Japan’s Securities and Exchange Surveillance Commission probing Toshiba latest earnings report

Toshiba’s auditor PriceWaterhouseCoopers Aarata LLC has qualified its latest earnings report.

On Thursday, a source with direct knowledge of the matter has divulged that Japan’s securities watchdog is investigating Toshiba Corp’s latest earnings statements to see whether it has properly handled losses pertaining to its U.S. nuclear unit.

The development comes in the wake of Toshiba’s auditor, PriceWaterhouseCoopers Aarata LLC, qualifying Toshiba’s earnings report for the last financial year, saying that the company was late in booking its losses in its Westinghouse unit.

The move follows recommendations made by proxy advisory firms, Glass Lewis and ISS, that Toshiba’s shareholders should not approve its earning statement given the mixed review given by its auditor.

Japan’s watchdog, which had previously fined Toshiba over its 2015 accounting scandal, has yet to make any observations on this issue, said a source on the condition of anonymity since he was not authorized to speak on the matter.

Toshiba’s spokesman declined to comment.

A representative for Japan’s Securities and Exchange Surveillance Commission was not immediately available to comment.

The fresh probe is part of a series of setbacks that Toshiba is facing after the declaration of bankruptcy at its now defunct Westinghouse unit, which has plunged the company into a crisis and has prompted the sale of its prized $18 billion NAND memory chip business.

Although the conglomerates accounting practices are still under scrutiny, it has gained a significant reprieve last week when the Tokyo Stock Exchange removed its name from a special watchlist, citing improved internal controls at the company.

According to industry experts, Toshiba is regarded as a company that is “too big to fail” thus its listing status is not likely to be materially affected.

Next week, Toshiba is set to hold an extraordinary shareholders meeting to vote on the sale of its NAND memory chip business, its earnings report, and appointment of directors in the company.

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