Olympus Clears Audit Firms of Fraud

Global accounting groups KPMG and Ernst & Young have been cleared of any responsibility for a $1.7 billion accounting fraud at Olympus Corp. by an unofficial panel, though the role of the firms will remain under official review.

Hot Feature: Global Factors Boost Gold and Silver Demand

The panel of lawyers set up by Olympus to look at the role auditors played in the 13-year fraud said in a report on Tuesday that five individual auditors were responsible for 8.4 billion yen ($109 million) in damages.

The panel found that the fraud, identified by a separate investigation to have been perpetrated by two former top executives in the 1990s to conceal losses, had been covered up by external audit firms.

“The masterminds of this case were hiding the illegal acts by artfully manipulating experts’ opinions,” the report said.

Olympus plans to sue the five former and current audit firms, and will seek up to 1 billion yen in damages.

Neither KPMG, the company’s external auditor until 2009, nor Ernst & Young, the its current auditor, were found to have violated their legal duties, the panel said, though they both still face possible sanctions by Japan’s accounting industry body and financial regulator, which have launched probes into the matter.

Don’t Miss: Is Occupy Wall Street a Phase?

To contact the reporter on this story: Emily Knapp at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com