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Auditor Refuses Nidec Earnings Sign-Off, Citing Governance Failures
Nidec is working to improve its corporate governance after its auditor, Ernst & Young ShinNihon, declined to approve its annual earnings report. The auditor cited concerns over internal controls and potential improper accounting related to overseas…
Nidec is moving to strengthen its corporate governance structure after its auditor, Ernst & Young ShinNihon, refused to sign off on the company's annual earnings report. The auditor cited significant internal control deficiencies and possible accounting irregularities tied to Nidec's overseas acquisitions, particularly those in Europe.
This lack of endorsement prevents Nidec from issuing new bonds, a critical function for its financial operations. Additionally, the Tokyo Stock Exchange could designate Nidec as a "security on alert" if the issues persist, potentially impacting its listing status. The company recently released its earnings for the fiscal year ending March 31, 2026, without the auditor's stamp of approval, detailing net income of ¥137.9 billion (USD 876.69 million) on sales of ¥2.49 trillion (USD 15.83 billion).
Nidec's board aims to address these issues by the end of September. The company plans to establish a new advisory committee to oversee internal controls, implement clearer accounting policies for its subsidiaries, and enhance training for its finance staff. These actions are intended to rebuild auditor confidence and ensure compliance with regulatory standards.
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