1. Toshiba Accounting Scandal
Lexy, Jessie, Greg, and Sudket

2. Overview
- Situation and Ethical Frameworks - Lexy
- Ethical responsibilities and standards - Greg
- Primary causes and how they could have acted differently - Jessie
- Outcomes and key lessons - Sudket
- Conclusion
- Questions

3. Situation and Ethical Frameworks

4. Situation
- Leading electronics & industries company
- 1.9 million “accounting adjustment” discovered
in September 2015
- Organisation structure and pressure led to
misreporting of numbers

5. Situation

6. Situation

7. Ethical Frameworks
- Deontology: Not morally right to use inaccurate accounting practices to meet
numbers on their reports
- Justice: ‘Fake it or will replace you with someone who will’ workplace culture and
shareholders very mislead
- Egoism: CEO’s placing their own welfare above all others

8. Ethical Responsibilities and Standards

9. Where do the Ethical Responsibilities Lie?
- EVERYONE working for Toshiba has the responsibility to act ethically.
- For the Toshiba scandal, the individuals that should be held accountable for the
ethical responsibilities lie on every level throughout the company.

10. Where do the Ethical Responsibilities Lie?
- Initially stemmed from the previous three CEO’s
- Not leading by example.
- Immense pressure from Toshiba’s corporate leadership onto the business unit
presidents to meet profit targets is what ultimately led to the fraudulent
accounting practices.
- Right down to the accountants entering the false information

11. Ethical Standards being Compromised
- Poor Corporate Governance
• Not identifying and stopping the inappropriate behaviours.
• Superiors Demanding obedience from subordinates to achieve their profit targets.
• Failure was not an option.
- Ineffective Internal Controls
• Methods to ensure integrity in accounting information.

12. Underlying Moral Values
- The individuals involved compromised their:
• Integrity- Falsifying the accounting information
• Empathy- How the pressure affected coworkers and subordinates
• Respect- Superiors not respecting their subordinates limits
- Maximising profits should not comprise the individual’s moral values.

13. Primary causes and how they could have
acted differently

14. Primary Causes
- Immense pressure on business unit presidents
- Superiors had ‘demand obedience’ integrated into corporate culture
- Poorly functioning internal systems due to weak corporate governance

15. How they could have acted differently?
- Acquired independent directors
- Developed an Internal ethics committee
- Utilised third party auditors

16. Outcomes and key lessons

17. Stakeholder Outcomes
- Business Outcomes
- Employee Outcomes
- Shareholder
- Supplier
- Community

18. Key Lessons
- The right approach
- Corporate Governance
- Unethical behaviour outcome

19. Conclusion
- Awareness of ethical practices as they influence culture and reputation
- Organisational structure & pressure from top executives overwhelming
- Report accurate figures to prevent a similar situation

21. References
Aronson, B. (2013). The Olympus Scandal and Corporate Governance Reform: Can Japan Find a Middle ground between the Board Monitoring Model and Management
Model? Retrieved July 19, 2016, from https://sydney.edu.au/law/anjel/documents/2013/ZJapanR35_05-Aro
nson.pdf
Boyd, J. (2015). Key questions in Toshiba scandal still unanswered. Retrieved July 18, 2016, from http://www.aljazeera.com/indepth/features/2015/10/key-questions-
toshiba-scandal-unanswered-151011075457531.html
Carpenter, W. (2015). Toshiba’s Accounting Scandal: How it happened. Retreieved July 19, 2016, from http://www.investopedia.com/articles/investing/081315/toshibas-
accounting-scandal-how-it-happened.asp
Du, L. (2015). 5 Things To Know About Toshiba’s Accounting Scandal. Retrieved July 19, 2016, from http://blogs.wsj.com/briefly/2015/07/21/5-things-to-know-about-
toshibas-accounting-scandal-2/
Goldmann, L. (2016, July). Business Ethics. Lecture presented for MGT320 at ICMS, Sydney, NSW.

22. References
Nagata, K. (2015). Pressure to show a profit led to Toshiba’s accounting scandal. Retrieved July 19, 2016, from
http://www.japantimes.co.jp/news/2015/09/18/business/corporate-business/pressure-to-show-a-profit-led-to-toshibas-accounting-scandal/#.V43bmFdYn-Z
Russel, G. (2015). Will Toshiba’s scandal bring about the change needed in corporate governance?. Retrieved July 20, 2016, from http://www.gaaaccounting.com/toshiba-
scandal-corporate-governance/
Singh, M. (2015). Toshiba Accounting Scandal: A Corporate Culture Problem. Retrieved July 18, 2016, from
https://blogs.cfainstitute.org/marketintegrity/2015/10/30/toshiba-accounting-scandal-a-corporate-culture-problem
The Financial Times. (2016). Toshiba shares fall 12% after warning of record $4.5bn loss. Retrieved from https://next.ft.com/content/f985af4a-a78e-11e5-955c-
1e1d6de94879
Toshiba Corporation. (2016a). Stakeholders. Retrieved July 19, 2016, from http://www.toshiba.co.jp/csr/en/engagement/stakeholders.htm
Toshiba Corporation. (2016b). Toshiba Group Standards of Conduct. Retrieved July 18, 2016, from https://www.toshiba.co.jp/csr/en/policy/soc.htm