An independent report has found that technology giant Toshiba overstated profits over a period of six years and that senior executives were complicit in the scandal. This could result in up to 400 billion Yen in charges and the resignation of most senior personnel. In fact, Chief Executive Hisao Tanaka has already resigned over the matter.
The forensic investigation first came to light in April, when Toshiba announced that it may have under-reported costs of infrastructure projects in the business year to March 2014. The investigation expanded in May and the findings of a third-party committee were that the operating profit for the three years to that date should be marked down by at least 50 billion Yen.
At that point, an independent committee headed by a former prosecutor and made up of forensic accountants and lawyers, was launched to broaden the investigation and three more business units came under scrutiny. Then last month, it was announced that internal auditors had found further instances of improper accounting amounting to 3.6 billion Yen.
Earlier this month, the independent panel found that top executives had been involved in improper accounting practices, with an announcement last week that Toshiba had overstated its operating profit by 151.8 billion Yen (£780m) over several years. According to the report, the executives knew about the profit overstatement and had created a pressurised corporate culture that prompted business heads to manipulate figures to meet targets. The forensic investigators also believed that, because the improper accounting was intentional, it would have been difficult for auditors to detect. However, now a forensic investigation has been launched, it is almost certain that most irregularities will be discovered.
Author: Roger Isaacs, 27 July 2015
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