Toshiba 2015 Annual Report Download - page 10

Functional
reinforcement
New
organization
New
organization
New
organization
New
organization
Board of
Directors
Supervisory SideBusiness Execution Side
Nomination Committee
Support outside directors
Support Audit Committee’s work
(1) Audits of accounts
(3) Audits of appropriateness
(2) Compliance inspections
(4) Audits of internal controls
Compensation Committee
Audit Committee
Audit
Committee Office
Staff Divisions
Internal Audit
Division
In-House
Companies
Representative
Executive Ocer,
President & CEO
Management Reform Division
Promote measures and policies relating to management revitalization
Reform of corporate culture, reform of staff work processes
Internal Management System Reinforcement Project Team
J-SOX
Restructure and reinforce internal control system
Project Monitoring & Oversight Division
Examine percentage-of-completion projects before orders
Monitor appropriateness of costs after orders
The investigation report from the Independent Investigation Committee particularized the major direct causes of inappropriate
accounting as institutionalized behavior in certain projects, including the involvement of certain members of top management,
their objective of overstating apparent current-period profit, a policy of over-riding emphasis on current-period profit, and
strong pressure to achieve budget targets.
It is also considered that the chief indirect cause of issues was the non-functioning of certain internal controls for nancial
reporting, as top-management involvement resulted in the insucient functioning of the monitoring function of the Board of Directors,
including the Audit Committee, the internal audit function, and the checks and balances functions, etc. of corporate divisions.
The Company presumes that these causes resulted from pressure caused by an awareness of concerns in the capital market,
and a need to find new business opportunities in a harsh environment where individual divisions were recording weak
performances as a result of negative impacts from the nancial crisis, the Great East Japan Earthquake, the ooding in Thailand
and an extremely strong yen, all at a time when traditional business markets were shrinking.
On receiving the investigation report, the Company acted on its analysis of causes by establishing the Management
Revitalization Committee, whose members included the Company’s four outside directors, an attorney-at-law and a certied
public accountant, both from outside the Company, and which also called on independent observers. Once new nominees for
outside directors were selected, they also joined the committee. The committee was tasked with carrying out intensive
discussions on a new management team and prevention of any recurrence, including reform of corporate governance.
Going forward, resolving management issues, improving the Company’s business environment and taking measures
against recurrence are all imperatives for the Company. The Company will accelerate business selection and concentration,
fundamentally reformulate its business structure and revamp its nancial structure, by taking measures to ensure ecient use of
assets, including asset sales.
4. Action taken in respect of governance structure and recurrence prevention measures
Outline of Reform of Corporate Governance Structure Management Revitalization Promotion Structure
(After September 30, 2015)
09 TOSHIBA Annual Report 2015