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Toshiba auditor to give 'qualified opinion' for fiscal 2016 securities report

The auditing company involved in approving the fiscal 2016 securities report for embattled Toshiba Corp., has told the electronics giant that it intends to provide a "qualified opinion" on the matter.

Auditing company PwC Aarata has judged that it will still be possible for Toshiba to submit an overall report, despite the presence of certain deficiencies concerning the firm's nuclear business unit in the United States. It is also anticipated that by receiving a qualified opinion, Toshiba will not be given an "adverse opinion," and will therefore be able to avoid being delisted from the Tokyo Stock Exchange.

Toshiba is planning to submit the securities report to the Kanto Local Finance Bureau on Aug. 10. In relation to the financial results for the business year ended March 2017, PwC Aarata has requested that Toshiba post losses for the previous business year as well, on the basis that, "It is possible that Toshiba was aware of the nuclear unit deficit as early as fiscal 2015."

However, in response to this request, Toshiba has said that, "The first time we were aware of the huge losses in the U.S. nuclear business unit was in December 2016." Discussions of this nature have continued to take place between the two parties beyond the legally stipulated deadline of June 30, 2017, for submitting the report.

According to a source close to the issue, PwC Aarata has been looking closely into Toshiba's financial affairs. At this current point, differences in opinion about the period to be used for Toshiba's posting of losses for its U.S. nuclear unit have not been resolved. However, there is no disagreement about the amount lost in the nuclear unit, and the decision to provide a qualified opinion was apparently regarded as appropriate based on the fact that no particular grounds for irregularities worthy of an "adverse opinion" have been found.

Yet, PwC in the U.S. -- which is in charge of auditing on the American side -- is still having doubts about whether to judge the situation as "appropriate."

In addition to finances, the possibility that Toshiba's internal controls, which indicate the appropriateness of in-house rules, deserve an "adverse opinion" also remains. If the controls are found to be worth an "adverse opinion," there are concerns that this will have a negative effect on the audit relating to Toshiba being delisted from the Tokyo Stock Exchange.

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