toshiba accounting scandal
TRANSCRIPT
Toshiba Accounting Scandal
Lexy, Jessie, Greg, and Sudket
Overview- Situation and Ethical Frameworks - Lexy
- Ethical responsibilities and standards - Greg
- Primary causes and how they could have acted differently - Jessie
- Outcomes and key lessons - Sudket
- Conclusion
- Questions
Situation and Ethical Frameworks
Situation- Leading electronics & industries
company
- 1.9 million “accounting adjustment” discovered in September 2015
- Organisation structure and pressure led to misreporting of numbers
Situation
Situation
Ethical Frameworks- Deontology: Not morally right to use inaccurate accounting
practices to meet numbers on their reports
- Justice: ‘Fake it or will replace you with someone who will’ workplace culture and shareholders very mislead
- Egoism: CEO’s placing their own welfare above all others
Ethical Responsibilities and Standards
Where do the Ethical Responsibilities Lie? - EVERYONE working for Toshiba has the responsibility to act ethically.
- For the Toshiba scandal, the individuals that should be held accountable for the ethical responsibilities lie on every level throughout the company.
Where do the Ethical Responsibilities Lie?- Initially stemmed from the previous three CEO’s
- Not leading by example.
- Immense pressure from Toshiba’s corporate leadership onto the business unit presidents to meet profit targets is what ultimately led to the fraudulent accounting practices.
- Right down to the accountants entering the false information
Ethical Standards being Compromised- Poor Corporate Governance
• Not identifying and stopping the inappropriate behaviours.• Superiors Demanding obedience from subordinates to achieve their
profit targets.• Failure was not an option.
- Ineffective Internal Controls• Methods to ensure integrity in accounting information.
Underlying Moral Values- The individuals involved compromised their:
• Integrity- Falsifying the accounting information• Empathy- How the pressure affected coworkers and
subordinates• Respect- Superiors not respecting their subordinates limits
- Maximising profits should not comprise the individual’s moral values.
Primary causes and how they could have acted differently
Primary Causes- Immense pressure on business unit presidents
- Superiors had ‘demand obedience’ integrated into corporate culture
- Poorly functioning internal systems due to weak corporate governance
How they could have acted differently?
- Acquired independent directors
- Developed an Internal ethics committee
- Utilised third party auditors
Outcomes and key lessons
Stakeholder Outcomes - Business Outcomes
- Employee Outcomes
- Shareholder
- Supplier
- Community
Key Lessons - The right approach
- Corporate Governance
- Unethical behaviour outcome
Conclusion
- Awareness of ethical practices as they influence culture and
reputation
- Organisational structure & pressure from top executives
overwhelming
- Report accurate figures to prevent a similar situation
ReferencesAronson, B. (2013). The Olympus Scandal and Corporate Governance Reform: Can Japan Find a Middle ground between the Board Monitoring Model and Management
Model? Retrieved July 19, 2016, from https://sydney.edu.au/law/anjel/documents/2013/ZJapanR35_05-Aro
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key-questions-toshiba-scandal-unanswered-151011075457531.html
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http://www.investopedia.com/articles/investing/081315/toshibas-accounting-scandal-how-it-happened.asp
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ReferencesNagata, K. (2015). Pressure to show a profit led to Toshiba’s accounting scandal. Retrieved July 19, 2016, from
http://www.japantimes.co.jp/news/2015/09/18/business/corporate-business/pressure-to-show-a-profit-led-to-toshibas-accounting-scandal/#.V43bmFdYn-Z
Russel, G. (2015). Will Toshiba’s scandal bring about the change needed in corporate governance?. Retrieved July 20, 2016, from
http://www.gaaaccounting.com/toshiba-scandal-corporate-governance/
Singh, M. (2015). Toshiba Accounting Scandal: A Corporate Culture Problem. Retrieved July 18, 2016, from
https://blogs.cfainstitute.org/marketintegrity/2015/10/30/toshiba-accounting-scandal-a-corporate-culture-problem
The Financial Times. (2016). Toshiba shares fall 12% after warning of record $4.5bn loss. Retrieved from
https://next.ft.com/content/f985af4a-a78e-11e5-955c-1e1d6de94879
Toshiba Corporation. (2016a). Stakeholders. Retrieved July 19, 2016, from http://www.toshiba.co.jp/csr/en/engagement/stakeholders.htm
Toshiba Corporation. (2016b). Toshiba Group Standards of Conduct. Retrieved July 18, 2016, from https://www.toshiba.co.jp/csr/en/policy/soc.htm