Toshiba Top Executives Involved In Improper Accounting
It has recently come to light that a number of top executives in Toshiba Corporation are reportedly involved in the accounting scandal that is currently affecting the company, according to Reuters. Moreover, Toshiba’s improper accounting practices were reportedly done in various areas of the company’s businesses including its semiconductor and nuclear conglomerates.
Among the top executives named to be participating in Toshiba’s improper accounting are Toshiba Director and Representative Executive Officer Hisao Tanaka, Director and Vice Chairman of the Board Norio Sasaki as well as former president and adviser Atsutoshi Nishida.
In the midst of this, Tanaka has issued an apologetic statement to shareholders and stakeholders. He said, “Toshiba regrets and concerns caused to shareholders and stakeholders. We are determined to settle this matter as soon as possible.”
Moreover, Tanaka made a brief explanation of the Toshiba’s current accounting situation. He said, “Earlier this year, we identified a problem with our percentage-of-completion method of accounting for certain infrastructure projects. We responded by setting up a Special Investigation Committee in April, and in the course of its activities, we determined that it was necessary to investigate further. Acting on this, we delegated investigations to an Independent Investigation Committee of third-party experts on May 15. This second investigation is now underway, and all of us in Toshiba are cooperating fully with the Independent Investigation Committee and its activities.”
Furthermore, he emphasized his apologies again on behalf of the company. He added, “On behalf of Toshiba Corporation, I express sincere apologies to our shareholders and all other stakeholders for any concern or inconvenience caused by this matter, and assure you that we will make every effort to restore your trust. Thank you for your ongoing support.”
In April 3, Toshiba Corporation released a statement that they have just learned of “a matter requiring investigation” with regard to “the percentage-of-completion method of accounting used by the Company (Toshiba) in fiscal 2013 (as a non-consolidated entity) in relation to certain infrastructure projects undertaken by the Company.” In response this, Toshiba had decided “to immediately establish” a Special Investigation Committee that will conduct an internal investigation in the matter. It was made up of executives and directors from Toshiba as well as “outside experts.”
The said committee included Toshiba Corporation Chairman of the Board Masashi Muromachi, Corporate Vice President & General Manager of the Corporate Audit Division Hiroshi Igashira, Corporate Senior Vice President in charge of the Legal Affairs Division Fumiaki Ushio, Outside Director Ken Shimanouchi, Attorney-At-Law from Mori Hamada & Matsumoto Mikinao Kitada and Certified Public Accountant from Deloitte Tohmatsu Financial Advisory LLC Shigeru Tsukishima.
Later in May 8, Toshiba released another statement saying that the Special Investigation Committee’s findings. More specifically, Toshiba said that during the investigation, “instances have been identified in some infrastructure-related projects in which the percentage-of-completion method of accounting was used, wherein the total amount of the contract cost was underestimated and contract losses (including provisions for contract loss) were not recorded in a timely manner.”
Toshiba added, “Instances have also been identified other than in projects in which the percentage-of-completion method of accounting was used that require further investigation.”
This prompted the company to have an Independent Investigation Committee continue with looking into Toshiba’s accounting problems. Meanwhile, Toshiba recently announced that it plans to make the report of the latter committee public soon, although the company may need to “implement partial redaction” to protect “trade secrets” and “individual privacy.”
On the other hand, reports have surfaced that Toshiba may be looking at paying as much as 300 billion yet for their accounting fiasco. However, Toshiba said that “the Company has not made any such announcement.”
They also said that “the final amounts of impact on the Company’s consolidated and non-consolidated financial statements in connection with the investigation have not yet been finalized.”