Question

Based on Toshiba Scandal

1.  What could Toshiba have done differently after the accounting scandal was uncovered?

2. Do you think such scandals in Japan would have taken place in U.S.? If yes or no, why?

3. What is your opinion on Toshiba's internal audit function?

Answer 1

Ans.1

Toshiba could have done differently after the accounting scandal was uncovered -

- Acquired independent directors

- Developed an Internal ethics committee

- Utilised third party auditors.

Ans.2 Yes

Ans.3

In the accounting literature, the Japanese Toshiba has taken an important place with its accounting scandal that occurred in 2015. Toshiba's accounting records have been systematically changed and the company's operating profit has been inflated for many years. Toshiba's financial statements irregularities, non-rational profit targets, failure in reflecting the loss of value in its financial statements, the occurrence of arbitrary practices of the company's top management caused multiple serious problems in the management of the company. The fact that even a huge company, such as the Japanese giant Toshiba, is managed away from the corporate governance, causes other companies to question the importance of audit once again. The fact that we still face such large accounting scandals today, and they bring about the issue of whether the internal audit systems of the companies are established or not if they are established how efficiently they are operated, and how effective the independent audit is. This research, which emphasizes the importance of auditing process for companies is based on the Toshiba's corporate accounting scandal case. The Toshiba case has been evaluated and the necessity of independent auditing and the issue of how to ensure audit quality have been handled. This research intends to take lessons from the Toshiba case in order to raise awareness, to encourage corporate partners to increase audit quality and to communicate with each other in order to ensure audit quality.