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The outline of the accounting treatments corrected based on matters such as the results of the investigation in 1. above is as follows:
Instances relating to the percentage-of-completion method of accounting
These include instances in which the total estimated cost of contract work was calculated without being based on the latest
information regarding incurred costs; instances in which provisions for contract losses were not recorded at the time when it
became clear that losses would arise; and instances in which the total estimated cost of contract work was calculated based on
expected cost reductions that lacked concrete substantiation.
Instances relating to the recording of operating expenses in the Visual Products Business
These include instances in which some operating expenses were not accounted for on an accrual basis; instances in which
unrealized profits that had been recognized due to temporary increases in transactions with affiliated companies were not
eliminated; and instances in which supplier discounts were recognized despite the absence of any substantive cost reductions,
such as by being predicated on adjustment or ination of the procurement price in subsequent periods.
Instances relating to valuations of inventory in the Semiconductor Business
These are instances in which valuation losses were not recorded at the timing when works-in-progress or the like were actually
disposed of; and instances in which the cost of sales was under-recorded as a result of the book value of term-end intermediate
products and term-end completed products being overstated, due to a loss of continuity between the revising of the standard
cost for standard cost calculation in the front-end process and in the back-end process.
The members of the Independent Investigation Committee were as follows:
Chairman: Koichi Ueda Attorney-at-Law (former Superintending Prosecutor, Tokyo High Public Prosecutors Oce)
Members: Hideki Matsui Attorney-at-Law (Co-representative of Marunouchi Sogo Law Oce)
Taigi Itoh
Certied Public Accountant (former Deputy Chairman of the Japanese Institute of Certied Public Accountants)
Kazuyasu Yamada Certied Public Accountant
2. Outline of corrected accounting treatments
instances such as where the total contract cost had been underestimated and where contract loss (including provisions for
contract losses) had not been recorded at appropriate times, and also identied other matters requiring further investigation.
For this reason, the Company determined as of May 8, 2015 to change the framework of the investigation to an
investigation by an independent committee comprising fair and impartial outside experts with no interests in the Company. The
specic scope of the investigation delegated to the Independent Investigation Committee was (i) accounting in relation to the
percentage-of-completion method, (ii) accounting in relation to recording of operating expenses in the visual products business,
(iii) accounting in relation to valuation of inventory in the semiconductor business, mainly discrete and system LSIs, and (iv)
accounting in relation to parts transactions, etc. in the PC business.
Subsequently, on July 20, 2015, the Company received the Investigation Report from the Independent Investigation Committee.
Parallel to the above investigations, the Company conducted a self-check of the Company and all of its consolidated
subsidiaries as of March 31, 2015, regarding matters such as whether there had been any cases in which accounting standards or
accounting rules etc. had not been complied with or other cases of inappropriate accounting treatment, and whether there was
any awareness thereof, including minor instances, for any of the scal quarters during the period from scal 2009 to scal 2014
and from April to the end of May of 2015.
As a result of conducting validation procedures in respect thereof the Company determined that it was necessary to correct
the nancial results of past scal years in relation to the matters stated in 2. below, and the Company made corrections to the
nancial statements it had reported to shareholders for the 171st scal year (from April 1, 2009 to March 31, 2010) through the
175th scal year (from April 1, 2013 to March 31, 2014).
06
TOSHIBA Annual Report 2015