Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Posts Tagged ‘Olympus

Olympus sued by 6 banks over accounting fraud; largest in a series of suits

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Bloomberg reports Olympus Sued for $273 Million After 13-Year Fraud.

Six banks filed suit claiming 27.9 billion yen ($273M) damages from the drop in stock price after the fraud was disclosed.

The article says Olympus was sued in November 2012 by a group of investors. That claim was for 19.1B Yen ($186M). That one had been preceded by 14 other suits.

Written by Jim Ulvog

April 16, 2014, 8:43 am at 8:43 am

Posted in Fraud

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Olympus back in news – will face fraud charges in England

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The British Serious Fraud Office (SFO) will prosecute Olympus and its sub in England, Gyrus, for fraud.

The Olympus press release on this page says the SFO will bring criminal charges against the company. The statement says: Read the rest of this entry »

Written by Jim Ulvog

September 4, 2013, 9:20 am at 9:20 am

Posted in Accounting, Fraud

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Suspended sentences for senior Olympus officials in $1.7B fraud

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Suspended sentences all around.

The Bloomberg report, Ex-Olympus Chairman Gets Suspended Sentence for Fraud, says the three senior staff charged a year ago received suspended sentences after their guilty pleas.

The individuals and their sentences: Read the rest of this entry »

Written by Jim Ulvog

July 3, 2013, 12:02 pm at 12:02 pm

Posted in Audits, Fraud

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My guest post at re: The Auditors is at the top of the list for her favorites of 2012

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Wow! My guest post on the Olympus fraud, How Do You Hide A Multibillion Dollar Loss? Accounting For The Olympus Fraud, (link below) is at the top of Francine McKenna’s list of favorite posts for 2012.

Her comment: Read the rest of this entry »

Written by Jim Ulvog

January 1, 2013, 13:53 pm at 1:53 pm

Posted in Accounting, Audits, Fraud

Tagged with ,

Olympus scandal – the CEO’s bio is released

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Exposure: Inside the Olympus Scandal: How I Went from CEO to Whistleblower“, from the former Olympus CEO Michael Woodford is out this week.

The first review I’ve seen is at The EconomistPaying a price for doing what’s right.

Read the rest of this entry »

Written by Jim Ulvog

November 28, 2012, 8:02 am at 8:02 am

Posted in Audits, Fraud

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Former president of Olympus and two others plead guilty

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Associated Press reports the ex-president pled guilty to securities law violations. Two other senior staff pled guilty as well.

The AP report can be found in the Wall Street Journal article, Ex-President of Japan’s Olympus Pleads Guilty.

The Reuters report can be found in the New York Times article, Guilty Pleas in Trial Over Olympus Scandal.

The three individuals pleading guilty:

Read the rest of this entry »

Written by Jim Ulvog

September 25, 2012, 7:45 am at 7:45 am

Posted in Fraud

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Japanese regulators slightly criticize Olympus auditors then say the corrective action plan they require wouldn’t have found the fraud anyway

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Reuters reports that the Japanese regulator, Financial Service Agency, criticized KPMG and Ernst & Young for their audits of Olympus. Then they partially retracted their criticism.

The Reuters article, Japan regulator raps KPMG, Ernst & Young for Olympus work, says the two firms

…lacked operational management systems to ensure proper auditing that would spot and flag dubious transactions.

The regulators didn’t find any “intentional acts of grave negligence” according to the article.

I guess that means they should have had the foresight to develop some unidentified management system that would have identified the fraud.

The two firms have to develop a business improvement plan and report on their progress every six months.

An official then essentially retracted the criticism. Check out this comment:

Read the rest of this entry »

Written by Jim Ulvog

July 10, 2012, 8:06 am at 8:06 am

Posted in Audits, Fraud

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How do you overpay for an acquisition but keep the announced sales price? More journal entries to describe the Olympus fiasco.

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Here are some more journal entries that describe how Olympus moved money in their accounting fiasco.

‘Michael’ asked a great question at re: The Auditors about my guest post on the Olympus accounting fraud. 

The full article with my reply can be found at How Do You Hide A Multibillion Dollar Loss? Accounting For The Olympus Fraud.

Here is his question, with slight editing:

If they actually bought the tiny companies for way more than they were worth, this would not fix their problem, they would just have the original losses plus the new losses on the companies that they overpaid for.

The only way this works is if they claimed to pay $1,000,000 for the companies but in reality only paid $100,000. Is this the case?

For example if they paid $1,000,000 for the subsidiary you would.

  • Dr. investment 100,000
  • Dr. goodwill 900,000
  •      cr. cash $1,000,000

There would be no cash in the subsidiary, just goodwill. So how could the subsidiary purchase the financial assets that were seriously underwater? The subsidiary would have to actually pay the inflated fair value for this to work?

A very good question, Michael. 

I’ll go into more detail on how the money was moved and my read on what summarized entries would be.  I posted my reply at re: The Auditors. Francine McKenna has allowed me to reprint my response. Here is my explanation:

Read the rest of this entry »

Written by Jim Ulvog

June 21, 2012, 8:46 am at 8:46 am

Posted in Accounting, Fraud

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Olympus will settle claim from fired chief executive. Also expected layoffs at Olympus.

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The Wall Street Journal reports Olympus and Ex-CEO Woodford Settle Lawsuit with expected payment to Michael Woodford for approximately $15 million.

The article, behind a pay wall, indicates the settlement is moving towards approval by the Olympus board.

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Written by Jim Ulvog

May 30, 2012, 8:37 am at 8:37 am

Posted in Audits, Fraud

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Range of U.S., Chinese, and Japanese regulators’ responses to fraud in today’s news – Olympus and Longtop

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Sometimes you get fun results when you look at two news articles side by side. Let’s look at the responses of securities regulators in the US, China, and Japan.  Hat tip to Going Concern for highlighting the articles.

Olympus fine

Japan’s securities market regulator proposed a fine of $2.5M against Olympus for conducting a $1.7 billion financial fraud that was spread over 13 years – Japan market watchdog recommends $2.5 million fine for Olympus.

Let’s put that proposed fine into perspective. All amounts will be in US dollars.

Read the rest of this entry »

Written by Jim Ulvog

April 13, 2012, 8:54 am at 8:54 am

Panel clears E&Y over Olympus auditing – far less to the report than meets the eye

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The Wall Street Journal headline says Panel Clears Ernst & Young in Olympus Probe.

Cool update on the investigation, huh? An official panel looks at E&Y’s role and concludes their auditing was okay.  They have no legal liability.

I was quite interested in the article.  Then found out the details.

Read the rest of this entry »

Written by Jim Ulvog

March 29, 2012, 8:55 am at 8:55 am

Prosecutors file official charges in Olympus fiasco

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On Wednesday, prosecutors in Japan filed official charges against six individuals for their role in the accounting scandal at Olympus.  They also filed charges against Olympus.

The six charged include the ex-chairman, former executive vice president, former corporate auditor and three outside bankers.

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Written by Jim Ulvog

March 7, 2012, 7:05 am at 7:05 am

Posted in Accounting, Fraud

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Arrests in Olympus accounting scandal point to a serious and expanding investigation

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I previous mentioned the arrest of 7 former officials and advisors in the Olympus fiasco.  Also mentioned that I did not know what the arrests mean in the context of the Japanese legal environment.

The Wall Street Journal article Arrests Go Beyond Olympus provides me some context.  (Article behind paywall, so grab your copy of Friday’s WSJ before you toss it.  Better yet, get an online subscription.)

It would seem that the prosecutors are seriously pursuing the case.

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Written by Jim Ulvog

February 20, 2012, 7:42 am at 7:42 am

Posted in Fraud

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Arrests start from the Olympus accounting scandal

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Seven former officials and advisors to Olympus have been arrested for their alleged roles in the accounting fiasco at the company. See the Wall Street Journal article, Tokyo Makes Arrests in Olympus Scandal (article behind paywall).

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Written by Jim Ulvog

February 16, 2012, 7:42 am at 7:42 am

Posted in Fraud

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Investigators for Olympus aren’t pointing fingers at KPMG and E&Y

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An investigative panel set up by Olympus released a report saying the external auditors couldn’t have found the fraud. 

The panel also blamed five internal auditors for helping with the cover up.  Olympus has sued the five.

An Internet search today indicates there are 270 articles discussing this. Here are a few you can browse:

One panel of investigators appointed by Olympus pointed fingers at the external auditors. I discussed this report in my guest post at re: The Auditors.

In contrast, this new panel isn’t pointing fingers at the external auditors.  They are blaming the internal auditors for the costs incurred to investigate the cover up.

Read the rest of this entry »

Written by Jim Ulvog

January 17, 2012, 10:08 am at 10:08 am

Posted in Audits, Fraud

Tagged with ,

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