Toshiba apologises for 150b yen profit overstatement

Japanese conglomerate Toshiba has confirmed receiving an investigation report from an independent committee for errors identified in the company's previous financial results.

On Tuesday morning, the technology giant issued a statement apologising to shareholders, investors, and stakeholders after it received a report that highlighted accounting irregularities within the company and linked Toshiba executives to the overstatement of more than 150 billion yen in profits.

The report's panel, headed by a former Tokyo prosecutor, painted a picture of a corporate culture where underlings could not challenge powerful bosses who were intent on boosting profits at almost any cost.

"The company will thoroughly analyse and examine the investigation results and recommendations received from the independent investigation committee, and reflect them in our management practices, as well as examine measures to prevent recurrences," president and CEO of Toshiba, Hisao Tanaka, said in a statement.

"In addition, the company will announce in a timely and appropriate manner, any matters that need to be announced as a result of its analysis and examination of the investigation report."

The committee has presented Toshiba with a rebalanced seven-year earnings sheet, showing that cooked FY2008 and FY2009, as well as FY2011 through FY2014 results have all contributed to the 150 billion yen overstatement of profits. In FY2012, the company allegedly added 85 billion yen to its year end earnings.

Toshiba has said that it will take procedures to correct past financial results "as necessary", saying it will verify yearly results, run its findings through the company's auditors Ernst & Young ShinNihon, and report as required.

"As a result of this verification, it is possible that amounts such as those for depreciation and tax expenses may be changed for some fiscal years," Toshiba said.

The company has said that it intends to post its FY2014 results by August 31, with an announcement of any corrections relating to its previous results to be made after this date.

Shares in Toshiba have soared almost 6.0 per cent after the announcement. They spiked 5.78 per cent to 398.6 yen on the Tokyo exchange at the opening bell. The shares hovered at 390.0 yen, up 3.50 per cent, some 20 minutes after the opening bell, amid reports that the company's top managers will resign to take responsibility.

With AAP