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Toshiba Accounting Scandal

899 Words4 Pages

Ozan Çağlar İnaç
5-26-2017

Aymelek Kozikoğlu

MGMT 512 Exam 1

1

TOSHIBA ACCOUNTING SCANDAL

Creation of Toshiba starts with foundation of Tanaka Engineering Works in 1875 and

Hakunetsu-sha Co., Ltd. in 1890. After foundation, both companies had big growth rate similar

to Japan economy. After having hard times at great depression, the two companies; Shibaura

Seisaku-sho (the name was changed from Tanaka Engineering Works in 1893) and Tokyo

Electric Company (the name was changed from Hakunetsu-sha in 1899) merged and Tokyo

Shibaura Denki was created. Lastly, in 1983 company’s official name was adopted as Toshiba

Corporation. (https://www.toshiba.co.jp/worldwide/about/history.html#history2000, history of

Toshiba)

When the accounting scandal emerged, the company had more than 200.000 employees all

around the World and reported net worldwide sales of more than $63 billion for the fiscal year

ending March 31, 2015 (Toshiba 's Accounting Scandal: How It Happened by J. William

Carpenter).

The scandal were found out after independent investigative panel released a report describing

the accounting improprieties in detail on 20th July, 2015. According to the report, Toshiba’s

senior management, including CEO and last two CEOs’, understated the long term project costs

and overstated profits. As a result of this accounting cheat, company overstated operating profit

by at least $1.2 billion and had also improperly valued

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