Olympus panel says auditors not to blame

ACCOUNTING groups KPMG and Ernst & Young have been cleared of any responsibility for a £704m accounting fraud at Japan’s Olympus, one of the nation’s worst corporate scandals, in a report issued this morning by a panel of lawyers appointed by the company.
The panel said five current and former individual auditors were responsible for ¥8.3bn (£704m) in damages.

Olympus has been found to have used improper accounting to conceal more than $1bn in investment losses under a scheme that continued for 13 years from the 1990s, when Japanese stock markets had fallen heavily and the yen strengthened markedly.

KPMG’s Japanese unit, KPMG AZSA LLC, was the firm’s external auditor until 2009 when local rival Ernst & Young ShinNihon LLC took over as outside auditor.

The roles of both firms have been questioned because they signed off on Olympus’ parent accounts despite a string of questionable deals over the last decade which were later found to have been at the heart of the cover-up.

The scandal claimed the scalp of British chief executive Michael Woodford, who was sacked by the firm after blowing the whistle.