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The Japanese Institute of Certified Public Accountants (JICPA) issued a statement expressing regret from the standpoint of capital market credibility after PwC Japan LLC declined to express an audit opinion on Nidec Corporation’s Annual Securities Report for the fiscal year ended March 2026. Nidec’s filing was delayed by three months after accounting fraud—including profit inflation and deferred expense recognition—came to light. PwC Japan withheld its opinion citing that some officers and employees involved in the fraud remain at the company in positions of responsibility over <a href="https://bitcomme.com/ai-marketing-adoption-gap-costs-financial-firms-revenue/” title=”AI marketing adoption gap costs financial firms revenue”>financial reporting. The Institute stated it will continue to take necessary actions regarding audit execution going forward.
Key Elements
The Japanese Institute of Certified Public Accountants (JICPA) issued a statement on October 2 expressing that it finds it “regrettable from the standpoint of capital market credibility” that PwC Japan LLC, a member firm, issued a disclaimer of opinion on the Annual Securities Report of major motor manufacturer Nidec Corporation (6594.T) for the fiscal year ended March 2026.
The Institute explained that the comment is not intended to criticize any specific audit firm by name, but rather represents its view on the overall current situation. It added that it “will continue to take necessary actions regarding the status of audit execution,” signaling its commitment to ensuring audit quality among its members.
Following the revelation of accounting fraud, Nidec submitted its Annual Securities Report for fiscal year ended March 2026 on September 30—three months past the original filing deadline. However, PwC Japan, the firm responsible for the audit, declined to express an audit opinion, citing that some officers and employees involved in the fraud remain at the company and hold positions of responsibility in the financial reporting process.
At a press conference on October 1, Masataka Kubota, Representative Executive Officer of PwC Japan, explained the circumstances leading to the disclaimer, stating that audit evidence obtained from officers and employees who had made false representations “simply cannot be trusted.”
Response to a String of Accounting Scandals
In April of this year, JICPA had already announced a policy to “closely monitor the status of audit execution to ensure members fulfill their responsibilities,” in response to a series of accounting scandals uncovered at multiple listed companies. The latest comment is positioned as an extension of that stance.
The fraud uncovered at Nidec includes profit inflation and the deferral of expense recognition. While the company did submit its Annual Securities Report, the situation is highly unusual in that it was unable to obtain an opinion from its audit firm.
Impact on the Market
A disclaimer of audit opinion means that the reliability of a listed company’s financial information is not assured, significantly impairing the basis for investor decision-making. With JICPA officially expressing “regret,” efforts to restore trust across the audit industry may accelerate going forward.
Although Nidec’s Annual Securities Report has been filed, it carries no audit opinion, forcing investors to independently assess the reliability of the company’s financial statements. With an urgent need to rebuild the company’s governance structure and internal controls, the focus going forward will be on repairing the relationship with its audit firm and the effectiveness of recurrence-prevention measures.
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