According to Reuters, investigators are scrutinizing top officials who may have contributed to accounting irregularities and financial misstatements, which led to inflated profits by more than 170 billion yen (US$1.2 billion).
Toshiba hired a third-party to investigate previous bookkeeping policies and practices that led to overstated profits. Investigators are focusing the probe around key board members who may have encouraged the unethical behavior for several years.
The investigation comes at a time where the country’s Prime Minister Shinzo Abe is looking to revamp corporate governance among major companies and crackdown on corporate misconduct. Sources told Reuters that a shakeup in the electronics manufacturer’s boardroom might happen at its next shareholders’ meeting in September.
The Wall Street Journal reports that while many Japanese companies find themselves in hot water with regulators over financial misstatements, little is often done to make sure it does not happen again. Toshiba, however, is expected to respond to its corporate governance and compliance issues.
In April, the company disclosed accounting irregularities after Japan’s financial watchdogs inquired about reports on past bookkeeping procedures. This occurred after one of its medical subsidiaries in 2013 overstated results for many years.
Toshiba has highlighted a string of cases where its business units failed to implement adequate bookkeeping measures for executing contracts, which is one of the many reasons behind its inflated profits.
No comments yet