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The Toshiba Affair, An Incompetent Press, and A Big, Big Unanswered Question
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When the Enron scandal broke in 2001, it was not long before the press homed in on the company’s auditor Arthur Andersen. In the end Andersen was found guilty on criminal charges and was forced to exit auditing.

So here is a question: which of the global Big Four auditing firms missed the recently reported fictions in Toshiba’s books? If you don’t know, don’t feel bad. Just note that standards in financial journalism have deteriorated over the years.

The identity of Toshiba’s auditor should have been the first question any competent financial journalist should have asked. In reality virtually none of the reports has mentioned the firm – although in these internet days its identity can be checked in seconds. (I remember a more painstaking and professionally competent era when financial journalists relied on filing cabinets stuffed with annual reports for answers to such questions.)

For the record the answer is Ernst & Young ShinNihon, an affiliate of London-based EY.

To be sure the auditing problems at Toshiba do not seem to have been nearly as scandalous as those at Enron. But if I were a Toshiba stockholder I would be hopping mad – not only at the evident incompetence of Toshiba and Ernst & Young ShinNihon but of the supposed cream of the international press.

(Reprinted from Forbes by permission of author or representative)
 
• Category: Economics • Tags: Toshiba 
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