Why Transparent, Conservative Accounting Is So Important…

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Why Transparent, Conservative Accounting Is So Important…

On Tuesday, July 21, Toshiba Corporation became embroiled in an accounting scandal that led to the resignation of its CEO following the results of an outside investigation which concluded that the company had overstated profits by more than $1.2 billion over a seven-year period.

None of our portfolios hold Toshiba, but the story captured our attention for two reasons. First, Charlie Dreifus and I share a keen interest in accounting issues. Secondly, Toshiba has a number of joint ventures with SanDisk Corporation, a stock which we currently do not own but which both Charlie and I have held in the past.

In fact, around the time that I joined Charlie as assistant portfolio manager for Royce Special Equity and Special Equity Multi-Cap Funds in October 2014, one of our initial discussions centered on the California-based company that provides data storage products and solutions, including flash memory, proprietary controller and firmwa