Michael Woodford Olympus
Former Olympus CEO Michael Woodford blew the whistle on dubious accounting by his firm its takeover of Gyrus in 2008 (Reuters)

Japan's Olympus Corp and its UK subsidiary Gyrus Group will be prosecuted by the Serious Fraud Office over allegations of false accounting in the latest development of a scandal that has engulfed the camera and medical equipment firms for almost two years.

Olympus and Gyrus face prosecution under Section 501 of the UK Companies Act 2006 for allegedly making "misleading, false or deceptive" representations to auditors of their accounts in the fiscal years 2009 and 2010.

"As it is difficult to predict the outcome of this matter or estimate the level of fines that may be imposed on the company and Gyrus Group Limited, the potential financial impact of this prosecution on Olympus Group's business is unclear," said the firm in a statement.

"The company will release further details regarding any potential financial impact without delay as soon as it receives any information in this respect during the course of these proceedings."

There will be a hearing on September 10 at Westminster Magistrate's Court where the company said it expects the case will be referred to a crown court.

The Olympus-Gyrus scandal unfolded when a British whistleblower at the Japanese company sounded the alarm over the amount of money being spent on acquisitions.

Michael Woodford, the former chief executive of Olympus, raised questions over a $687m advisory fee paid out to a mysterious third party relating to its £1.7bn takeover of Gyrus in 2008.

An investigation by Japanese authorities discovered that giant advisory fees had been used to mask losses by Olympus, an accounting practice used as far back as the 1990s.

In July, three former Olympus executives were given suspended sentences by Japanese courts for their roles in trying to cover up losses.

The SFO started investigating Olympus and Gyrus in October 2011 when Woodford handed the authority a dossier of evidence against his former company.

Olympus admitted it had been caught out masking losses when the scandal first unfolded.

"Through this process [of the third-party investigation], we found that from the 1990s the posting of losses on securities investments had been deferred," the company said in a statement at the time.