The 2015 Toshiba Accounting Scandal

Subject: Case Studies
Pages: 2
Words: 286
Reading time:
2 min
Study level: School

The case under consideration is the Toshiba accounting scandal of 2015. The main issue is that the conglomerate’s senior management recognized that the company’s earnings had been overstated by around $2 billion. Even though the timeframe of the scandal is seven years, the outcomes are still significant because the estimates were four times less than the presented financial outcomes (Matthews & Gandel, 2015). This scandal pointed to the use of fraudulent accounting practices by Toshiba.

The main factor contributing to the challenge is the fact that managers are free to postpone reports or move costs into later years that result in discrepancies in the company’s financial outcomes. In this case, the main ethical issue is being dishonest with the conglomerate’s stakeholders and shareholders. Consequently, they are the ones affected. The main implication is that stakeholders and shareholders do not possess truthful information regarding the operation of Toshiba. For this reason, they cannot make appropriate decisions about their further cooperation with the company. For instance, they believe that the company is more successful than it really is. Therefore, they invest in it that may turn into a financial failure.

Speaking of internal accounting regulations, none of them were violated in this scandal because, according to Toshiba’s corporate culture, postponing reports and moving costs to the following years is allowable. These regulations are governed by senior management. Other regulators that might impact accounting rules include those of the governments by means of passing standards and legal provisions in the area of accounting, governmental and international accounting agencies, and financial institutions (Pierta, McLeay, & Ronen, 2014). These institutions are external regulators that have a direct impact on the process of developing internal accounting procedures and ethical codes of conduct.


Matthews, C., & Gandel, S. (2015). The 5 biggest corporate scandals of 2015. Web.

Pierta, R. D., McLeay, S., & Ronen, J. (2014). (Eds.). Accounting and regulation: New insights on governance, markets, and institutions. New York, NY: Springer.