The Toshiba Accounting Scandal

The first issue that allowed the Toshiba accounting scandal to happen was the unethical culture in Japan where subalterns are not allowed to oppose higher hierarchical personnel. For this reason, we believe that this is an important aspect to be considered. Enhancing a corporate ethical culture is among the crucial factors to prevent companies’ failure.

In addition, an internal audit department should be established within the corporation.

Furthermore, we believe the independence of the auditors should be reviewed and new standards applied. In the case of Toshiba, the auditor was given an unqualified report. This shows how deficient the auditors of the corporation were.

High level management can easily overlook false recordings because they

If some company still want to introduce bonuses for performance, they should clearly stress that honest work approach if requested, and anyone who looks after their own interests ahead of the company’s won’t be around for long.

Accounting scandals are not exclusively a Japanese problem. Companies from a wide spectrum are caught exaggerating returns or hiding losses in creative ways. The reason the Toshiba scandal is important is that it illustrates some of the worst parts of Japan and Japanese corporate culture. In our opinion, more and stricter accounting principles make committing fraud harder and harder, and the big lesson learned here is that always the scandal is going “to hit harder than the fake gains”.

In our opinion there are other aspects to be consider on the Toshiba scandal for example substantive audit procedures examines the financial statements and detects errors and accounting

We believe It’s all about changing culture within these organisations as the issues here was from the top down, this makes it difficult for those within the organisation to adhere to their own ethical standards due to fear of repercussions, hence the need for strong protection for whistle blowers. In order to comply, ethical standards here appeared to be negligent from all levels of management, starting with the board of directors, internal accountants, internal audit functions and the role of the external auditors would also need to be examined here as clearly the corporate governance was week and thus the quality of internal controls were impacted and the auditor’s tests on such controls should have been designed to detect such weakness as such controls are essential for assuring achievement of an organisation's objectives in operational effectiveness and efficiency, reliable financial reporting, and compliance with laws, regulations and policies and clearly this was not the case with