PwC as NIDEC's auditor: disclaimers and the committee's findings

analysisAccording to the Third-Party Committee's investigation report of 27 February 2026, Chuo Aoyama Audit Corporation audited NIDEC from the listing of its shares in 1988 until the fiscal year ended March 2006, and, renamed Misuzu Audit Corporation, for the fiscal year ended March 2007. From the fiscal year ended March 2008 the accounting auditor was Kyoto Audit Corporation, which certain former partners of Misuzu Audit Corporation had established. Kyoto Audit Corporation became a PwC member firm in 2013, was renamed PwC Kyoto in 2016 and merged with PwC Aarata on 1 December 2023 to become PwC Japan LLC, which has carried out NIDEC's accounting audits since the third quarter of fiscal 2023 (October–December 2023). ¹

analysisPwC Japan's annual audit reports on NIDEC are signed by engagement partners of its Kyoto office. The report dated 26 September 2025 on the year ended 31 March 2025 and the report dated 30 September 2026 on the year ended 31 March 2026 each carry the signatures of four partners, and one partner signed both. At NIDEC's press conference of 1 October 2026 a questioner, referring to changes since November 2025, asked why three of the four signing partners had changed and whether this was related to what the questioner described as all three coming from the former PwC Kyoto. Masataka Kubota of PwC Japan replied, according to a transcript published on a blogging platform, that the four-member team had been chosen as the best composition in view of the complexity and difficulty of the case and the members' individual experience. ^{2 3 4}

analysisIn 2024 PwC Japan confirmed that its own audit reports on NIDEC had contained an error. NIDEC's corrected annual securities report for the 51st fiscal year (year ended 31 March 2024), filed with the Kanto Local Finance Bureau on 25 June 2024, gave as its reason that part of the content of the independent auditor's report and internal control audit report prepared by PwC Japan contained an error. In a statement of the same date, PwC Japan said that this reason was consistent with the facts as it understood them and that it would take the necessary steps; the statement does not describe the error further. ⁵

analysisPwC Japan's independent auditor's report dated 26 September 2025, signed by four engagement partners of its Kyoto office and included in NIDEC's annual securities report for the fiscal year ended 31 March 2025, expressed no opinion on the consolidated financial statements or on NIDEC's internal control report as of 31 March 2025. The report states that the Third-Party Committee set up on 3 September 2025 and internal investigations into trade and tariff matters were still ongoing, that NIDEC had not reflected their possible effects in the consolidated financial statements, and that the possible effects of any undetected misstatements were material and pervasive. A disclaimer of opinion records that the auditor could not obtain sufficient appropriate audit evidence to form an opinion; this one was issued while the committee's investigation was still in progress and does not quantify any misstatement. PwC Japan subsequently also expressed no conclusion on NIDEC's semi-annual review (six months to 30 September 2025) and third-quarter interim review, and no opinion on the financial statements for the year ended 31 March 2026. ^{1 2 3 4}

analysisNIDEC's own documents record the two interim results. According to its presentation of 1 October 2026, the auditor's review report on the semi-annual securities report for the six months ended 30 September 2025, submitted on 14 November 2025, contained a disclaimer of review conclusion. Its notice of 30 September 2026 states that PwC Japan also expressed no conclusion in its interim review report on the condensed quarterly consolidated financial statements for the third quarter (1 October to 31 December 2025) and the nine months ended 31 December 2025. Interim reviews express a conclusion rather than an audit opinion, and in both cases the auditor stated that it could not obtain sufficient evidence to express one. ^{2 4 5 3}

analysisNIDEC's notice of 30 September 2026 states that on that day it received from PwC Japan an audit report containing a disclaimer of opinion on both the consolidated and the non-consolidated financial statements in its annual securities report for the fiscal year ended 31 March 2026, and an internal control audit report disclaiming an opinion on its internal control report as of 31 March 2026; the auditor's report reproduced in the annual securities report is dated 30 September 2026 and signed by four engagement partners of PwC Japan's Kyoto office. At NIDEC's press conference the next day, PwC Japan's representative executive officer said, according to a transcript, that a disclaimer of opinion is not an audit opinion asserting that the consolidated financial statements contain errors and that it reflected the situation as of 30 September 2026, and NIDEC's new president said, according to a press report, that the company aimed to obtain an audit opinion during October. NIDEC's presentation of 1 October 2026 lists 30 October 2026 as the date by which it planned to complete the remaining tasks to obtain audit opinions to meet the submission due date. ^{1 2 3 4 5}

analysisOne basis PwC gives is corporate governance. Its report on the consolidated statements cites the Third-Party Committee's reports as identifying instances in which management or accounting personnel of NIDEC and its group companies gave the auditor inaccurate or misleading information, concealed relevant documents or provided altered records to obtain the auditor's concurrence. It states that some remedial personnel actions were incomplete, so that certain officers and employees who participated in, directed or knew of the improper accounting, or who gave false explanations to the auditor, continued to hold positions of responsibility in the financial reporting process. PwC therefore could not obtain sufficient appropriate audit evidence that the corrections were complete or that no undetected misstatements arising from the risk of management override existed. The report neither names nor counts the people concerned and describes the committee's findings and NIDEC's personnel measures as of its date. ¹

analysisAnother basis concerns impairment. PwC's report states that NIDEC recognised impairment losses of ¥632,221 million in its consolidated financial statements for the fiscal year ended 31 March 2026 but that PwC had not obtained sufficient appropriate audit evidence on the reasonableness of the accounting estimates for the amount and period allocation of impairment losses for certain cash-generating units. NIDEC restated comparative information because opening balances of non-financial assets had been overstated in light of the improper accounting, but, according to the report, did not sufficiently explain whether these prior-period corrections used only information available at the relevant dates, without hindsight, as IAS 8 requires; PwC therefore could not determine whether the impairment losses complied with IAS 36 and IAS 8. NIDEC's own notes to the same statements give total impairment losses on non-financial assets by segment of ¥632,135 million, and the documents do not reconcile the two figures. ^{1 2}

analysisPwC also could not determine the appropriateness and completeness of the restated amounts and disclosures for the fiscal year ended 31 March 2025 presented as comparative information, because individuals involved in the improper accounting continued to hold positions of responsibility in financial reporting. Under 'Other Matter', its report states that NIDEC adjusted opening retained earnings in the comparative information but has not corrected the consolidated financial statements in its annual securities reports for fiscal years up to and including the year ended 31 March 2025; the report on the non-consolidated financial statements makes the same statement about those statements. ^{1 6}

analysisPwC's report on NIDEC's non-consolidated financial statements for the 53rd fiscal year (year ended 31 March 2026), prepared for the parent company under Japanese GAAP, also contains a disclaimer of opinion. Besides the governance basis, it states that NIDEC recorded valuation losses of ¥183,543 million on shares of affiliated companies and ¥2,223 million on investments in affiliated companies and a ¥28,397 million provision for losses on affiliated companies' business, and that, because PwC lacked sufficient appropriate evidence on asset impairment in the consolidated financial statements, it could not determine whether the amounts and period allocation of these items were appropriate. ⁶

analysisPwC's internal control audit report on NIDEC's internal control report as of 31 March 2026 likewise expresses no opinion. It states that NIDEC's internal control report says the company is unable to express the results of its assessment of internal control over financial reporting, because some remedial personnel actions for officers and employees involved in the improper accounting were incomplete and their effect on entity-level controls could not be evaluated, and that PwC was unable to perform significant audit procedures. As an emphasis of matter it notes material weaknesses in entity-level controls, in financial closing and reporting process controls and in business-process controls. ¹

analysisAccording to the Third-Party Committee's report, NIDEC officers and employees often gave the accounting auditors inaccurate or misleading information to obtain favourable opinions, not only certain site CFOs but also the headquarters CFO and Accounting Department, on an ongoing basis for years, and numerous pieces of evidence indicated that they perceived PwC Kyoto as 'easy to persuade' and 'easy to handle' (one e-mail: 'PwC Kyoto: we can manage them perfectly on our side'). The committee could not rule out that these perceptions resulted in a lack of effective restraint on 'aggressive' accounting, but said that the auditors' approval would by no means justify improper accounting, that obtaining it improperly deceives investors and the market, and that the responsibility lies with NIDEC. It named none of the people concerned, did not examine the auditors' working papers or interview the engagement partners, and made no evaluation of the auditors. At NIDEC's press conference of 1 October 2026 PwC Japan's Masataka Kubota said, according to a transcript published on a blogging platform, that whether PwC was an easy counterpart was the company's view, on which PwC was not in a position to comment, that PwC did not consider itself in such a position and had not been aware of that perception at the time, and that it would examine past audits and use what it learned to raise audit quality. The disclaimers PwC Japan issued the previous day on the year ended 31 March 2026 cite among their grounds that certain officers and employees who had taken part in the improper accounting or given the auditor false explanations still held positions of responsibility in financial reporting. ^{1 2 3 4}

analysisThe committee also described how internal-audit interview minutes were changed in the investigation of improper accounting at a domestic subsidiary that began in February 2020 after a whistleblowing report shared by PwC Kyoto. Minutes of interviews reporting relentless pressure from executive officers at NIDEC headquarters were shared with PwC Kyoto. According to the report, its engagement partner added a comment asking whether it was acceptable to leave as is a passage suggesting that excessive pressure from headquarters may be a fundamental cause; beside the subsidiary president's reference to a 'profit commitment' it commented that if this were a compulsory order from headquarters it could be taken as pressure and a causal factor, so further confirmation from headquarters personnel might be needed, and it revised that statement by inserting 'I had planned, as the president' before 'profit commitment'; the minutes the Internal Audit Department finalised on the basis of these comments no longer contained the statements attributing the pressure to headquarters executive officers. The committee did not examine the auditors' working papers or interview the engagement partners, received written responses from the auditors and made no evaluation of them. PwC Japan told it, as matters it could confirm shortly after the committee's inquiry in February 2026, that a NIDEC headquarters first senior vice president and a general manager had explained in advance, in daily conference calls, that the actions were taken to meet targets set by the subsidiary itself, Nidec Servo Corporation (now Nidec Advanced Motor Corporation), and that, as the minutes appeared inconsistent with those calls, they were revised directly under time constraints to confirm the discrepancy quickly; the engagement partner had earlier told the corporate auditors by e-mail that digital forensics were needed to confirm there had been no inappropriate or excessive pressure or overly high targets from headquarters. ¹

analysisA further episode concerned the cost of a forensic investigation. After a whistleblowing report of March 2022 about improper accounting at Nidec Global Appliance Brasil, PwC Kyoto required a forensic investigation by an outside expert. According to the committee's report, PwC Kyoto was then made, on Shigenobu Nagamori's instructions, to cover half of the approximately ¥51.4 million cost, and agreed to reduce its audit remuneration by ¥25.7 million, split equally between fiscal 2021 and fiscal 2022 (the years ended 31 March 2022 and 31 March 2023); the report quotes Nagamori's written comment that this would be 'a good warning' to PwC Kyoto to prevent poorly considered instructions in the future. The report notes that PwC Kyoto's audit report under the Companies Act for the year ended March 2022 was made public on 13 May 2022, before the cost negotiations, and states that it contains no evaluation of the accounting auditors. PwC Japan told the committee that PwC Kyoto regarded the handling of the forensic investigation costs as part of the negotiations on audit remuneration and agreed to cover the costs taking into account the remuneration for the group's audit as a whole. ¹

analysisIn a statement dated 3 March 2026, issued after NIDEC published the committee's investigation report, PwC Japan said that, as described in that report, it had cooperated sincerely with the investigation and answered all of the committee's questions. It said it would refrain from commenting on the content of individual audit engagements and would continue its efforts to improve audit quality. ⁵

analysisAccording to his profile on PwC's Japanese website, Masataka Kubota has been Representative of the PwC Japan Group since July 2024 and concurrently serves as Representative Executive Officer of PwC Japan LLC; the profile also lists him as Representative Executive Officer and President of PwC Japan Group LLC, a certified public accountant and certified fraud examiner who became deputy representative executive officer (assurance leader) in July 2020. ¹

analysisAt NIDEC's press conference on 1 October 2026, Kubota said that a disclaimer of opinion is not an audit opinion asserting that the consolidated financial statements contain errors, and that it was issued because sufficient appropriate audit evidence could not be obtained. According to a transcript, he said the reasons differed from those for the fiscal year ended March 2025, when the investigations were incomplete, whereas for the fiscal year ended March 2026 the causes had been specifically identified. Preventive measures restricting involved staff to supporting roles in closing work had not been fully complied with, he said, further persons had been identified as involved in September, and some involved persons still held responsible positions in the financial reporting process at the end of September. He also said the disclaimer reflected the situation as of 30 September 2026 and that PwC strongly intended to fulfil its responsibility to issue an audit opinion. These remarks are known from a report in a Japanese business weekly and a transcript published on a blogging platform, not from an official PwC publication. ^{2 3}

analysisAsked whether former president Mitsuya Kishida was among the officers whose false explanations to the auditor were cited as a reason for the disclaimer, Kubota answered 'not included', according to press reports. A transcript published on a blogging platform records his explanation: the audit opinion was as of 30 September 2026 and Kishida had resigned on 29 September, so he was not within its scope. The answer does not state whether Kishida gave false explanations to the auditor. Asked whether an opinion would be issued by the end-October 2026 deadline for NIDEC's written confirmation of its internal management system to the Tokyo Stock Exchange, Kubota said the auditor's responsibility was to obtain sufficient appropriate audit evidence and express an opinion, that NIDEC was preparing a structure allowing such evidence to be obtained and that PwC would strive to be in time; a risk remained, he said, that persons with authority to make and enforce rules might bypass them. ^{4 5 3}

analysisPress reports of 1 and 6 October 2026 stated that about 20 officers and employees who had been involved in the improper accounting or had given false explanations to the auditor were still involved in financial reporting, at bases in several countries; the report of 6 October added that 730 accountants and others had been deployed on the audit. The number of persons comes from press reports; the auditor's report and NIDEC's available filings neither quantify nor name these persons. At the conference NIDEC's representative director Masayuki Minai said that, despite preventive measures to remove involved persons from closing work, suspected persons had actually been involved in several countries where NIDEC has bases. According to a transcript published on a blogging platform, he said NIDEC was identifying the persons still affecting financial processing in certain countries and aimed to obtain unqualified opinions by reviewing their placement and roles. ^{5 4 2 3}