Unmasking Fraud at Toshiba

Issues in Accounting Education, Forthcoming

32 Pages Posted: 21 May 2019

See all articles by Dennis Caplan

Dennis Caplan

University at Albany (SUNY)

Saurav K. Dutta

State University of New York (SUNY) at Albany

David Marcinko

Skidmore College

Date Written: May 3, 2019


Following its purchase of Westinghouse and subsequent macroeconomic events, Toshiba faced declining profits. In response, Toshiba engaged in earnings management through two accounting treatments. First, it delayed the recognition of losses under long-term contracts. Secondly, it inappropriately applied price masking to account for transfers of components between itself and contract manufactures. Students using this case will assess how business risks and corporate culture relate to audit risk, and how accounting for price masking transactions can lead to increased fraud risk. Students will also research aspects of auditing standards related to fraud and accounting estimates. The case is designed for auditing courses and capstone courses with an auditing component.

Keywords: price masking, audit risk and materiality, internal control, corporate governance, earnings management, fraud triangle

Suggested Citation

Caplan, Dennis and Dutta, Saurav K. and Marcinko, David, Unmasking Fraud at Toshiba (May 3, 2019). Issues in Accounting Education, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3382076 or http://dx.doi.org/10.2139/ssrn.3382076

Dennis Caplan (Contact Author)

University at Albany (SUNY) ( email )

1400 Washington Ave
Albany, NY 12222
United States

Saurav K. Dutta

State University of New York (SUNY) at Albany ( email )

135 Western Ave
Building, Room 109
Albany, NY 12222
United States

David Marcinko

Skidmore College ( email )

815 North Broadway
Saratoga Springs, NY 12866-1632
United States

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