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Case Study On Errors and Frauds

Toshiba engaged in accounting fraud from 2008-2015, overstating profits by $1.2 billion. An investigation found Toshiba business units improperly booked future profits early and pushed losses and charges to later periods. Executives imposed strict profit targets that business units could only meet through fraudulent accounting. Toshiba's obedient corporate culture enabled the fraud. The scandal led to a huge $6.4 billion loss for Toshiba in 2015, 14,000 job cuts, and a 45% decline in US sales, negatively impacting the Japanese economy. To regain trust, Toshiba replaced top management, is changing its culture, making independent audits, and strengthening CSR.

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Hariharan Shetty
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281 views9 pages

Case Study On Errors and Frauds

Toshiba engaged in accounting fraud from 2008-2015, overstating profits by $1.2 billion. An investigation found Toshiba business units improperly booked future profits early and pushed losses and charges to later periods. Executives imposed strict profit targets that business units could only meet through fraudulent accounting. Toshiba's obedient corporate culture enabled the fraud. The scandal led to a huge $6.4 billion loss for Toshiba in 2015, 14,000 job cuts, and a 45% decline in US sales, negatively impacting the Japanese economy. To regain trust, Toshiba replaced top management, is changing its culture, making independent audits, and strengthening CSR.

Uploaded by

Hariharan Shetty
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Case study on Errors and frauds

-Toshiba Fraud
Fraud of Toshiba
• On July 21, 2015, Toshiba CEO Hisao Tanaka
announced his resignation in the face of an
accounting scandal tied to about $1.2 billion
in overstated operating profits. Details of the
scandal emerged the day before when an
independent investigative panel released a
report describing the accounting improprieties
in detail.
Findings of the Investigative Report
• Investigators found direct evidence of
inappropriate accounting practices and
overstated profits in multiple Toshiba business
units, including the visual products unit, the PC
unit and the semiconductor unit.
• The accounting misconduct began under CEO
Atsutoshi Nishida in 2008 amid a global financial
crisis that cut deeply into Toshiba's profitability.
• It continued unabated under the next CEO, Norio
Sasaki, and eventually ended in scandal under
Tanaka.
How did they fraud
Independent panel of auditors and investigators
found that in Toshiba International the following
illegal and unethical things were occurring:-
• Booking future profits early
• Pushing back losses
• Pushing back charges
• Changing revenue and labilities side by side
How they did Fraud
Reason for fraud?
• Investigators describe how 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.
• In some cases, quarterly Challenges were handed
down near the end of the quarter when there was
no time left to materially affect unit performance.
• It soon became clear within individual business
units that the only way to achieve these
Challenges was to do so through the use of
irregular accounting techniques.
• The investigative panel concluded that Toshiba's
corporate culture, which demanded obedience to
superiors, was an important factor enabling the
emergence of fraudulent accounting practices.
• The culture operated on the level of business unit
presidents and on every level of authority down
the chain to the accountants who ultimately
employed the accounting techniques.
Loss of that Fraud
• Toshiba, a pillar of Japan’s industrial
establishment, is expecting a huge loss of
about 710bn yen (US$6.4bn or £4.4bn) for the
year to March, with declining global demand
exacerbating financial woes
• Toshiba took total job losses to 14,000 in
2015.
• Sales in Us decline about 45%
• Japan Economy was also effected
How Toshiba regains market trust?
• Toshiba replaced its top management after
the scandal.
• They are changing their culture.
• They are paying the challans to different
organizations
• Toshiba has made a independent audit section
in their organization.
• CSR development team is also developing.
Thank you
• Karan
• Rohan
• Pritesh

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