Financial accounting is the external reporting of a firm’s performance based on historical information. It is used for investors, stakeholders, and other third parties to make a business decision. Hence accountants should follow the Generally Accepted Accounting Principles (GAAP) with ethics and integrity. However, financial statement fraud is still a common phenomenon.

ioSPeWI4j.bYOlympus Corp. was sued by six banks last year for a 13-year accounting fraud. The company has been trying to conceal past losses by inflating fees to advisers and overpaying for takeovers for the past decade. In 2011, it cut $1.3 billion of net assets. The investors are now asking for $273 million of compensation.
The reason for Olympus reporting a false financial statement is mainly due to situational pressure. The U.S dollar has been depreciating in relation to Japanese yen. This made Olympus more difficult to exports its products. In 1990, Japanese bubble burst and the company hid a growing loss of over $1 billion. The initiative was to retain its investors by hiding losses, but now it has caused severe consequences to its stakeholders. Even though Olympus currently controls 75% of endoscopes market, its future is cloudy due to the scandal.

 

http://www.bloomberg.com/news/articles/2014-04-09/olympus-sued-for-273-million-after-13-year-fraud

http://www.nytimes.com/2011/12/09/business/deep-roots-of-fraud-at-olympus.html?_r=0