Nidec Precision and NDTC: how profits were shifted between…

the questionWhat specific mechanisms support the wider accounting findings?

1Precision’s inherited problems and new asset entries

analysisAt Nidec Precision, the committee traced problematic assets back to failed customer projects and unsubstantiated costs. Much of the specialised equipment remained idle, yet it was depreciated instead of impaired. Some equipment was repurposed, and later residual balances are smaller than the original exposure; those facts prevent an inflated sum of every historic number. ¹

attributedThe committee traced Nidec Precision’s longstanding problematic assets to idle manufacturing equipment, unsubstantiated services and labour costs. It said equipment for lost customer projects continued to be depreciated instead of impaired; around ¥940 million remained undepreciated at March 2025 for the two identified projects. ¹

qualification: The customer and projects are anonymised in the report. The various historic balances, later residuals and depreciation flows are overlapping measures. The report says some equipment was repurposed, so the finding is not that every purchased machine was unusable.

analysisThe ¥580 million service-revenue episode rested on a supposed technical-support arrangement that the committee could not substantiate. The contractor initially objected, and the executed documents included a supplemental agreement negating payment claims. The committee says that supplement was withheld from the auditor while consideration was added to the document submitted as accounting support. Internal legal objections were also not accepted. ¹

attributedThe committee concluded that Nidec Precision recorded ¥580 million of service revenue without substantiated technical support. It describes an agreement submitted to the auditor without the accompanying agreement negating payment claims, and an internal legal objection that was not accepted. ¹

qualification: The contractor initially rejected the proposed arrangement as insufficiently substantiated. The committee’s conclusion concerns the company’s accounting and withheld terms; it does not establish wrongdoing by every counterparty.

analysisLater practices capitalised labour and represented existing or purchased moulds as newly made or processed assets. The report describes hidden old moulds and falsified work records. Yet the president’s approval signature was not treated as proof he understood the scheme: his denial of detailed knowledge was not contradicted by testimony or objective evidence sufficient for that finding. ¹

attributedThe committee found that Nidec Precision capitalised development labour and later falsely treated existing or purchased moulds and other equipment as newly manufactured or processed. It describes concealed old moulds and falsified work records used during an internal audit. ¹

qualification: A company president’s signature on approval forms is not treated as proof of knowledge. The president said he had not scrutinised the detail, and the committee found no testimony or objective evidence establishing that he understood the scheme.

2NDTC’s two distinct issues

analysisNDTC’s inventory-cost case involved extending expense recognition from six months to twelve and then twenty-four months to help reach targets. The committee rejected the accounting basis and identified ¥1.105 billion still carried at the first quarter of FY2025. It also recorded a manager’s lack of recollection of earlier reporting and explained why it preferred the consistent accounts of the finance staff. ¹

attributedThe committee found that Nidec Drive Technology deferred inventory cost variances to achieve profit targets and extended their amortisation from six to twelve months, then to twenty-four months without a reasonable basis. It reported ¥1.105 billion still allocated to inventory at the first quarter of FY2025. ¹

qualification: The earlier ¥1.902 billion balance at the third quarter of FY2021 is a different dated balance, not another amount to add. The operational officials remain unnamed.
response: The former finance-and-planning head said he did not recall receiving reports of the earlier adjustments. The committee preferred the consistent accounts of the CFO and accounting staff and the reporting structure; the later CEO acknowledged consultation about the twenty-four-month extension.

analysisThe press-sales case concerned consolidation adjustments across Minster and Arisa. Transactions already recognised elsewhere were included again, duplicating group sales. The 2024 disclosure called it an error; the April 2026 supplement concluded the adjustments were intentional. It also said the amounts had already been corrected and needed no further change on this point. ²

attributedThe April supplement found that NDTC intentionally included in consolidation adjustments sales already made by Minster to outside customers and Arisa sales to other customers, recording sales twice. This changed the explanation of the problem from the error announced in May 2024 to intentional profit manipulation. ²

qualification: The supplement says the amounts had already been corrected in 2024 and required no further revision on this point. Minster and Arisa belonged to the NDTC operating group despite no direct capital ties with NDTC; the operating relationship is not an ownership edge.
outcome: The earlier internal investigation accepted the CFO’s explanation of misidentification after finding no evidence of intent in its email review. The later committee reached a different conclusion about intent, not a new uncorrected duplicate-sales total.

analysisMinster and Arisa belonged to the NDTC operating group without direct capital ties to NDTC. Their workflow explains the consolidation issue, but it does not establish a direct ownership chain or wrongdoing by every employee of either company. The graph records that operating capacity explicitly. ²

Sources (2)

Research source · s-d11 identified by category only · Research
Research source · s-d18 identified by category only · Research