Question

CASES: Students may select a case from any source or from the textbook, which highlights many real cases that describe corporate issues of ethical failure. Here are some other suggested cases for consideration: • Toshiba Accounting • Wells Fargo Fake Account abuse • Wells Fargo ethical violations • General Electric & SEC investigation • Boeing and “program accounting” ethical issues • Samsung's Bribery Charges Can I get help, please? Thank you

Answer 1

Solution :

Case - Toshiba Accounting

Toshiba Accounting is a scandal about improper accounting and overstating of operating profits due to the pressure from management.

It all came into picture when Toshiba CEO Hisao Tanaka announced his resignation on July 21st 2015 in the face of an accounting scandal isssue tied to an overstated operating profit of $1.2 billion. When the investigation had taken place it was found that improper accounting had taken place since last 7 years and two of the earlier CEO's were involved in it along with Tanaka. The statements of CEO were , that they didn't directly tell anyone to do the misstatement but they had put immense pressure to get the desired profitability and hence the books were altered as per it.

Toshiba was doing good post war during 1950's. It expanded its business by selling its products in foreign market. Till 2015 it had variety of business units in semiconductors, personal electronics, infrastructure, home appliances and medical equipment.

The Accounting misconduct began in 2008 under the CEO Atsutoshi Nishida including next CEO Norio Sasaki and ended up at Tanaka.

The accounting misstatement was found at various business units of Toshiba. The misstatement was found in the form of booking future profits early, pushing back losses, pushing back charges and other similar techniques that resulted in overstated profits. In investigation it was found that Toshibas corporate leadership handed down the business units strict profit Targets with the condition that failure won't be accepted. In some cases quarterly targets were given at the end of the quarters when there was no time for performance of the business and than the only option left was overstating profit to get the desired results for management.