Societal Context: The Hofstede Model Of The Toshiba Scandal

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Societal Context:
The Hofstede’s five-dimension model is a useful tool in understanding a country’s culture and communication nature. Japan comes across as a country with high context culture. The context is stronger than the reason. They value interpersonal relationships, collectivist by nature and form stable and long-lasting relationships. The problem solving and decision making usually happens in groups. Also, the power distance dimension in the model is above average for Japan. Hence, it can be interpreted that Japanese people expect and believe that the power is distributed unequally within the organizations and institutions. In short, Japan has a hierarchical society but less hierarchical than its Asian counterparts.
These two dimensions
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It was the compensation provided to the auditors. Japan had a cap on the auditing fee about a decade ago. Though it was removed later, the auditing fee was still lower in Japan. The Japanese firms were compensating their auditors on average by 3.2 basis points of their turn over. It was much lower than the world average which was at 5.6 basis points. This made it difficult to attract and retain good, high-quality professionals in the industry. Also, it affected the willingness of the auditor to do an in-depth quality audit as he/she was not compensated judiciously for the work. This is the phenomena observed in Toshiba, EY ShinNihon that handled Toshiba’s audits did not make note of anomalies with regards to accounting issues it investigated. Thus leading to a situation that Japan news mentioned as “internal controls that are supposed to monitor injustices within the company from an independent position failed to function.”(A. (n.d.). Japan news the 2015a exec pressure incite …show more content…
As the saying goes, “Prevention is better than cure”, it is better if companies could come up with appropriate structures and practices within the company that can prevent these occurrences. The companies should have a robust ethical infrastructure and should promote a culture of openness. The feedback mechanism that is set up by the company should be appropriate with the middle and top management being educated and trained to identify unethical activities/ behaviors and to report them. The independence of the auditors and other control authorities should be ensured so that they are free to protect whistle-blowers and act against the rule-breakers. On the other hand, the control bodies should consciously exercise the powers given to them. For instance, the auditors are legally and morally bound to perform a deep and proper auditing of the company accounts. They are expected to reveal or raise any discrepancies they find in the accounting practices followed by the company. It should not be affected by the auditor’s relationship company or by the compensation provided. This is a crucial factor needed for the success of control mechanisms that were not present in EY association with Toshiba. The most important of all, the company should have a clear idea about its inner workings, values, strengths and how it fares in various ethical dimensions. It helps to construct effective

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