Olympus Corp. Hiding Losses

Olympus Corp., a Japanese camera company, was found to have used some accounting tricks to hide big losses.  After being found out Olympus even admitted to using payments to merger advisers and venture capital funds to cover up securities losses dating back to the 1990s.  This being said, You have to wonder what the Japanese arms of KPMG and Ernst & Young were looking at during their audits of Olympus.  Both firms declined to comment on the matter.  Olympus removed the Japanese arm of KPMG as their auditor in 2009 after a dispute over how to account for some controversial acquisitions.  Olympus decided not to reveal this information to the stock market.

 Following the firing of KPMG, Olympus hired Ernst & Young to handle their audits.  To avoid any suspicion Olympus cited the reason for hiring Ernst & Young as, KPMG's contract had expired.  Despite Olympus trying to hide their activities, Recently outed chief executive Michael Woodford said he had questioned the excessive advisory payments for the acquisition of British medical device firm Gyrus.  Olympus paid one third of their acquisition costs for advisory costs.  It is normal to pay about one to two percent for these costs.

It is scary to think that two firms from the big four let something like this slip right past them.  It is very troubling to see, especially when both firms have been in situations like this before.  I hope they decide to get their act together and do things right.