Not even a year after pledging to stand by the side of its Japanese affiliate, PricewaterhouseCoopers announced that the doors to its Misuzu Audit Corp. firm would close, after revelations of the unit’s ties to a second scandal surfaced.
Misuzu, one of Japan’s Big Four accounting firms and part of PwC, said that it faced penalties stemming from its work for brokerage house Nikko Cordial, which faces record fines for accounting fraud, and possible delisting by the Tokyo Stock Exchange.
Until recently, Misuzu had operated under the ChuoAoyama Audit Corp. name. Last summer Japan's Financial Services Agency ordered the firm to halt its audit operations for two months after several auditors were linked to financial fraud at a major cosmetics manufacturer. Shortly after the punishment was handed down in May, PwC announced that its new Japanese accounting affiliate, Aarata, would open for business by July.
As of June, ChuoAoyama had been responsible for auditing the financial statements of more than 5,500 companies and employed about 2,500 workers.
According to Reuters, ChuoAoyama’s closing will leave the world’s largest accounting firm with a significantly smaller presence than its rivals in the world’s second-largest economy. When Aarata opened in July 2006, its chief executive said that the company had about 80 partners and its planned expansion would see the firm’s staff grow to about 1,700 by 2010.
Just last week, PwC announced a deal for the firm to take over the tax practice unit of an Indian financial services firm to create the largest accounting firm in that country.
