Toshiba
Summary:
In February 2015, a financial watchdog in Japan cautioned the financial community of possible accounting irregularities at Toshiba, so an independent panel was put in place to investigate the watchdog’s claims. In April, Toshiba made public that it was going to restate its profit for fiscal years 2011 through 2013 by at least ¥50B (or $419M) due to accounting irregularities at three units of the company (Power System, Social Infrastructure System and Community Solutions). In July 2015, the independent panel indicated that Toshiba overstated its profits by ¥150B ($1.2B), primarily in its electric power systems business from fiscal years 2009 through fiscal year 2013, plus additional irregularities in Toshiba’s personal computer and semiconductor business. The findings forced Toshiba’s Corp. President Hisao Tanaka and several other executives to step down in July.
The accounting scheme may have started around 2008 during the global financial crisis, but it is believed that it deepened after Japan’s March 2011 earthquake, tsunami and nuclear disasters because Toshiba supplied two of the reactors affected at the Fukushima Daiichi plant. After this event, Japan shut down the remainder of the nuclear operations at the site, and the demand for nuclear energy around the world was reduced. Toshiba, having a large stake of its business in the nuclear energy production, became affected by the events in 2011, so management at Toshiba set aggressive sales and profit targets across the company to offset the decline in the energy division. As a result of this decision, the rivalry across the divisions became intense; therefore triggering a number of accounting schemes. According to publications in the WSJ, Toshiba overstated its profit by inaccurately applying the percentage of completion for some of its energy projects, underreporting expenses, and