TOKYO -- Toshiba intentionally delayed booking losses for infrastructure projects by presenting unrealistic cost-cutting plans to auditors, sources familiar with the matter said, raising the specter that a financial watchdog could take action against the company ensnared in a deepening accounting scandal.
The infrastructure segment includes such businesses as electronic toll collection systems. Under the percentage-of-completion accounting method used for long-term construction projects, the possibility of future losses stemming from higher construction costs was recognized early on. To receive clearance from auditors, however, project leaders gave earnings estimates based on unrealistic cost-cutting plans and explained that losses would not grow because of cost reductions, the sources said.
