News
21 Jul 2015 08:49am

Toshiba profit overstated by £738m

An independent report into accounting irregularities at Toshiba has found that the Japanese tech giant overstated its operating profit by a total of 151.8bn yen (£783m) over a six-year period

This is three times as much as was initially anticipated and is likely to lead to a restatement of earnings.

In a statement following publication of the report, Toshiba said that it took the situation it had caused “very seriously” and apologised “deeply” to its shareholders, investors and all other stakeholders.

It added that it would be making its “best efforts” to regain their trust.

Toshiba said it would be taking steps to “correct past financial results as necessary” and indicated that it would be focusing on evaluation of assets, particularly the need to book impairment of fixed assets (including the timing of impairment) in the PC business, visual products business and the discrete and system LSI business in the semiconductor division.

It will also be considering “the need to book a valuation allowance regarding long-term tax assets of the company and its consolidated subsidiary corporations”.

Following verification by both the company and auditors Ernst & Young ShinNihon, Toshiba added, “it is possible that amounts such as those for depreciation and tax expenses may be changed for some fiscal years”.

The independent report, which was filed with the Tokyo Stock Exchange, also revealed that the accounting irregularities involved top management and said that there was a corporate culture which prevented employees from gainsaying their superiors.

According to Reuters, the report – which has yet to be translated – goes on to say, “Therefore when top management presented ‘challenges’, division presidents, line managers and employees below them continually carried out inappropriate accounting practices to meet targets in line with the wishes of their superiors.”

It seems likely that most of the board – including president and chief executive Hisao Tanaka and vice chairman Norio Sasaki – will either resign or be dismissed.

Since the scandal was uncovered in April, Toshiba, which is Japan’s tenth largest company by market value, has seen its shares slump by 25%.

Julia Irvine

 

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