Toshiba is an iconic brand that focuses on the provision of diversified services that involves communication systems and information technology. The company experienced a major accounting scandal that began in early 2008. The accounting scandal in the company impacted the major operations undertaken considering the nature of the effects that it had on the company. The investigations conducted regarding the fraud indicated that the root cause of the given issue in the company resulted from poor corporate governance. The investigation concluded that the internal factors in the company in the company played an integral role in the development of accounting fraud, which threatened the survival of the company in the industry. When analyzing the issue, it is important to note that the implementation of appropriate strategies in the company would have helped to prevent the occurrence of such an issue. The paper will focus on the analysis of examples of what could have been done by the company to prevent the accounting scandal.
The first aspect that could have prevented the occurrence of the accounting scandal involves the implementation of strong internal control. Having strong internal control would mean that the company is in a position to safeguard the assets and to ensure the integrity of the accounting records. Some of the key aspects that could have been done to strengthen the internal control of the company include training of the employees and motivating them to become professionals in their fields. Training of the employees would mean that the company has a strong team of employees who understand their roles in the company. Additionally, having a trained team of employees would mean that the company does not require to outsource experts to engage in matters concerning the management of internal control. In that case, the company could have prevented the occurrence of the accounting scandal that impacted the normal operations.
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The second important aspect that could have ensured that the company does not experience such an accounting scandal entails focusing on enhancing corporate governance. It is important to note that Toshiba experienced a major concern on the issue of corporate governance, which is an aspect that contributed to the fraud case. The implementation of appropriate corporate governance strategies that help to promote corporate culture among the employees and the top management would have prevented the accounting scandal. The willingness of the management and the employees to cooperate may have played an important role in creating an open environment for identifying any form of foul play on matters concerning the financial wellness of the company. The top management would be in a position to receive helpful information that helps to ensure that the company’s financial records are accurate. It is important to note that enhancing corporate governance would mean that the company would have an effective whistleblowing system to curb the occurrence of such accounting scandals.
The third significant aspect that could have prevented the occurrence of the issue in the company entails is the implementation of an accounting oversight board. The oversight board has the ability to monitor the financial activities of a company on a regular basis. Considering that the company did not have a strong oversight board to monitor and analyze the financial aspects of the company, the risk for accounting issues arose, thus resulting in the scandal. Through the implementation of a strong and effective accounting oversight board, the company could not have landed on the issue considering the board would have monitored various activities in the company. The evaluation procedures, monitoring, and approvals made by the company would have had a significant role in ensuring that the company did not face any accounting scandal and that the company would run effectively without any issues.
