Accounting fraud and response

Accounting fraud and response

oleh Aning Riyana -
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Assalamualaikum maam

Name    : Aning Riyana 

NPM      : 1812120096


CASE : 

The history of the establishment of the Toshiba company can be traced in 1875 when the establishment of the first factory in the city of Tokyo. This factory was established to meet the demand of the Japanese government.

In May 2015, Toshiba shocked the whole world when it stated that its company was investigating an internal accounting scandal and had to revise profit calculations in the last 3 years. The announcement was very unexpected because Toshiba has become a symbol of a very powerful Japanese company. After a thorough investigation, it was learned that Toshiba had been struggling to achieve business profit targets since 2008 in the midst of a global crisis. The crisis also hit Toshiba's business until finally Toshiba made a lie through accounting fraud worth 1.22 billion US dollars. This action was carried out with various efforts so as to produce profits that are not in accordance with reality.

On July 21, 2015, CEO Hisao Tanaka announced his resignation over an accounting scandal which he described as the most damaging event of the Toshiba brand in 140 years of Toshiba's history. Eight other leaders also resigned, including two previous CEOs. The name Toshiba was later removed from the stock index and experienced a significant sales decline. By the end of 2015, Toshiba had lost 8 billion US dollars.

The disclosure of this case began when a third-party audit conducted an internal investigation of the company's finances Although the management of Toshiba has worked hard to restore the condition of the company, until early 2017 Toshiba is still in the process of rising from the adverse effects of the scandal in 2015.

RESPONSE : 

In my opinion the case of accounting fraud above is very fatal for the company because the Toshiba brand has been one of the best brands with achievements for 140 years. this will be very detrimental at all, the general public will be difficult to trust the existing brand and also have an impact on other companies. In terms of correcting a good reputation, it will be quite a long time to remember that when a fraud occurs we must further improve the quality and trust of customers. Based on the information above, it can be seen that the company's management set unrealistic profit targets so that when the target is not reached, the division leader is forced to lie by manipulating financial statement data.

This cheating case is something that is not fair, because it impacts on a company, we must be careful in every problem because this problem can happen again in a large enough context