Why Toshiba Is Getting Hit With A Record Fine

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The 2015 Toshiba Accounting Case: Why Toshiba is Getting Hit with a Record Fine Introduction In 2015, The Japanese company owned Toshiba Corporation’s scandal lead to the CEO, Hisao Tanaka’s resignation after an independent financial audit revealed accounting discrepancies totaling 58.9 million dollars. Well known for various home electronics (TV, VCRs, etc.) and household appliances (dishwasher, washing machines, etc.) the Toshiba Corporation has been operating since 1875. An analysis of what happened to Toshiba demonstrate a lack of ethical standards in leadership, transparency, and finance. Leadership The corporate culture dictates how employee’s behavior and that old saying “lead by example” did not apply for employees working at Toshiba. Although the CEO of Toshiba did not directly instruct employees to misreport financial profits, there was indirect emphasis on meeting the company’s profit goals. The Japan culture has a reputation for enforcing obedience, therefore, Toshiba requires that employees show “obedience to their superior” (Carpenter, 2015). According to the independent panel, managers at Toshiba allegedly made it very difficult for employees to properly record expenses and revenue due to unrealistic and short-term targets (Addady, 2015). However, such aggressive tactics, reportedly resulted in seven (7) years of accounting violation where misreporting of expenses totaled 59.8 million dollars, while a third party reviewer faults employee acceptance of

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