What happend?
Products that Olympus manufactured and sold originally before the scandal occurred
cameras, lenses, and medical equipment for doctors
What was the audit firm responsible for?
Not noticing the Olympus’s illegal financial statements.
Who was involved in the cover up?
The top executives.
The three accounting principles violated
Revenue recognition, Matching principle, Cost principle
The year and country the Olympus fraud took place
October of 2011 in Japan
Name of the former CEO
Michael C. Woodford.
Who lost a lot of money due to the fraud and company’s losses?
Shareholders
How was the cost principle violated?
The cost of an item has to be recorded at the exact time it was transacted or purchased, in this case, the costs were not being recorded to keep the company from losing money.
The amount of money the company hide in losses
$1.7 billion
Number amount of people who were involved in the fraud
Six individuals.
Why would the company add less expenses to their balance sheets?
Because they were trying to prove more sales/profits were being made.
Name one internal policy that was not followed
The supervision of the documents being made and sent in.
No one being held responsible for these frauds.
Process steps not double checked.
Approval authority was not given for the financial transactions.
The method the company used to hide their losses
By making assets overpriced and paying inflated fees to their advisors. Making them seem more successful than they were
Why was the former CEO of the company expelled from his position?
Once he spoke up about the suspicious accounting behavior in the company, he got fired and an investigation started for the company.
What false information was being added to the financial statements?
Adding fake revenues, increasing asset prices, and inputting less expenses.
How was the matching principle violated?
An expense must be recognized at the same time revenue is recorded, but in this case, there was a lot lying about the expenses being made.
The main goal the company was trying to achieve through this fraud
To hide their losses from the public and keep it off their balance sheets
Olympus's audit firm
KPMG
The illegal activity added to the company's financial misstatements
False information being added to their transactions and balance sheets.
Why were the internal control policies created by Olympus?
To make sure their financial reports are reliable and follow the laws and regulations.