Scandal-tainted Japanese accounting firm Misuzu Audit, formerly known as ChuoAoyama PricewaterhouseCoopers, has disbanded after 39 years, according to Kyodo News.
The firm, founded in 1968, became one of Japan's four largest accounting firms. It took the name of Misuzu Audit last September after a scandal involving one of its clients, Kanebo, a cosmetics and textile maker.
ChuoAoyama certified Kanebo's inflated earnings statements, prompting Japan's Financial Services Agency to order the firm to suspend its auditing practice for 2,300 of its largest clients for two months. PwC set up PricewaterhouseCoopers Aarata, and many of the old firm's accountants relocated there.
Further trouble came with another auditing client, brokerage firm Nikko Cordial, which inflated its earnings for the fiscal year ending March 2005. ChuoAoyama had also audited Ashikaga Bank, a large regional bank that the FSA said had been fiddling with its financials to cover up its insolvency. In late February, another high-profile client, the electronics giant Sanyo, announced that regulators were probing its accounting practices and whether or not it underreported as much as $1 billion in losses in 2004.
Misuzu announced in May that it would disband, and since then many of its 2,400 accountants and other staff members have been leaving for the remaining three big firms in Japan. Ernst & Young ShinNihon hired 1,000, Deloitte Touche Tohmatsu Japan took on 400, and KPMG Azsa & Co. hired 280 of the firm's employees.
