E&Y to examine its involvement with Olympus

THE JAPANESE arm of Ernst & Young is to set up an external committee to investigate its audit of scandal-ridden Olympus.

The move follows a separate probe into an accounting scandal at the camera maker, which raised issues with its audit and work done by a previous auditor.

Ernst & Young ShinNihon said it has conducted an internal review of its Olympus audit and believes there were no problems, but decided to seek an external opinion given the scale of attention on the scandal.

The committee, which includes a former prosecutor, may report its findings this month.

This week an independent panel issued a damning report on a $1.7bn (£1bn) accounting scandal at Olympus, urging legal action against executives responsible for covering up securities losses dating back to the 1990s.

In its report, the panel also raised questions about whether the two auditors involved – Ernst & Young took over as Olympus’ auditor in 2009 from KPMG AZSA – could have done a better job in monitoring the firm's accounting. Olympus has lost more than half its market value since the scandal broke nearly two months ago.