COOKING THE BOOKS – TESCO AND TOSHIBA’S CASES

In the last century the whole world faced a great expansion and evolution of the global economy, it allowed small companies to grow and become big corporations conducting their businesses around the world. Big companies bring to big responsibilities these entities have towards all people involved in their businesses, either internal or external ones. Given the risks involved in managing such big companies, all countries have set rules and laws to follow in order to prevent bad events to happen. Despite all the regulations and rules, scandals and frauds occurred, in some cases the side effects of breaking the rules were fines or sentences to jail for the Managers in charge of supervising, but in the worst cases, we saw big corporations fail and people lose their jobs. In this paper, we will treat scandals and frauds related to the accounting processes. In companies mistreatment of the accounting data could be done because of several reasons that are strictly correlated with the internal companies’ policies, but we will look exclusively at those scandals aimed at presenting better final results with respect to what it would be the real situation of the company. In particular, we will look at the most used misstatement of results, the overstatement of earnings, also known as the practice of “Cooking the Books”, which is made in order to give the illusion that the company is performing well or, simply, it is done to cover an unavoidable failure.