PwC splits work in Japan
PricewaterhouseCoopers' new firm in Japan is to work alongside disgraced Chuo Aoyama in a new and unusual structure
PwC moved this week to try to contain the problems it has had in the country,
after its Japanese affiliate Chuo Aoyama was handed a two month ban on auditing,
raising concerns about the future of big-ticket audits.
Chuo Aoyama PwC will now focus on the audits of local Japanese companies,
while the new firm, which has yet to be named, will run the audits of large
multinationals.
Japan’s Financial Services Agency imposed the ban on Chuo Aoyama PwC after
three of the firm’s auditors were arrested for allegedly certifying false
accounts at consumer products giant Kanebo.
As news of the ban emerged, PwC immediately said that it would support Chuo
Aoyama but added that it would establish a new Japanese practice by July,
putting the future of Chuo Aoyama in doubt.
A spokesman for PwC International, however, told Accountancy Age
that the new Japanese firm will operate in tandem with Chuo Aoyama.’Our
objective is to create two strong firms in Japan by segmenting the market. Chuo
Aoyama will audit Japanese companies with minimal international operations’.
‘The second PwC firm will handle the client base of multinationals with
operations in Japan and large Japanese corporations,’ the spokesman said.
The firm also played down the impact of the Chuo Aoyama ban, saying that the
sanction did not affect international clients and provided other exemptions.
‘This is a significant suspension – but the sanctions have notable
exceptions. They do not apply to the reporting requirements of international
clients or foreign private issuers,’ the spokesman said.
He said that there were further exceptions for companies with Japanese year
ends and universities. ‘This is not a total ban,’ he said.
Despite these exceptions, Chuo Aoyama has already lost major clients,
including Shiseido, the world’s fourth biggest cosmetics company.
In the UK, companies such as Unilever and Reuters, which are audited by PwC
and have operations in Japan, have given no indication that they will change
auditors following the Chuo Aoyama censure.