Olympus

The Olympus case highlights a number of behavioral, ethical and accounting issues. First, the ethics of the case are crystal clear. The two executives of Olympus went to extensive lengths to commit the fraud. It was carefully planned, with multiple steps undertaken over an extensive time period. Viewed through the lens of the fraud triangle, they were in a position (opportunity) as both executives and members of the board to operate with minimal oversight, until Woodford was hired. The had a motive, in that they wanted to disguise the losses that would have been humiliating for the company and that only arose as the result of changes to the accounting rules. Lastly, Kikukawa and Mori had rationalized the fraud as being whats best for the company, though clearly in the long run this was not the case (ACFE, 2018).

From an ethical point of view, there is no ability to justify fraud. The main schools of ethical thought include virtue ethics, deontological ethics and consequentialist ethics. Kikukawa and Mori likely sought to rationalize their actions through the consequentialist lens, which would roughly imply that cheating the taxpayers out of money is justifiable in order to protect the company. One of the challenges with consequentialism is that it can be difficult, when making a complex ethical decision, to fully understand all of the consequences (Sinnott-Armstrong, 2015).

The behaviors of Kikukawa and Mori were deliberate, and conducted over a lengthy period of time. The

From the perspective of judging this action, it is clear that the perpetrators were engaging in fraud, knew that they were engaging in fraud, and worked hard to attempt to conceal their fraud. Thus, they have full culpability for the fraud committed.

The accounting aspect of the fraud was really a thing of beauty. The lengths that they went to in order to conceal their losses, including going offshore to a number of...

…investigate the fraud, he was fired, shows that too much power was concentrated within two specific individuals, leading to a lapse in governance large enough for this fraud to take place. Auditors should have pursued the transactions that took the investments off the books. Knowing that there was a change in accounting policy that would emphasize fair value reporting of investments should have meant that the auditors were going to scrutinize transactions involving investments. This apparently did not happen, because those transactions should have been subject to scrutiny and ultimately this was not the case. Auditors should have specifically investigated large transactions with companies that were previously unknown, and they did not.

In another example, a related party relationship was created between Olympus and QP and CFC, pertaining to the loan guarantees. These transactions should have been subject to greater scrutiny because of the risk that related companies are going to be used to act for the benefit of the main company. Again, the auditors failed to follow up that lead, and should have, because…