Ernst Young flounders on accountant’s sea

shipwreck-1854The Japanese accountants Ernst & Young are wondering how on earth they let through such a pile of old Tosh when it came to Toshiba’s accounts.

Toshiba managed to stuff up its accounts by more than $1.2 billion more or less under the eyes of its auditors Ernst & Young.

Ernst & Young ShinNihon has established a team of about 20 executives to investigate whether there were any problems with how it conducted its audits of Toshiba.

The news was first reported by the Nikkei newspaper but it does suggest that Ernst & Young are a little concerned that it may have done something a little bit wrong.

After all while the executives would technically be justified trying to make their company look its best even when some of its divisions were losing money, it was up to accounts to stop them.

An external panel of lawyers and accountants hired to probe Toshiba’s accounts found the company had inflated profits $1.23 billion over seven years by postponing the realisation of losses and other schemes.

Ernst & Young ShinNihon’s finest minds are also the subject of the Japan Institute of Certified Public Accountants, a self-regulatory body for the accounting industry.

The Financial Services Agency, the country’s financial regulator, is expected to follow with its own probe in the coming months so Ernst & Young ShinNihon will have to come up with some pretty good answers.

The in-house investigating team at Ernst & Young ShinNihon is made of audit check specialists, and there will be no cross-over with the roughly 150 people working to finish the post-scandal audit of Toshiba’s accounts, the person familiar with the matter said.

The auditing firm will aim to finish its investigation by the end of August.