Correction of Prior-Year Earnings Reports and Other Filings and Improvement Measures Related to the Fictitious Circular Transactions
KDDI Corporation and its consolidated subsidiaries ビッグローブ and ジー・プラン
The advertising agency businesses of ビッグローブ and ジー・プラン (online advertising transactions)
Insufficient knowledge of the advertising agency business and sensitivity to fraud risk, excessive concentration of duties in specific individuals, inadequate segregation of authorities in the ordering and payment processes, insufficient verification of the substance of transactions, counterparties’ ability to fulfill orders and creditworthiness, and inadequate subsidiary management, group finance management and internal audits
Company response
The advertising agency businesses of ビッグローブ and ジー・プラン. They were discontinued immediately after the issue came to light in December 2025 and have not resumed since.
There are no plans to resume the businesses.
A Special Investigation Committee comprising external attorneys and certified public accountants. The chair was Natori Toshiya (名取俊也), attorney, and the members were Hen Seiyu (辺誠祐), attorney, and Sato Yasunori (佐藤保則), certified public accountant. The investigation was conducted from 14 January 2026 through 31 March 2026.
Strengthening fraud risk assessments and risk management systems for new businesses, Eliminating opportunities for fraud through a review of the business division structure, Strengthening business reviews and fraud detection functions by corporate divisions, Accounting with an emphasis on cash flow, Strengthening the internal audit structure and audit methods, Promoting understanding of new businesses, Strengthening and improving risk sensitivity, Reviewing business activities and establishing a risk detection system, Strengthening efforts to understand the actual status of subsidiaries’ internal controls and segregation of duties, Strengthening the human resources base for the 1.5-line function in business divisions and the department responsible for managing investees, Strengthening verification of the appropriateness of funding needs in group finance, Strengthening subsidiary management and centralizing and integrating financial management functions, Enhancing group internal audits, Additional initiatives by KDDI to strengthen group governance
Corrected net sales: ▲¥246.1 billion; corrected gross profit: ▲¥49.9 billion; external cash outflows: ▲¥32.9 billion (total)
The prior-year financial statement corrections cover the 39th fiscal year (fiscal year ended March 2023) through the second quarter of the 42nd fiscal year (second quarter of the fiscal year ending March 2026). The summary table of accounting impacts covers the cumulative third quarter of the fiscal year ending March 2026.
Related procedures
Submission of an Improvement Report pursuant to Article 504, Paragraph 3 of the Securities Listing Regulations, and an investigation by a Special Investigation Committee
Tokyo Stock Exchange, Inc.
The advertising agency business will not resume, and KDDI, ビッグローブ and ジー・プラン will continue implementing, operating and monitoring the improvement measures. Efforts to prevent recurrence will proceed through reporting to the Board of Directors, the Group Governance Strengthening Measures Committee, the Risk Management Committee, the Three Financial Statements Review Meeting and other forums.
The Group Governance Strengthening Measures Committee is scheduled to meet in July and September 2026. The next Risk Management Committee meeting is scheduled for October 2026, and the status of the improvement measures will continue to be reported to the Board of Directors.
| Item | Details |
|---|---|
| Event name | Correction of Prior-Year Earnings Reports and Other Filings and Improvement Measures Related to the Fictitious Circular Transactions |
| Date of occurrence | From no later than August 2018 through December 2025 (the period during which the fictitious circular transactions continued) |
| Date recognized / date notice received | Mid-December 2025 (a acknowledged the existence of the fictitious circular transactions); early January 2026 (the existence of suspicions was confirmed based on objective evidence) |
| Subject Entity | KDDI Corporation and its consolidated subsidiaries ビッグローブ and ジー・プラン |
| Target Locations / Products | The advertising agency businesses of ビッグローブ and ジー・プラン (online advertising transactions) |
| Cause | Insufficient knowledge of the advertising agency business and sensitivity to fraud risk, excessive concentration of duties in specific individuals, inadequate segregation of authorities in the ordering and payment processes, insufficient verification of the substance of transactions, counterparties’ ability to fulfill orders and creditworthiness, and inadequate subsidiary management, group finance management and internal audits |
| Amount of Impact on Business Performance | Corrected net sales: ▲¥246.1 billion; corrected gross profit: ▲¥49.9 billion; external cash outflows: ▲¥32.9 billion (total) |
| Accounting period in which recognized | The prior-year financial statement corrections cover the 39th fiscal year (fiscal year ended March 2023) through the second quarter of the 42nd fiscal year (second quarter of the fiscal year ending March 2026). The summary table of accounting impacts covers the cumulative third quarter of the fiscal year ending March 2026. |
| Type of litigation or proceeding | Submission of an Improvement Report pursuant to Article 504, Paragraph 3 of the Securities Listing Regulations, and an investigation by a Special Investigation Committee |
| Court or authority | Tokyo Stock Exchange, Inc. |
| Suspended operations | The advertising agency businesses of ビッグローブ and ジー・プラン. They were discontinued immediately after the issue came to light in December 2025 and have not resumed since. |
| Scheduled resumption date | There are no plans to resume the businesses. |
| Investigation structure | A Special Investigation Committee comprising external attorneys and certified public accountants. The chair was Natori Toshiya (名取俊也), attorney, and the members were Hen Seiyu (辺誠祐), attorney, and Sato Yasunori (佐藤保則), certified public accountant. The investigation was conducted from 14 January 2026 through 31 March 2026. |
| Measures to prevent recurrence | Strengthening fraud risk assessments and risk management systems for new businesses, Eliminating opportunities for fraud through a review of the business division structure, Strengthening business reviews and fraud detection functions by corporate divisions, Accounting with an emphasis on cash flow, Strengthening the internal audit structure and audit methods, Promoting understanding of new businesses, Strengthening and improving risk sensitivity, Reviewing business activities and establishing a risk detection system, Strengthening efforts to understand the actual status of subsidiaries’ internal controls and segregation of duties, Strengthening the human resources base for the 1.5-line function in business divisions and the department responsible for managing investees, Strengthening verification of the appropriateness of funding needs in group finance, Strengthening subsidiary management and centralizing and integrating financial management functions, Enhancing group internal audits, Additional initiatives by KDDI to strengthen group governance |
| Outlook | The advertising agency business will not resume, and KDDI, ビッグローブ and ジー・プラン will continue implementing, operating and monitoring the improvement measures. Efforts to prevent recurrence will proceed through reporting to the Board of Directors, the Group Governance Strengthening Measures Committee, the Risk Management Committee, the Three Financial Statements Review Meeting and other forums. |
| Planned follow-up disclosure | The Group Governance Strengthening Measures Committee is scheduled to meet in July and September 2026. The next Risk Management Committee meeting is scheduled for October 2026, and the status of the improvement measures will continue to be reported to the Board of Directors. |
Items this document does not state (9)
These are items the company does not state in this document. We do not leave them blank, nor fill them in from other sources or by inference.
The reasons the company gives
The company's own explanation, not something inferred from the numbers.The overlapping factors were insufficient knowledge of the advertising agency business and sensitivity to fraud risk, excessive concentration of duties in specific individuals, inadequate segregation of ordering and payment authorities, insufficient verification of the substance of transactions and counterparties’ ability to fulfill orders, and inadequate subsidiary management, group finance management and internal audits.