You are here: Home » Reuters » News
Business Standard

Exclusive: Toshiba auditor to split opinion on finances, governance - sources

Reuters  |  TOKYO 

By Taro Fuse

TOKYO (Reuters) - The auditor for Corp is likely to sign off on the conglomerate's annual while giving a thumbs down on the group's corporate governance during a series of crises, people with direct knowledge of the discussions said on Tuesday. PricewaterhouseCoopers Aarata LLC will give a "qualified opinion" endorsing Toshiba's finances in the financial statement for the year ended in March, the two sources told That would end a period of limbo when the auditor withheld its opinion as it checked problems that bankrupted Toshiba's U.S. nuclear power engineering unit in December. However, PwC will give an "adverse" statement on the company's internal controls in Thursday's results, they said.

Investors have feared an adverse statement could lead to a delisting of the 140-year-old company, complicating its ability to raise money for its cash-hungry memory-chip business and jeopardising its competitiveness.

But with the highly unusual split decision, one source said they were of the opinion that "can avoid delisting if it shows a path towards improving its internal controls."

is already barred from issuing equity as a result of its 2015 scandal.

The auditor could not be reached for comment outside business hours.

A spokesman said, "We have not received the opinion from our auditor yet. We are in talks with the auditor to submit the financial statement by the deadline."

Since taking over as Toshiba's auditor in June last year, PwC has yet to endorse the firm's financial Sources have said it was querying whether should have recognised multi-billion dollar losses at U.S. nuclear power engineering arm Westinghouse Electric Co before December.

A writedown at Westinghouse and other liabilities linked to the nuclear unit have pushed into negative shareholders' equity of $5.2 billion, forcing it to put its prized memory chip unit up for sale.

A mixed review by PwC, by allowing it to avoid a delisting, may remove one less headache for But it still faces uncertainty as talks to sell the chip business have stalled, raising concerns over whether it can plug a multi-billion-dollar balance sheet hole left by the collapse of its U.S. nuclear power business.

A qualified opinion on a company's finances means the auditor has found minor problems with the books but is still broadly vouching for them. It is below the highest grade, an "unqualified opinion."

It is unusual to issue a qualified statement in Japan, said a source at the stock exchange. A split decision giving a qualified opinion on finances and adverse opinion on governance is almost unheard of, said this source and another at the Financial Services Agency regulator.

(Additional reporting by Takahiko Wada and Makiko Yamazaki; Writing by William Mallard and Ritsuko Ando; Editing by Susan Fenton, Greg Mahlich)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Tue, August 08 2017. 19:10 IST