The accounting scandal Toshiba faces spanned over seven years, involved millions of dollars, and resulted in resignation of several top level management officers. The CEOs appeared to be directly related to scandal. While they did not implicitly instruct anyone in accounting to “cook the books” they placed pressure on the accounting unit and subordinate staff to produce the desired numbers (Carpenter, 2015). The corporate culture of obedience to high level management played a large factor in the subordinate staff to obey the directives regardless of the incorrect nature of the reporting. The scandal was a result of over-inflated profits and pushing off losses as long as possible.
There are several actions Toshiba could done to resolve the scandal including: stronger corporate governance over the accounting department, establish a whistle blowing system without the fear of retaliation, and change in corporate culture to add more checks & balances. By adding corporate governance over the accounting department Toshiba will have more control over the numbers being reported. The corporate governance actions include more audits over the data, heavier analysis of the data being reported, internal controls, and additional sign off management. If Toshiba was to add a whistle blowing system, the issue could have possibly been eliminated altogether or rectified sooner. The unethical accounting practices went unnoticed for over seven years and three CEO’s (Carpenter, 2016). One whistle blower could have ended the issues with the accounting much sooner if there was a system for reporting the issues without fearing retaliation. And lastly, if Toshiba had a change in corporate culture to add more checks & balances the scandal would have been discovered much sooner. The CEOs choose to ignore the issue and allow it to continue with the next successor.
Carpenter, J. "Toshiba's Accounting Scandal: How It Happened (OTCBB:TOSBF)."Investopedia. N.p., 21 July 2015. Web. 11 Apr. 2016.