Introduction
Recently, mainly among listed companiesAccounting fraudA series of scandals have occurred involving the company. CFOs at its subsidiary Air Water and SoftBank affiliates have embezzled tens of millions of yen, and a 1.1 billion yen transfer error occurred at Hatena. The amounts involved are large, and the social impact is enormous.
It's easy to think, "It's okay to leave it to the auditing firm," but what this article will make clear is that **audits have their limits, and companies have a responsibility to create an environment that does not tolerate fraud.**
We hope that by sharing this article with our readers, you will gain a renewed appreciation for the importance of accounting practices and organizational culture.
Why is "double-checking" necessary instead of leaving everything to the auditing firm?
Audit firms are not omnipotent.
Many people involved in business tend to think that "if no fraudulent accounting has been found, it means the auditors were inactive." However, the purpose of accounting audits is not to uncover fraud, but to confirm that the financial statements are presented fairly, and it is impossible to verify every transaction within the constraints of time and cost.
If the documents themselves are forged, it becomes difficult to detect. Trusting an audit is the same as believing it's foolproof, so overconfidence is dangerous.
Double-checking mechanism
**Every transaction, including buying, selling, and deposits/withdrawals, should have two eyes.**
for example:
– Review the contract and compare it with the invoice.
– Create a slip and have multiple people review it.
- Another person checks the entry when it is entered into the journal.
A feeling that "something is wrong" is an important sign. In fraudulent accounting, figures such as accounts receivable and inventory are inflated, so checking the balance sheet during financial analysis may reveal the anomaly.
Examples of Mr. Yuji Tanada
According to an article in Nikkei Business dated May 1, 2026, past cases of misconduct often show instances where "checks were merely a formality" or "suspicious actions were overlooked." **"Double checks" refers not to a formality, but to a substantive checking system.**
Specific measures and implementation methods
Point 1: Do not allow critical tasks to be performed by a single individual.
Even executives and department heads should not be entrusted with important tasks such as disbursement, remittance, and contract signing.An appropriate checking system needs to be implemented.。
In the case involving the CFO of a SoftBank subsidiary, a certified public accountant embezzled 460 million yen, and one of the contributing factors was that "no one was keeping a close eye on things."
Point 2: Conduct financial analysis on a monthly and annual basis.
Not only should auditing firms and accounting departments review the financial statements, but the president, directors, and auditors themselves should also review them.Unnatural changes in numbers can serve as an early warning signal.。
Particular caution is needed when examining the balance sheet (BS), as evidence of fraud is often found there.
Point 3: Make the internal whistleblowing system function effectively.
It is crucial to avoid creating a situation where people feel they "can't tell anyone" even if they sense something is wrong. **We will create an environment where people are protected from harm by providing anonymous consultation services and means of contacting external parties.** Even if the president is involved in misconduct, having a system in place to reach external parties can potentially prevent further damage.
Words of Mr. Yuji Tanada
In Kazuo Inamori's book "Management and Accounting," published 30 years ago, there is the following message:
"How many business owners have experience providing accounting guidance?"
"Insufficient questioning of inconsistencies and inadequate dialogue with the finance department may be leading to oversights."
"A CEO can only truly manage a business if they understand accounting on a daily basis."
These words still resonate strongly with me today.
Supplementary information and points to note
The mechanism by which "pus" remains in BS
When you falsify your financial statements, it's not just the income statement that looks good; according to the principles of double-entry bookkeeping, it also affects the balance sheet.Accounts receivable that don't actually exist are ballooning.If you postpone processing the expensesIt will remain recorded as inventory, etc.。
These unusual figures are important clues that can be checked during financial analysis. However, it's crucial not to assume that "the auditors haven't noticed them."
The Importance of Accounting Guidance
As Mr. Yuji Tanada pointed out, it is essential for managers to understand accounting and to make an effort to provide ongoing guidance on accounting. **It's not just about looking at the numbers, but understanding the underlying mechanisms is crucial.** A culture of immediately questioning anything that seems odd is necessary.
Collaboration with cybersecurity
IT-related companies like Hatena are also seeing an increase in system-based fraud.We need to review the withdrawal instructions and transfer approval processes.Please keep this point in mind as well.
Summary: Why accounting is necessary for modern management
Mr. Yuji Tanada argues that "only when managers fully understand accounting and make the effort to provide regular guidance on accounting can they truly manage their businesses."Accounting is not merely administrative work, but a crucial tool for understanding the essence of a company.is.
There is significance in the renewed attention being paid to Kazuo Inamori's "Management and Accounting," published nearly 30 years ago. "Even as times change, there are unchanging principles," and these include double-checking, verification through supporting documents, and the functioning of internal whistleblowing systems.
Creating an organization that does not tolerate wrongdoing isThis is not merely about compliance, but about the sustainability of the company itself.It's important to think about and act on "what we can do ourselves," rather than relying solely on audit firms.
「Are you doing the obvious things in an obvious way?"That is the best way to protect the company."
