Tabikobo postpones earnings report due to suspected fraud; parent company Adventure evaluates…

Tabikobo has delayed the release of its earnings report due to suspected fraudulent activities discovered during corrective audit procedures. The company is considering extending the deadline for filing the Annual Securities Report as required by Japan’s Financial Instruments and Exchange Act. Its parent company, Adventure, will follow suit in taking these measures.

The suspected fraud came to light during a sales sample test conducted on the Corporate Sales Division for the fiscal year ending in March 2021. The audit firm identified irregularities that differed from those detected by the Special Investigation Committee. It is believed that unauthorized gift certificates were included in the cost of goods sold, converted to cash, and embezzled. Tabikobo suspects that emails were manipulated to create false evidence of orders placed by business partners.

Initial investigations suggest that the fraudulent activities may involve a specific individual and not current or past management members. To expedite the inquiry, the company has established an internal inspection team. Director and Executive Officer Hirofumi Asai, along with two other executives, will lead the investigation with the support of external accounting and legal experts. The team will examine the current case and look for similar instances within the company.

Previously, Tabikobo had set up a Special Investigation Committee with external experts to scrutinize government subsidies the company received between March 2020 and November 2022. During this review, discrepancies in software asset recognition were uncovered. A former employee of the Corporate Sales Division, from approximately June 2017 to May 2020, was found to have manipulated financial records to conceal losses from travel arrangement errors through fictitious transactions, fraudulent voucher acquisitions, and misrepresentation of incoming payments. These findings led to additional suspected cases of fraudulent transactions during the audit of previous financial statements.

Due to the subsidiary’s ongoing closing procedures, Adventure, as the parent company, will delay the release of its earnings report and contemplate extending the deadline for filing the Annual Securities Report. Both Tabikobo and Adventure were initially required to submit their reports by September 30th.

In response to these issues, Tabikobo and Adventure are being proactive in addressing the suspected fraud and ensuring a thorough investigation to uncover any wrongdoing within the company. It is essential for businesses to uphold transparency, integrity, and accountability in financial matters to maintain trust with stakeholders and the public.