Toshiba Accounting Scandal

CASE STUDY

7/28/2023
ANSWER: 1
The issue about whether or not the inquiry into the crisis that occurred at Toshiba should continue until all
implicated persons are identified and punished is a difficult one that depends on a number of different
considerations.
Let's weigh the benefits and drawbacks of this option:
Arguments in favor of carrying on with the inquiry until all of the responsible persons are caught and
punished.
Accountability: If all those involved were identified and given appropriate punishments, this would
guarantee that the persons responsible for the infraction are held accountable for their acts, which would
discourage such inappropriate behavior.
Deterrence: If wrongdoers are thoroughly investigated and given appropriate punishment, this can serve
as a deterrence to other managers or workers who would otherwise contemplate engaging in fraudulent
acts of a similar nature.
Restoring Trust Revealing the full scope of the issue and taking proper punishment against all those who were
involved will assist in restoring faith in both Toshiba as a business and the larger corporate governance structure
in Japan.
Cons of carrying out the study for an unlimited period of time:
Time and Resources: An extensive inquiry may be both time-consuming and expensive, taking resources away
from other essential business processes and perhaps impeding the capacity of the organization to recover.
Concentrate on Recovery In order for Toshiba to move ahead and reclaim its reputation, it may be
absolutely necessary for the company to concentrate on adopting corrective actions and rebuilding the
organization. This should be done rather than concentrating simply on the past.
Disputes in the Courts: The investigation of complicated accounting scandals can present a number of
legal issues, such as the collection of evidence and the maintenance of due process for all parties
involved, both of which have the potential to lengthen the investigation.
In the end, it is extremely important to strike a balance between enforcing accountability and allowing the
organization to continue moving forward. It is possible that it would be more realistic to guarantee that the
important persons responsible for the scandal are identified and held accountable for their actions rather than
seek to prosecute every employee who was even tangentially engaged in the incident.

ANSWER: 2
Although the practice of using external panels to conduct investigations can be helpful in boosting business
compliance and openness, it should nevertheless be reinforced by other measures to assure that governance is
carried out in an effective manner. The following are some potential methods that might be utilized to guarantee
compliance with laws and accounting rules on the part of corporations:
Improving the Strictness of the Organization's Own Controls For the purpose of detecting and putting a
stop to fraudulent activities, it is very necessary for firms to have rigorous internal control systems.
Page | 1
 When conducting audits on a system on a regular basis and ensuring that they are supervised by an
independent audit committee, it is easier to identify anomalies and irregularities within the system.
Protection for People Who Report Misconduct It is vital to have processes in place that safeguard
employees who blow the whistle on wrongdoing in the workplace and encourage such employees to
come forward with the knowledge they have. This might include ways of reporting that are kept
anonymous, as well as legal protections for anybody who makes a whistleblower complaint.
Greater autonomy on the part of the board One strategy for reducing the likelihood of possible conflicts
of interest and improving oversight of management decisions is to increase the number of independent
directors serving on company boards.
Stricter Regulatory Enforcement: It is vital for regulators to take an active role in monitoring firms and
to react promptly to take remedial action when they detect misbehavior. It is also important for
regulators to be more stringent in their enforcement of existing regulations. It is important that the
penalties for breaking the rules be high enough to effectively deter improper behavior.
Culture of the Business Institution The development of a corporate culture that places a high emphasis
on ethics, transparency, and accountability is of the highest significance for enterprises. This may be
done by the use of suitable training, communication, and leadership within the company's upper levels,
which sets the appropriate example for the rest of the organization to follow.

ANSWER: 3
To increase transparency and win the confidence of international investors, Japan may want to consider putting
into place a number of initiatives at the national level, including the following:
Regulating Corporate Governance Should Be Made Stricter Japan might change its corporate
governance legislation to compel businesses to have a particular number of independent directors on
their boards and to encourage more open financial reporting. This would be one step toward
strengthening the country's regulatory framework for corporate governance.
Enact laws that protect whistleblowers from reprisal and encourage people to come forward with
information about corporate misbehavior. These laws are referred to as "whistleblower protection laws."
Establish an Independent Regulatory organization to Oversee business operations Establish an
independent regulatory organization to investigate any fraud or irregularities, supervise business
operations, and guarantee conformity with accounting rules.
Encourage corporations to offer investors and stakeholders with financial disclosures that are both more
thorough and more easily understood by advocating for more transparency in corporate reporting.
Involvement of Investors: Encourage a higher level of involvement between firms and investors in
order to cultivate discussion and accountability.
Enforcement and Sanctions: Ensure that regulatory agencies have sufficient authority to both enforce
compliance and impose sanctions on businesses and persons who are found to have engaged in
inappropriate behavior.
By putting these measures into effect, Japan will be able to get closer to the global norms of openness and
corporate governance. This may encourage more foreign investments and strengthen the country's reputation as
a dependable environment for conducting business.

Page | 2