TOSHIBA ACCOUNTING SCANDAL
GROUP ASSIGNMENT 2
WHAT HAPPENED
In April 2015, TOSHIBA was
exposed tat over the past 7
years, the company had
inappropriate accounting
practices overstated profits in
multiple TOSHIBA business units.
Its operating profits was
recorded at a total inflate profits
of 151.8 Billion Yen ($1.2 Billion)
Involved 2 former CEO & current
CEO (2015)
WHY THEY DID IT
Toshiba's corporate leadership
handed down strict profit
targets, known as Challenges, to
business unit presidents, often
with the implication that failure
would not be accepted.
The only way to achieve these
Challenges was to do so through
the use of irregular accounting
techniques.
Weak corporate governance &
poorly functioning system of
internal controls
GROUP MEMBERS
MUHAMMAD BILAL BIN KHAIRUDDIN (S37272)
SHARIZAL BIN MOKHTAR (S37358)
MOHAMMAD ZUHAILI BIN ABD KARIM (S40450)
BACKGROUND HOW THEY DID IT
Toshiba was founded in 1939 as Tokyo Shibaura Denki K.K. through the merger Independent panel of auditors and
of Shibaura Seisaku-sho (founded in 1875) and Tokyo Denki (founded in 1890). investigators found that in Toshiba
International the following illegals
The company name was officially changed to Toshiba Corporation in 1978. and unethical things were occurring:
Booking future profits early
Toshiba is organized into four groupings: the Digital Products Group Pushing back losses
the Electronic Devices Group Pushing back charges
the Electronic Devices Group Changing revenue and liabilities
the Home Appliances Group Figure 2. Label in 24pt Calibri. side by side
the Social Infrastructure Group
Audited by Ernst & Young ShinNihon (during scandal) HOW THEY GET CAUGHT
Investigators found direct evidence
IMPACT FROM TOSHIBA SCANDAL
of inappropriate accounting
practices and overstated profits in
Force Chief Executive Hisao Tanaka to step down. multiple Toshiba business units,
Japans financial regulator has fined an Ernst & Young affiliate 2.1 billion yen
including the visual products unit,
($17.4 million) the PC unit and the semiconductor
Ernst & Young ShinNihon LLC suspend from taking on new business contracts unit.
for three months.
Toshiba is cutting 7,800 jobs in total as part of a major restructuring for the investigators found evidence of
Japanese tech firm booking future profits early, pushing
Stock price decrease by 40% back losses, pushing back
charges and other similar techniques
that resulted in overstated profits.
The investigative panel identified a
single set of direct and indirect
causes to explain how the
inappropriate practices took hold
Atsutoshi Nishida Norio Sasaki Hisao Tanaka across the conglomerate.
Former CEO (2005-2009) Former CEO (2009-2013) Current CEO (2013-2015
References
1. https://blogs.wsj.com/briefly/2015/07/21/5-things-to-know-about-toshibas-accounting-scandal-2/
MUHAMMAD ISKANDAR SAID BIN MOHD SUFFIAN (S37275)
2. https://www.theverge.com/2015/12/21/10635070/toshiba-job-cuts-accounting-scandal
MUHAMMAD NOR YUSRI BIN MOHD ZAIN (UK24450) 3. https://www.cnbc.com/2015/07/15/toshiba-faces-3b-charges-over-accounting-scandal-sources.html
4. https://www.reuters.com/article/us-toshiba-accounting-ernst/japan-fines-ernst-young-affiliate-17-4-million-over-toshiba-
audit-idUSKBN0U505S20151222
5. https://www.nippon.com/en/genre/economy/l00117/