PwC’s Japanese firm forced to suspend audit work

The Japanese unit of PricewaterhouseCoopers – Chuo Aoyama PwC – has been
ordered to suspend auditing services for its bigger corporate clients for two
months following its work as auditor at cosmetics company, Kanebo.

In the first such decision of its kind, Chuo Aoyama PwC was suspended by the
Financial Services Agency for having allegedly lax internal controls that
contributed to an accounting fraud at Kanebo, which was bailed out by the
government-backed Industrial Revitalisation Corporation.

This follows three PwC auditors having been arrested for allegedly
‘willfully’ certifying Kanebo’s false accounts for a period of five years.

The decision has thrown the accounting profession in Japan into turmoil as
PwC audits over 2,000 companies including such major clients as Toyota, Sony and
Nippon Steel.

These companies have now been forced to find a new auditor

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