Analysis of Fujifilm Holdings' Accounting Problem

Running Head: Analysis of problem, since its inception 1
Name
Analysis of problem, since its inception
Affiliation

Running Head: Analysis of problem, since its inception 2
The Problem
This problem was indicated in 2017 when Fujifilm Holdings was closing its accounts for
the year. It found some problems in the accounts of overseas subsidiaries and sale units. These
sales unit were located in New Zealand and Australia, and there were signs, that they were
involved in fraudulent activities in the past to overstate their profits. (MCNICOL, 2017)
Fuji Xerox New Zealand and Fuji Xerox Australia were involved in past accounting frauds, and
they intentionally used accounting gaps to overstate their performance and avoid faithful and
truthful representation of sales units in their business reporting. (Lasy, 2015)
We are going to critically investigate the cause of accounting problem scandal. We
conducted a pretty rigorous investigation on both of sales units, and in July 2017 they issued a
report underlining the problems which resulted in fraudulent activities in both of those sales
units. (Lukac, 2017)
Some of the problems indicated by our investigative committee are as follows.
During the year of 2010 and 2015, both of these sales units used some inappropriate
accounting policies, to overstate their performance. These inappropriate accounting policies
over the period of 5 years accumulated and resulted in a blunder. (Patrick, 2017)
When they looked at Australian subsidiary, they found the same patterns. These
accounting fraud signs were not very visible at the start. But it can be said that Australian
subsidiary is also involved in fraudulent accounting policies, to fake its performance over the
period of 5 years. (O'Neil, 2017)

Running Head: Analysis of problem, since its inception 3
 Restatements of some of the restatements for the past fiscal years were as follows.
 Impact on shareholders equity*
 Fuji Xerox New Zealand = 24Billion yen and in Fuji Xerox Australia = 12.8 billion
Totals restatement of equity = 37.5 billion yen (Innovation, 2017)
This indicates the total increase in the retained earnings over the past seven years. So,
some of this restatement part of retained earnings will be due to accounting problems
indicated.
So, according to this report internal management and internal management committee,
is responsible for this scandal. There was problem indicated with the Corporate Governance in
both of these sales units. And such a scandal is due to the loose controls of internal
management or internal management is also involved in this problem. Further analysis is also
required in this problem. It is very important to find the right person to blame this all on.
(Spencer, 2017)
There is also problem indicated with the management of Fujifilm Holdings over these
subsidiaries. Fujifilm group was going through restructuring in the past few years. They
appreciated nice profits generated by the New Zealand and Australian subsidiaries. They
provided them profits when they needed and were going through the restructuring process. So,
they were a little lenient on their foreign units, and they allowed them to continue operating
with shady accounting policies. But Fujifilm Holdings was unaware of fraudulent accounting
policies of New Zealand and Australian Subsidiaries. (Spencer, 2017)

Running Head: Analysis of problem, since its inception 4
These are some of the causes of such a problem, and they were caused by the
combination of internal discrepancies and lost control from Fujifilm holdings. And what were
the detailed accounting misrepresentations and fraudulent techniques that were used by both
of these subsidiaries to falsify their accounting records over the period of five years? (PULLAR-
STRECKER, 2017)
We are going to elaborate further the cause problems and accounting techniques used
for representation in 5 years. In this report, we hope to find the cause of the problem, so it may
not be repeated in future and if repeated its symptoms can be detected before the scandal
unfolding and the problem can be solved pre-hand.
Analysis of problem, since its inception
September 2009
An internal audit was conducted by Fuji Xerox Asia Pacific headquarters (APO). They
found some lease agreements, which did not fulfill the minimum criteria of lasing agreements
according to leasing policy of the company. This was the first symptom of the problem.
Although it was indicated in New Zealand Sales unit of Fuji Xerox, it has a lot to do with the
Australian problem of the same nature. When the lease contract was reported to management
of New Zealand Fuji Xerox, they failed to cancel or change the contract. They knew that this
contract was bad, but still, they could not do anything to revise it. This indicated a problem on