Case Summary: The Toshiba Fraud Case

Toshiba’s lasting reputation in innovation and constant growth was stunted when over $1.2 billion dollars was deemed fraud. Profits over seven years were overstated and undetected by independent auditors of Ernst & Young. When the fraud was eventually discovered, minimal was done to the culprits including resignation and probation. Since the discovery of the fraud, Toshiba has started to see the consequences of the fraud be alleviated and trust be regained. This paper serves as an insight into the aspects behind the fraud and how auditors could potentially discovered the fraud.

Company Background

Toshiba did not get its name until 1978 when two Japanese companies merged. Tanaka Seizo-sho, establish in 1875, was a lead manufacturer of telegraph equipment. It merged with Hakunestu-sha, which was the first plant to manufacturing incandescent lamps in Japan in 1890. When they
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Hisao Tanaka and half of his staff were placed to blame. None of them ended up behind bars, instead they all resigned and deeply apologized for their actions. Since the case has just recently been closed, the perpetrators have not been able to find new careers. The whistleblower in this case was the prior prosecutors that Toshiba hired to investigate their financials. They determined that the profits of Toshiba were overstated by over 1.2 billion dollars. Toshiba was required to restate their financials and pay hefty fines. Now that the company has changed their structure and the fraud is blowing over, Toshiba hopes to gain the trust of their stockholders and consumers back.

In conclusion, the fraud committed by Toshiba and their executives not only hurt the reputation of the company, but also were detrimental to the careers of many. Even though auditors were unable to detect the fraud, the amount that the profit was overstated was going to be uncovered

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