Exclusive: Olympus removed auditor after accounting
By Nathan Layne and Kirstin Ridley
TOKYO/LONDON (Reuters) - Japan's Olympus Corp replaced its auditor in 2009 after a disagreement over how to account for several acquisitions, but it decided not to reveal the dispute to investors, an internal document shows.
Olympus has lost 55 percent of its market value since its former chief executive blew the whistle on a series of strange deals over the past five years, including the payment of a massive $687 million advisory fee.
In May 2009, Tsuyoshi Kikukawa, the then president of the camera-maker and medical equipment firm, announced that the contract for its then auditor, KPMG, had ended and that another global accounting firm, Ernst & Young, would take over.
Kikukawa made no mention of any row with KPMG, although Japanese disclosure rules require companies to notify investors of "any matters concerning the opinions" of an outgoing auditor.
In a confidential internal document, Kikukawa wrote to executives in the United States and Europe, revealing that there had been a disagreement with KPMG which he did not plan to disclose to the stock market.
"The release to be published today says that the reason of this termination is due simply to expiry of accounting auditors' terms of office," Kikukawa said in the letter dated May 25, 2009, which was written in English.
"I, however, would like to personally tell both of you about the circumstances behind this decision for your understanding."
Kikukawa outlined a rift between management and KPMG over the goodwill impairment of some consolidated firms and over its $2.2 billion purchase of UK medical device firm Gyrus in 2008. Continued...