Professional Values Ethics And Attitudes: Detailed facts of Olympus and Toshiba corporation scandals

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PROFESSIONAL VALUES ETHICS AND ATTITUDES
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PROFESSIONAL VALUES ETHICS AND ATTITUDES
Detailed facts of Olympus and Toshiba corporation scandals
Olympus Corporation:
Olympus Corporation famously known for its Cameras all over the world became a topic
of discussion in 2011when it was exposed to the universe that the Company top executives had
concealed losses of approximately 1.7 billion dollars. Ironically, the person who revealed this
secrecy was the newly appointed CEO of non-Japanese origin known as Michael Woodford.
Surprisingly this tendency of hiding the Company losses began in the year 1999. The Company
tactics of hiding losses have been occurring for more than 10years; this was possible because the
organization was capable of making superlative profits. However, a particular incident of the
Enron paves the way for the use of new accounting techniques which was to be adopted by all
Companies in the year 2017. This new method of accounting completely brought changes and
improvement in the standard of accounting procedures being followed by then, and it became a
major setback to the management’s ventures of covering up losses (Coney and Coney 2016
p.26). Soon, individuals that are at the forefront of such deplorable deeds came with an invention
that they could use costs and fees associated with the organization acquiring the Gyrus, a firm
from the British medical equipment and other three small firms from the Japanese as a place of
hiding money. The management of Olympus Corporation paid a total of US2.2 for purchasing
Gyrus, a Firm whose yearly earnings was 1 /10 of the consideration paid by Olympus in dollars.
The amount paid by Olympus for the advisory of the acquisition was a total of US687 million.

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Immediately after the transaction, the Company acquired another three firms and spent a total of
US773 for the purchase. The strength of the employees of the three firms acquired by Olympus
was less than 50 each. The company Auditor during that time raised their concerns over the
Firm’s financial dealing to the public that there is critical information the company never
provided for their auditing work. This was the time when the company appointed Michael
Woodford as the Company president. Michael came up with many altercations and deliberations
with the Media over potential falsification of the company books of accounts. This made
Michael appoint new auditors to check the books of accounts once again to trace any elements of
suspicion or discrepancy (Utz 2018 p.25) Michael had to resign as the president of the Company
after questioning the falsification of the books of account.
Toshiba
On December 2015, Tanaka who was the CEO of Toshiba announced his Resignation
due to accounting scandal in which the organization overstated profits of approximately
151.8billion. This scandal also made eight other officials of the Company resign, including the
other two previous Chief executive officers (CEO) who were still operating at the firm in
different roles. The investigative board released a report describing the details of the scandals
which primarily relate to corporate culture and lack of internal control driven to exaggerate
profits. Improper accounting has been taking place in the company for seven years. Upon
investigation, it was found that the company CEOs of Toshiba put pressure on the employee to
meet the targets set on sales (Hoang 2018 p.24). The influence on the subordinates often came
right before the end of fiscal or a quarter year, which pressed employees to bring forward sales.
The top management of the company set impossible targets with the intention of meeting the
sales target. They also relied on the corporate culture of the Japanese of loyalty and obedience

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that restrict individuals lower in the rank to do anything possible to meet the targets of the
company. There are also manipulations of the accounts to achieve sales targets (Khondaker and
Marc 2016 p.72).
The investigative board also pointed to week internal control and corporate governance as
the cause of the scandal. The corporate auditing department, internal control in the accounting
and finance division and the risk management department did not operate properly to stop and
identify the inappropriate behaviors.
2 Stakeholders involved and Affected in the scandal:
Olympus Corporation
The first stakeholder was Michael Woodford, the appointed president of the company; he
was then sacked following this corporate scandal. Michael resigned as the CEO of the company
because the Japanese institutional investor refused to support his bid. Olympus Corporation
compromised their ethical and moral values, and this made its investors lose their faith and
confidence in the organization (Askary 2017 p.102). This incident made the company board
officials to convene a special meeting for the shareholders to act as a damage control mode.
The second stakeholder is the Japanese media: the media in Japan exposed Woodford as
someone who has mismanaged the organization. The media also claimed that Woodford was
unable to adapt to the Japan working culture (Morris 2018 p.57).
The third stakeholder is KPMG and Ernst and Young: This accounting firm also came
under investigation for undertaking lawless activities of the organization for years. Different
Lawyer criticized the reputation of KPMG and Ernst and Young.
Toshiba Corporation