Risk & Compliance

More Accounting Woes Delay Toshiba Results

New CEO Masashi Muromachi says he will consider resigning if the new Sept. 7 reporting deadline is not met.
Matthew HellerAugust 31, 2015

With its accounting woes still unresolved, Toshiba Corp. on Monday missed another deadline for reporting its annual results, prompting CEO Masashi Muromachi to say he may resign if there is another delay.

Toshiba has delayed announcing its results for the fiscal year ended in March by around three months due to an independent investigation over its past accounting practices. It cited 10 new cases of accounting problems, including at a U.S. hydro-power unit, for missing Monday’s deadline.

The company said government regulators accepted its request for extension and that it plans to submit the results by Sept. 7.

“We deeply apologize for the situation we are in yet again, and for the inconvenience and concern we have caused to our stakeholders including shareholders and investors,” Muromachi said at a news conference.

Toshiba’s previous CEO Hisao Tanaka stepped down last month, a victim of Japan’s worst corporate scandal in four years. The independent probe has found Toshiba overstated past results by around $1.2 billion over several years and that top management including Tanaka knew about it.

The improper accounting included overstatements and booking profits early or pushing back the recording of losses or charges, investigators said.

Muromachi said Monday that the new cases of accounting errors dated back to around 2010, but they will not drastically affect Toshiba’s forecast for an operating profit of 170 billion yen ($1.4 billion). The company has said it expects a net loss for the past year.

If Toshiba does not meet the new reporting deadline, Muromachi said, “I would have to consider taking responsibility, including resignation, if needed.”

“One week delay is not such a big deal, but that’s another week of uncertainty,” Hideki Yasuda, an analyst at Ace Research Institute in Tokyo, told Bloomberg. “They need to report as soon as possible.”

Tanaka vowed in June to “create a new Toshiba” in response to the accounting scandal.

“The company has completely lost investor trust, since no one had expected things to be this bad,” said Yasuaki Kogure, chief investment officer at SBI Asset Management. “We still don’t know whether the new management will change the company and how, and what it will consider as an achievable profit margin.”

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