Toshiba Accounting Scandal

by OskarWallin

Japanese company Toshiba mislead investors through accounting fraud. They inflated earnings by at least $1.2 Billion US Dollars. Requests were made by senior managers to alter financial documents released to the public (Toshiba Executives Resign Over $1.2 Billion Accounting Scandal).

 

Masashi Muromachi, chairman and president of Toshiba Corp., attends a news conference in Tokyo, Japan, on Monday, Sept. 7, 2015. The manufacturer of chips and nuclear reactors released earnings on Monday after it delayed them last week on the discovery of new accounting irregularities related to a U.S. unit's construction project. Photographer: Kiyoshi Ota/Bloomberg via Getty Images

http://fortune.com/2015/09/08/toshiba-accounting-scandal/

 

The managers responsible for the financial fraud have since been forced to resign. There is an interesting overlap in accounting and ethics here. The information provided in the company’s income statement was not correct. This was done in order to attract investors, maintain a strong brand image and improve the companies position on the stock market. This issue raises some interesting questions. Should Toshiba be punished further? Clearly, the company is very important to the Japanese community in terms of economic benefits (Jobs, Taxes, international presence etc). How about the individuals responsible for this? This is a serious offence as investors could lose a significant amount of money due to the dishonesty of Toshiba. The targets set by the business were too ambitious which lead to managers being pressured into fraud (Toshiba’s Accounting Scandal Worse than We Thought).

The company has promised to restructure completely to avoid similar problems in the future. However, there is still an issue in terms of accountability. Financial statements are important tools for companies as they attempt to attract investors and make all stakeholders aware of how the business is doing. It is interesting to look at the connection between accounting and ethics to see how different aspects of business are all linked.

 

Bibliography

“Toshiba’s Accounting Scandal Worse than We Thought.” Fortune VWs Deadline Fed Minutes and a New Speaker 5 Things to Know This Week Comments. N.p., 04 Oct. 2015. Web. 04 Oct. 2015. <http://fortune.com/2015/10/04/week-ahead-vw-fed/>.

“Toshiba Executives Resign Over $1.2 Billion Accounting Scandal.” Bloomberg.com. Bloomberg. Web. 2 Oct. 2015.