AUDIT ASSIGNMENT Q2 COMPILE.docx - SUBJECT EAB21103 AUDIT 1...

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SUBJECT: EAB21103 AUDIT 1 TOPIC: ASSIGNMENT 1: TOSHIBA’S ACCOUNTING SCANDAL LECTURER NAME: MADAM MASNIZAR BINTI SUPAR GROUP: AC10 PREPARED BY: NURUL SAKINAH BINTI MOHD SHOKOR 62213116012 NURUL AMIRA AZLIN BINTI SAZALI 62213116159 NUR IZZATI BINTI NOZULAN 62213116004 NUR AFIQAH BINTI ROSLY 62213116025 NURUL AKASHAH BINTI JAMALUDDIN 62213116278
1. INTRODUCTION Cook the books is one of the fraud activities which the company have bad intention in creating a fake and false financial statement. Cook the books work when the company decide in creating new account that does not exist to maximize their profit. Furthermore, cook the books also are used in maximizing the revenue, minimizing the expenses and creating other expenses or income. Toshiba scandal are the companies that we can relate with cook the books. This company manipulated their account to get higher revenue. The shareholder and regulators worry because the capability of the company to hide something right from them. Sarbanes- Oxley Act, 2002 was created because to get back the confidence of investors. Toshiba scandal is one of the example cook the book can be explain. Toshiba Corporation is one of the companies that provides the world’s largest electronic device, home appliances and social infrastructure equipment. They also make a diverse array of products from computer chips to nuclear energy. The company already had problems with their financial which their income are decrease in the economic downturn. So the financial statement had been change by the company organisation. In order to attract the investor with the performance’s company, Toshiba does various unethical behaviour. Firstly, between 2008 and 2014, they make overstates in operating profits which amounted to 151.8 billion yen ($1.2 billion). They also practice an inappropriate accounting which gain at least 151.8 billion yen and a series manipulation in financial year accounting from 2009 to 2014 across the company. Toshiba also using the percentage-of- completion method of accounting in wrongful way and other similar techniques. Moreover, profits was also exaggerated by Nishida and Sasaki in multiple Toshiba business including visual products unit, the pc unit and the semiconductor unit. This shows how Toshiba “cook the books”. Besides, Toshiba’s leader was a strict person. He put great stress on his employees to achieve sales target. The pressure felt by the employees led them to do the fraud. The
whole world know that the company make a fake financial statement. The people who involve in this fraud will get an order from the court which are they had to pay penalties and may be prisoned. The fraud also make their company look bad and weak. Lastly, based on the scandal, it is how cook the books work that we can explain.
2. TOSHIBA CORPORATION SCANDAL IN 2015 The world has experienced many serious accounting and governance scandal such as Bank of Credit and Commerce International also known as BCCI in 1991, Xerox in 2000, Enron in 2001, WorldCom in 2002, Freddie Mac in 2003, American Insurance Group as known as AIG in 2004, Lehman Brothers in 2008 and Olympus Corporation in 2011. This

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