IRISO Electronics' results supplement of October 9 goes beyond IRISO Electronics Panel Cannot Prove Judge Payments but Confirms Customs Cash. It describes accounting and quality failures found by the third-party committee, and it ties a lower profit forecast to the cost of fixing them.
Quality failures
The supplement lists three quality-control problems. In the reliability laboratory, required tests were not run and reports were written from past test data. In some cases out-of-spec or unnatural data were excluded or rewritten, and test reports that did not match actual results went to customers. At the factory, sampling inspections set by inspection standards, and some final shipment measurements, were skipped, with figures approximating nearby process readings recorded instead.
The company also says it changed moulds for catalogue products without the customer approval its agreements required, relying on internal procedure. It names staff and equipment shortages, and management's poor grasp of conditions on the floor, as common causes. The supplement does not say which customers received the reports or whether any product failed.
Accounting failures
On financial reporting, the supplement says local audit completion repeatedly slipped and five accounting staff left at once. Consolidated statements were then built on closing figures that were not finished, and the company did not proactively tell the auditor that the work was incomplete. Separately, headquarters pressed a sales subsidiary to hit targets, and revenue was booked although goods had not left the warehouse or reached customers.
On the payments, the supplement repeats the committee's position. Part of two above-market legal fees, paid in March 2021 and August 2025 to settle a long labour dispute, may have reached a judge, but the committee did not reach a definitive finding. Cash paid to customs officials was funded by money returned from outside vendor transactions.
Accountability and cost
The company is replacing its president and abolishing the honorary chairman post. The president is returning 30% of executive pay for six months. The chairman and three other directors are each returning 10% for three months, as are the three outside directors on the audit committee. Retired executives are also covered.
Remediation includes a new governance promotion department, a stronger and more independent internal audit function, extra staff and test equipment, and a code of conduct that has put compliance, safety and quality at the top since October 1.
The numbers
For the year to March 2026, sales rose 9.9% to ¥61.96bn, a record, while operating profit slipped 0.2% to about ¥5.4bn. The supplement says roughly ¥1.3bn of investigation costs went into extraordinary losses. For the year to March 2027 it forecasts sales of ¥67.0bn, up 8.1%, and operating profit of ¥3.5bn, down 35.6%. It attributes the drop partly to higher raw-material prices and to personnel costs and risks tied to the remediation. The dividend forecast will be set after second-quarter results.
The committee's five-month investigation ended when the final report arrived on September 28. Its work was set up on April 27 after payment concerns surfaced in January and February.