Research Question
Toshiba Corporation is among the well-established corporations of Japan with headquarter in Tokyo, Japan. The main aim of the organization is to serve the products that are related to information technology, power systems, industrial and social infrastructure system, medical equipment and many more. The foundation year for the Toshiba is 1993 (Burns et al., 2014). The services and the products offered by Toshiba was divided into four major categories, this includes: the electronic devices group, the digital products group, the social infrastructure group and the home appliances group. Toshiba is providing a better employment sector for peoples all over the world. 187,809 employees are associated with the Toshiba group from all over the world. By the mid of 2012, Toshiba had revenues ¥6,100.3 billion (Johnston, 2017). These revenues were collected from these four main business. Each business contributed to the company’s revenue collection. The products and services provided by the organization varies from air conditioners, railway system , escalators ,office equipment, TFT displays, power system that includes electricity turbines , fuel cells and many more (Kimura & Nishikawa, 2018). In the year 2001, a contract was signed between two companies Toshiba and Orion electric. This contract helped Toshiba to serve the increasing demand of the North American market as the Orion Electric deals with supplying TV products and video products. In 2012 July, Toshiba faced an accusation of fixing the price of the LCD panels at a high level in the United States (toshiba.co.jp, 2018). Toshiba is facing some issues relate to the internal audit failure and this has affected the corporate governance.
In these paper, the research aim is to determine the issue of internal audit failure faced by Toshiba. This is the responsibility of each organization to appoint people who will provide audits so that the integrity of the organization can be maintained. The audit also safeguards and maintains a standard that will determine the honesty of the employees working within the organization. The main objective of performing an internal audit is to determine the working of the employees and determines that they are working in favour of the corporate governance or not (Bhattacharjee, Maletta & Moreno, 2015). These is the reason company maintains a multi-layer system of controls. Thus, internal audit is necessary for every organization to determine the behaviour of the employees and to maintain the control within the organization. The main responsibility of the auditors is to ensure that the financial statement of an organization is correct and is matching the accounting standard. Thus this becomes very much necessary to check whether the auditing is done in right way or not , but in this case the audit division of the Toshiba did not checked the procedure followed by their auditing members , that whether they are following right and appropriate procedure or not. Due to the negligence of the auditing department, this issue turned to be a big scandal and further lead to failure of corporate governance. Major pressure was faced by the employees of this organization as the objective that was set by the company became hard to achieve. According to the Generally Accepted Auditing Standard, auditors should be adequate technical training, independent and should maintain the proficiency.
Research Aim and Objectives
The main objective of the internal audit is to provide an assurance that the organization is effectively controlling the process involved in managing the risk that are associated with organization and governance and are not busy in providing the management strategies for consultant services. Thus, it becomes the responsibility of Toshiba to ask their internal auditing team to focus on internal management system (Schwartz, 2017). The investigation committee found that, the audit department of Toshiba provided consultation service towards their management and it really cared about carrying a service from the perspective of accounting. Apart from the internal audit maintained by the Toshiba group, there are three external audit committees who had no knowledge about accounting and financing. Toshiba failed in providing appropriate audit and due to the mistake of the auditors these turned to be a big scandal. It is the responsibility of the senior management to determine the goals and the work contents of the company. The goals are set in such a way that it will help in earnings for them. Internal audits are needed to be undertaken by independent auditors (Kerr & Twal, 2016). The auditors of the Toshiba are not independent. The external committee that was formed by the organization was unable to perform their activity and failed to perform the audit in determining the accounts related details. The committee failed to maintain and determine the accounting details, even in the time of irregularity a former employee was chief member of the audit group. Thus, from this situation it can be said that the internal audit was not performed efficiently (Hay, Stewart & Botica Redmayne, 2017).
The major objectives includes the following:
- To analyze the responsibility of the accountants and auditors towards corporate governance
- To promote transparency within the organization
- To influence the activity of the organization
- To create new measure that will help the organization in managing the accounting
- To develop the strategies among the internal auditors, so that the organization can avoid such condition from next time
The main aim of the research is to analyze the responsibility of the accountants and auditors towards corporate governance. Corporate governance is referred to the way of handling the institutional system, ethics and accounts of the company (Maher & Singhapakdi, 2017). The main objective is to promote transparency within the organization. This becomes the responsibility of the auditor to maintain the interest of the shareholders. This becomes responsible of the audit team to influence the activity of the organization (Elbardan, Ali & Ghoneim, 2015). The responsibility of the auditors is to create new measure that will help the organization in managing the accounting. This becomes the responsibility of the auditors to provide efficient information for the board of the auditors, so that they can evaluate based on this information. The auditors can also prevent the employees from performing any activity that will manipulate the financial data related to the organization by implementing penalties for such behavior. The penalties can include removing the managers from their post or compensating equivalent compensation such as reduction in annual bonus and even banning on providing the bonus. Auditor helps in promoting the feature and necessity of the corporate governance (Khani & Noroozian, 2018).
Keywords for Literature Review
The responsibility of the auditors is to review the security measures for the organization so that the organization can prepare strategies for protecting the corporate against the fraud and corporation. In addition to assessing the possible risks, the responsibility of the auditors is to provide mitigating plans.
The aim of the research is to develop the strategies among the internal auditors, so that the organization can avoid such condition from next time. It is the responsibility of the internal auditors to prepare an audit that will look after the accounting department and will prepare strategies that will help mitigating the risks. Auditor helps in promoting the feature and necessity of the corporate governance (Jacoby, 2018). The responsibility of the auditors is to review the security measures for the organization so that the organization can prepare strategies for protecting the corporate against the fraud and corporation. In addition to assessing the possible risks, the responsibility of the auditors is to provide mitigating plans. Auditors also helps in developing a good corporate governance by generating effective crisis management plans. This plan includes assigning responsibility to different administrative of the company (Tricker & Tricker, 2015).
Toshiba corporate is among the leading organizations and has developed over year, but irrespective of the growth it gained it has faced an issue related to the internal audit. These becomes very much necessary for the organization to develop a good corporate governance so that it can help organization in developing the strategies. The responsibility of the internal audit is to check the responsibility and the honesty maintained by the employees within the organization. Moreover, the auditor’s responsibility is to manage the financial sheet and checks whether the accounting is done in a correct way or not. In this case the error occurs in the organization as the internal audit team fails in delivering correct reports related to finance. This situation is an outcome of negligence (JOHNSON & SYLVIA, 2018). There is a lack of interrelation among the accountability and ethics. This is the major accounting issue of Toshiba case. These becomes very much necessary for the organization to avoid such cases. These is strongly suggested that there is a need of providing an internal audit which will be independent. In addition, to this the team of external audit was referred to as the major drawback as they did not had any knowledge about the accounts , whereas the main aim is to provide organization with all the details related to financial department.
Toshiba Corporation Overview
According to the author Grambling Maletta, Schinder and Church (2004), transparency within the organization is needed to be maintained. The authors have analyzed the corporate governance from the perspective of internal audit. In the case of Toshiba, the main fault is of the internal audit department. They failed to analyze the accounting details of the organization that lead the company to face such scandal. Apart from the internal audit department there are three other committee known as the external auditor, management and the audit committee. These paper has provided a detailed background for the need of internal audit within the organization and the motivation involved within the organization. The governance quality were being assisted at the time of research in the year 1965. Secondly the article described that the transparency is necessary for both maintaining the image, the reputation, reliability and to maintain the cooperation with international organization and for defining the responsibility related to the governance.
The author Fulop (2013) focuses on defining the idea of governance code with the help of providing the audit among the seven business elements. Four theories were implemented so that they can set principles for corporate governance as transaction, agency, stakeholders and administration. The case of the Toshiba reveals the detailed information regarding the failure faced by the company from the perspective of all the four theories. For example the organization lack in maintaining the transparency among the organization resulted in affecting the manager’s activity. The conceptual model stage contains the conclusion of this case study. These article will help the organization to develop a healthy way of maintain the corporate governance.
According to the author Mele, Rosanas and Fontrodona (2017), the ethical perspective related to this case is needed to be understand and also from the philosophical perspective. Whereas, the other sources provides the elements and models and also gives a brief description about the social degradation, as a result of this the ethical values within the organization got lowered. The scornful derision towards the ethics is responsible for decreasing the moral values of the employees within the organization. This helped the organization to gain huge profit in the year of 2014. In this article all the authors has discussed several purpose other than the accounting analysis. This helps the author to view the issue from the social perspective and also determines the ethical behavior. This article also contributes a valuable business research for the European people includes royal ahold, Parmalat and vivendi universal. The author says that, developing personal integrity, reporting misbehavior and maintaining the professionalism will help business organization to achieve success.
Internal Audit Failure and Corporate Governance
The author Shafer (205) suggests that the elements mentioned above in the passage will help the organization to lead a healthy ethical climate. The aim if the author is to prepare a article based on the other authors article and will provide a solution from the perspective of accountants ethics and managerial decision. The findings of this paper, describes the importance of tone at the top and includes detail related to ethical climate, management and social responsibility. The management was responsible for setting morals for the employees and goals that were hard to achieve in the case of Toshiba. According to the author the behavior of ethical breaching will negatively affect the professionalism maintained in accounting quality (Steinbart et al.,2018). The problem started from the point when the CEO of the Toshiba desired to show of the profits gained by the organization. For every organization it becomes necessary to maintain the moral values as this impacts the micro management and also changes the perceptions of employees about the procedures and practices that are too be followed within the organization. In the article the author describes a scheme known as the locus, this describes that in order to attain the success for morality behavior of every individual of the team needs to show interest towards this. Toshiba would have successfully avoided this situation, if they had properly managed their employees instead of indulging them in wrong activities and the organization would have successfully completed its internal audit. In the further part of the article based on six data sources from different organizations ,correlation between the elements was described with the ethical criteria , calculated and numbered.
From the four sources, in-depth perspective related to the Toshiba scandal is discussed. However, the main aim of all the article is to discuss about thee internal audit and individual responsibility within the organization and also aims in providing a better future for the Toshiba group. Thus all the articles gave different perspective towards the same objective and has shared several possible steps that can be taken in order to prevent the organization from facing such issue in future.
In this research paper, the data are collected with the help of qualitative method. The qualitative method of data collection involves using of secondary data ore referring to peer reviewed articles. IN this research several articles and journal papers are analyzed so that the responsibility of the auditors and the accountants can be analyzed easily. The responsibility of the internal audit team is to analyze and prepare the financial sheet. Thus the organization needs to maintain a transparency during its work. The accountant also needs to be honest while checking the balance sheet, as this determines the company’s benefit and share values (Griffiths, 2016). Thus accountant and the auditor needs to be honest and should maintain a transparent way of working. In this research paper, four articles have been reviewed and all the details that are discussed is being described. The articles are useful for providing a theoretical background to this research paper. The data are collected from analyzing these articles, thus is known as secondary data collection (Hanvey, 2018).
Objectives of Internal Audit and Role of Auditors
Ethical consideration is given huge importance in every organization. Each organization needs to perform activity which will be ethically correct and will not harm anyone. The research performed is unbiased and has described all the necessary studies (Abbott et al., 2016). All the data that are used in these paper is being cited. Thus, the research has been done without violating any rights and also the credits is also been given to every author. This means that the intellectual property rights is being maintained throughout the research. The aim of the research is to analyze the report in a right way, without violating any rights.
References
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