The Toshiba Accounting Scandal of 2015 Essay

Exclusively available on Available only on IvyPanda® Made by Human No AI

The case under consideration is Toshiba accounting scandal of 2015. The main issue is that the conglomerate’s senior management recognized that the company’s earnings have been overstated by around $2 billion. Even though the timeframe of the scandal is seven years, the outcomes are still significant because the estimates were four times less than the presented financial outcomes (Matthews & Gandel, 2015).

This scandal pointed to the use of fraudulent accounting practices by Toshiba. The main factor contributing to the challenge is the fact that managers are free to postpone reports or move costs into later years that results in discrepancies in company’s financial outcomes. In this case, the main ethical issue is being dishonest with the conglomerate’s stakeholders and shareholders. In this way, they are ones affected.

The main implication is that stakeholders and shareholders do not possess truthful information regarding the operation of Toshiba, so they cannot make appropriate decisions about their further cooperation with the company. For instance, they might believe that the company is more successful that it is in fact and invest in it. As a result, such a decision may turn into a financial failure. This example is a common implication for community.

Still, there are other stakeholders to consider. For instance, owners suffer financial losses due to ruined reputation. Another group of those affected are employees because commonly lose confidence in their company and senior management. The same is true for customers that may distrust the company, thus decreasing the customer base. Except for these groups, marketers and vendors may as well be impacted because they fail to estimate the real condition of the firm and develop ways to cooperate with it.

Finally, there are managers who face unnecessary difficulties in running the company, such as the need for addressing fraud implications, and regulators that are forced to review standards in order to conclude on their effectiveness and revise them in case of necessity.

Speaking of internal accounting regulations, none of them were violated because, according to Toshiba’s corporate culture, postponing reports and moving costs to following years is allowable. These regulations are governed by senior management. Nevertheless, the considered scandal is a proper example of violating the Generally Acceptable Accounting Principles (GAAP) issued by the Financial Accounting Standards Board (FASB).

According to these rules, accounting, as a process, should be timely, while, as a result, it should be precise. In this case, reports were neither timely (because the problem covered a seven-year reporting period) nor precise (because the reported information was not accurate). The same requirements to accounting (International Financial Reporting Standards or simply IFRS) are developed and published by another influential institution – the International Accounting Standards Board (IASB). Therefore, regardless of the corporate culture specificities, the scandal is a representation of ignoring generally acceptable rules and standards of accounting.

The abovementioned institutions are some of the regulators that might impact accounting rules. Other influential regulators are governmental and international accounting agencies and financial institutions. Some of them are the following: Governmental Accounting Standards Board (GASB), American Institute of Certified Public Accountants (AICPA), U.S. Securities and Exchange Commission (SEC), and Internal Revenue Service (IRS).

Still, it is essential to note that they are the U.S.-based regulators. As for international regulators, they are the Financial Accounting Foundation (FAF) and the one mentioned above – IFRS. Except for them, these are governments that might as well influence accounting by passing standards and legal provisions in accounting (Pierta, McLeay, & Ronen, 2014). Nevertheless, regardless of a variety of regulators, all of them are external and have a direct impact on the process of developing internal accounting procedures and ethical codes of conduct.

References

Matthews, C., & Gandel, S. (2015). . Web.

Pierta, R. D., McLeay, S., & Ronen, J. (2014). (Eds.). Accounting and regulation: New insights on governance, markets, and institutions. New York, NY: Springer.

More related papers Related Essay Examples
Cite This paper
You're welcome to use this sample in your assignment. Be sure to cite it correctly

Reference

IvyPanda. (2020, September 26). The Toshiba Accounting Scandal of 2015. https://ivypanda.com/essays/the-toshiba-accounting-scandal-of-2015/

Work Cited

"The Toshiba Accounting Scandal of 2015." IvyPanda, 26 Sept. 2020, ivypanda.com/essays/the-toshiba-accounting-scandal-of-2015/.

References

IvyPanda. (2020) 'The Toshiba Accounting Scandal of 2015'. 26 September.

References

IvyPanda. 2020. "The Toshiba Accounting Scandal of 2015." September 26, 2020. https://ivypanda.com/essays/the-toshiba-accounting-scandal-of-2015/.

1. IvyPanda. "The Toshiba Accounting Scandal of 2015." September 26, 2020. https://ivypanda.com/essays/the-toshiba-accounting-scandal-of-2015/.


Bibliography


IvyPanda. "The Toshiba Accounting Scandal of 2015." September 26, 2020. https://ivypanda.com/essays/the-toshiba-accounting-scandal-of-2015/.

If, for any reason, you believe that this content should not be published on our website, please request its removal.
Updated:
This academic paper example has been carefully picked, checked and refined by our editorial team.
No AI was involved: only quilified experts contributed.
You are free to use it for the following purposes:
  • To find inspiration for your paper and overcome writer’s block
  • As a source of information (ensure proper referencing)
  • As a template for you assignment
Privacy Settings

IvyPanda uses cookies and similar technologies to enhance your experience, enabling functionalities such as:

  • Basic site functions
  • Ensuring secure, safe transactions
  • Secure account login
  • Remembering account, browser, and regional preferences
  • Remembering privacy and security settings
  • Analyzing site traffic and usage
  • Personalized search, content, and recommendations
  • Displaying relevant, targeted ads on and off IvyPanda

Please refer to IvyPanda's Cookies Policy and Privacy Policy for detailed information.

Required Cookies & Technologies
Always active

Certain technologies we use are essential for critical functions such as security and site integrity, account authentication, security and privacy preferences, internal site usage and maintenance data, and ensuring the site operates correctly for browsing and transactions.

Site Customization

Cookies and similar technologies are used to enhance your experience by:

  • Remembering general and regional preferences
  • Personalizing content, search, recommendations, and offers

Some functions, such as personalized recommendations, account preferences, or localization, may not work correctly without these technologies. For more details, please refer to IvyPanda's Cookies Policy.

Personalized Advertising

To enable personalized advertising (such as interest-based ads), we may share your data with our marketing and advertising partners using cookies and other technologies. These partners may have their own information collected about you. Turning off the personalized advertising setting won't stop you from seeing IvyPanda ads, but it may make the ads you see less relevant or more repetitive.

Personalized advertising may be considered a "sale" or "sharing" of the information under California and other state privacy laws, and you may have the right to opt out. Turning off personalized advertising allows you to exercise your right to opt out. Learn more in IvyPanda's Cookies Policy and Privacy Policy.

1 / 1