Nidec Announces Material Weakness About Nidec’s Internal Control Over Its Financial Reporting

Nidec Corporation (TOKYO: 6594; OTC US: NJDCY) (the “Company”) announces today that it has identified a material weakness in its internal control report for the fiscal year ended March 31, 2023 audited by our auditor that the Company submitted to the Kanto Local Finance Bureau in accordance with Article 24-4-4(1) of the Financial Instruments and Exchange Act. Accordingly, pursuant to Article 24-4-5(1) of the Act, the Company stated, in the amendment report for its internal control report for the same fiscal term that it submitted to the Kanto Local Finance Bureau, that the Company’s internal control over financial reporting is not effective, as described below.

1.

Details of the material weakness

 

It became clear that, at Nidec Drive Technology, a consolidated subsidiary of the Company, the wrong data was identified for part of the adjustment, such as sales accompanied by transactions between consolidated subsidiaries of the Company’s business group in its consolidated account closing procedure, resulting in sales recorded in an inflated manner. As it became necessary to cancel the sales amount recorded in an inflated manner, the Company came to the conclusion that it should correct the financial results of the fiscal year ended March 31, 2023. The Company’s rules on internal control over its account closing and financial reporting processes are that journals prepared by their issuers must be approved by someone with approval authority. Nonetheless, this error occurred because of insufficient communications among concerned organizations, which led to an insufficient understanding of the proper and comprehensive information that is necessary when identifying cases that require adjustments, and also to an insufficient system to monitor book closing. As a result, the Company was unable to discover this material misrepresentation. This is how the Company decided that this error is a material weakness in the internal control over its account closing and financial reporting processes.