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    Toshiba, a major Japanese electronics company, was embroiled in a major accounting scandal when it was revealed in 2015 that they had overstated profits by 151.8 billion yen over seven years. In the wake of this discovery, the CEO and eight other senior officials resigned, including two previous CEOs still with the company. An investigation found that Toshiba executives had pressured subordinates to meet unrealistic sales targets through improper accounting practices to avoid showing losses. This scandal highlighted issues with Japan's prior focus on profits over fraud prevention and tolerance for companies selling at a loss to stay in business. It was one of the largest accounting scandals in Japanese history.

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    Toshiba, a major Japanese electronics company, was embroiled in a major accounting scandal when it was revealed in 2015 that they had overstated profits by 151.8 billion yen over seven years. In the wake of this discovery, the CEO and eight other senior officials resigned, including two previous CEOs still with the company. An investigation found that Toshiba executives had pressured subordinates to meet unrealistic sales targets through improper accounting practices to avoid showing losses. This scandal highlighted issues with Japan's prior focus on profits over fraud prevention and tolerance for companies selling at a loss to stay in business. It was one of the largest accounting scandals in Japanese history.

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    31 views4 pages

    Eportfolio

    Uploaded by

    api-334921583
    Toshiba, a major Japanese electronics company, was embroiled in a major accounting scandal when it was revealed in 2015 that they had overstated profits by 151.8 billion yen over seven years. In the wake of this discovery, the CEO and eight other senior officials resigned, including two previous CEOs still with the company. An investigation found that Toshiba executives had pressured subordinates to meet unrealistic sales targets through improper accounting practices to avoid showing losses. This scandal highlighted issues with Japan's prior focus on profits over fraud prevention and tolerance for companies selling at a loss to stay in business. It was one of the largest accounting scandals in Japanese history.

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    of 4

    Tandukar 1

    The Worlds Biggest Accounting Scandals


    George Smith
    Accounting 2010
    Tuesday 21 July 2015
    Toshiba Accounting Scandals
    Sachin Tandukar
    Tandukar 2

    As we all know Toshiba is one of the biggest brand in the world. Toshiba was founded in 1938,

    Toshiba Corporation is a Japanese multinational corporation which has it headquarters in Tokyo,

    Japan. Toshiba is also known as the king of electronics and different products such as

    communications equipment, electronic components, household appliances and so on. Toshiba

    was the worlds fifth-largest personal computer vendor and the worlds fourth-largest

    manufacturer of semiconductors, based on revenues.

    Toshiba have remained successful for many years because of their ability to stay on top

    of the world of technology. They were inventing many changes in the technology that most other

    market wasnt able to keep pace with it. Toshiba is active in diverse business fields thats why it

    has established itself worldwide. They have strong presence in Europe, Asia, and America.

    Although it is still one of the best brand in the world, on July 21, 2015 the CEO of Toshiba

    announced his resignation because of the accounting scandals in which the company overstated

    profits by 151.8 billion yen over a seven years period and after that eight others senior official

    also resigned, including the two previous CEOs who where still working in the company.

    This scandal was done for the long-term projects and lack of internal controls. When the

    investigation was going on, it became apparent that Toshiba CEOs was giving pressure on

    subordinates to meet sales target after the 2008 global recession and then the pressure started to

    come right before the end of the fiscal year. Then after the top management set impossible

    targets to make their profits and business go high. Those high targets in the market were really

    hard for them, as a result of meeting the targets, they were given tougher goals. The investigation

    was going on and they revealed that most of the unwanted accounting scandals were not done by

    the external auditors but did by the internal accountants. The staff skillfully did complex
    Tandukar 3

    accounting treatments where the current evidence proved extremely difficult. When the external

    auditors asked about the information, facts were hidden and the information that was provided

    created a very difficult picture from the actual facts.

    Right after two months of this huge accounting scandal, Japan adopted its first corporate

    governance code. Prime Minister Shinzo Abe made changes in corporate governance a key

    theme in his attempt to revive the Japanese Economy, hoping such changes would attract more

    outside investors. The government had largely focused on increasing profitability than

    preventing fraud. It is because Japan companies have long been seen to tolerate low profits, by

    putting painful decisions by selling at the low prices. They did this in order to make their

    business run again.

    Therefore, it proves that how the accounting irregularities in evidence at Toshiba spread

    from a minor accounting misrepresentation to corporate-wide deception ingrained in the cultural

    fabric of the organization. Toshiba now is focusing on how to overcome and make different

    strategies and different challenges to recover from the biggest accounting scandal in Japanese

    History.
    Tandukar 4

    Work Cited

    Atsuko Fukase, Toshiba Accounting Scandal Draws Record Fine From Regulators. Updated

    December. 7, 2015.

    www.wsj.com/articles/toshiba-accounting-scandal-draws-record-fine-from-regulators-

    1449472485

    J. William Carpenter, Toshibas Accounting Scandal: How it happened. August 13, 2015.

    www.investopedia.com/articles/investing/081315/toshibas-accounting-scandal-how-it-

    happened.asp

    Mori Kazuo, Toshiba Accounting Scandal Highlights Issues in Corporate Governance.

    December 6, 2015

    www.nippon.com/en/in-depth/a04802/

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