshiba’s internal controls in reference to the Westinghouse issue.

A statement from Toshiba stated that after a carrying out independent investigations “no evidence was found indicating that Toshiba or Westinghouse could have recognized the loss at any time prior to the third quarter of FY2016.”

“Toshiba considers that its internal controls on processes for financial results worked effectively, allowing it to submit its Internal Controls Report to the Kanto Finance Bureau today, but PwC Arata nonetheless expressed an adverse opinion”, the statement added.

The company has reported a loss of $8.8bn (£6.7bn) for the last fiscal year.

The 140 year-old tech giant has had a recently chequered history, navigating several scandals and losses.

In 2015 it was found that the company had inflated its profits for seven years by $1.22bn (£780m). Toshiba was then slapped with a £494,000 fine by the Tokyo Stock Exchange, barred from issuing equity, and the scandal led to the resignation of several senior members including CEO Hisao Tanaka. Its auditor at the time, EY, was also fined 2.1 billion yen ($17.4 million) by Japan’s regulator for failing to note these irregularities.

The beleaguered conglomerate was hit by yet another scandal earlier this year, when in January it was alleged that senior management played a role in the padding of profits by ¥40bn ($339m) over a three-year period.

Receiving sign off from PwC gives some respite to Toshiba following an inordinately turbulent period, but if it reports negative net worth again next year it will once again face being delisted from the Tokyo Stock Exchange.

Earlier this month PwC was fined $1m over Merrill Lynch audit.

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