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TOSHIBA ACCOUNTING SCANDAL

GROUP ASSIGNMENT 2
WHAT HAPPENED BACKGROUND HOW THEY DID IT
In April 2015, TOSHIBA was Toshiba was founded in 1939 as Tokyo Shibaura Denki K.K. through the merger Independent panel of auditors and
exposed tat over the past 7 of Shibaura Seisaku-sho (founded in 1875) and Tokyo Denki (founded in 1890). investigators found that in Toshiba
years, the company had International the following illegals
inappropriate accounting The company name was officially changed to Toshiba Corporation in 1978. and unethical things were occurring:
practices overstated profits in Booking future profits early
multiple TOSHIBA business units. Toshiba is organized into four groupings: the Digital Products Group Pushing back losses
the Electronic Devices Group Pushing back charges
Its operating profits was the Electronic Devices Group Changing revenue and liabilities
recorded at a total inflate profits the Home Appliances Group Figure 2. Label in 24pt Calibri. side by side
of 151.8 Billion Yen ($1.2 Billion) the Social Infrastructure Group

Audited by Ernst & Young ShinNihon (during scandal) HOW THEY GET CAUGHT
Involved 2 former CEO & current
CEO (2015) Investigators found direct evidence
IMPACT FROM TOSHIBA SCANDAL
of inappropriate accounting
practices and overstated profits in
WHY THEY DID IT 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
Toshiba's corporate leadership including the visual products unit,
($17.4 million) the PC unit and the semiconductor
handed down strict profit
Ernst & Young ShinNihon LLC suspend from taking on new business contracts unit.
targets, known as Challenges, to
for three months.
business unit presidents, often
Toshiba is cutting 7,800 jobs in total as part of a major restructuring for the investigators found evidence of
with the implication that failure
Japanese tech firm booking future profits early, pushing
would not be accepted.
Stock price decrease by 40% back losses, pushing back
The only way to achieve these charges and other similar techniques
Challenges was to do so through that resulted in overstated profits.
the use of irregular accounting
techniques. The investigative panel identified a
single set of direct and indirect
Weak corporate governance & causes to explain how the
poorly functioning system of inappropriate practices took hold
internal controls Atsutoshi Nishida Norio Sasaki Hisao Tanaka across the conglomerate.
Former CEO (2005-2009) Former CEO (2009-2013) Current CEO (2013-2015

GROUP MEMBERS References


1. https://blogs.wsj.com/briefly/2015/07/21/5-things-to-know-about-toshibas-accounting-scandal-2/
MUHAMMAD BILAL BIN KHAIRUDDIN (S37272) MUHAMMAD ISKANDAR SAID BIN MOHD SUFFIAN (S37275)
2. https://www.theverge.com/2015/12/21/10635070/toshiba-job-cuts-accounting-scandal
SHARIZAL BIN MOKHTAR (S37358) 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-
MOHAMMAD ZUHAILI BIN ABD KARIM (S40450) audit-idUSKBN0U505S20151222
5. https://www.nippon.com/en/genre/economy/l00117/