[Last One Mile Labor Union] "A discrepancy of 10 million yen in accounting is fine": The surprising financial management CEO Makoto Watanabe taught the accounting department

Last Mile Inc. is a listed company. Investors make investment decisions based on the premise that the net sales, operating income, expenses, assets, and liabilities disclosed by the company are prepared in accordance with appropriate accounting practices and internal controls.

However, in a training video for the accounting department provided to our union by current Last One Mile employees, Representative Director, Chairman and CEO Makoto Watanabe made statements to the effect that "it's fine if there are discrepancies of 1 million yen, 2 million yen, or 10 million yen," repeatedly prioritizing the reduction of processing costs over the accuracy of accounting operations.

It doesn't matter if it's off by 1 million, 2 million, or 10 million yen.

During the training, there was a discussion on how precisely to reconcile the figures managed by operations with accounting figures.

Unless it's an extreme discrepancy, I suppose it doesn't really matter if it's off by a million, two million, or ten million yen.

Even after a participant confirmed "just a little over 10 million yen," Makoto Watanabe requested narrowing down the accounting categories and simplifying the processing as long as the discrepancy with the actual site was within a certain range.

Of course, there is the concept of materiality in accounting. It is not rational to investigate every single-yen discrepancy with the same amount of effort.

However, importance is not determined by whether the amount would cause the company to go bankrupt immediately. It must be evaluated comprehensively by considering the size of the amount, the account title, the cause of occurrence, repetitiveness, relation to fraud, and the impact on investors' decisions.

If it fluctuates by 10 million yen every month, I'll just add it appropriately to each company.

If it drifts by 10 million yen every year and every month, we should just make a rule to add 1 million yen or 2 million yen to each company. We should just decide it by a rule.

If a certain amount is allocated to each company to cover the difference, without being based on actual transactions, contracts, billings, payments, or the provision of services, what do those figures actually represent?

Making rules does not create a basis for numbers. If groundless allocations are repeated every month in the same way, errors simply become systematic and continuous.

Put unknown expenses under miscellaneous expenses and be done with it.

Makoto Watanabe is also requesting that expenses whose contents cannot be verified be processed and finalized by placing them under some account title.

Put it anywhere—whether it's under unknown, miscellaneous expenses, or whatever—just process it somehow and get it done with.

When it's found out later, you can just pretend it never happened. Instead of going back to the past to redo the ledger, if the numbers are trivial, you can just transfer them at the time you find out.

The fact that you do not know what the expenditure was for serves directly as a significant internal control warning. Depending on whether there is a lack of supporting documentation, personal use, a duplicate payment, an incorrect vendor, or simply an unknown account title, the appropriate response will be completely different.

If you bury that as "miscellaneous expenses," it will be processed on the books, but it doesn't solve any real-world problems.

The consumption tax rate is "the 8% that benefits the tax office"

There is also a surprising explanation for cases where it is unclear whether the restaurant payment is subject to the reduced tax rate of 8% or the standard tax rate of 10%.

Don't believe what the tax accountant says. The tax office is the one to listen to.

If it's 8%, the tax office wins. So 8% is fine for everything. Process it at 8%.

The consumption tax rate is not determined by whether the tax office or the company benefits. It is determined based on the transaction details, the method of provision, and the documentation.

The idea that you won't run into problems as long as you handle things in a way that favors the tax office is not proper accounting, but rather a process of manipulating numbers to avoid scrutiny.

You can just have the tax office inspect the shelves.

You can just tell them, "Please look at the statement at the tax office; it's on that shelf over there. Looking at that is the tax office's job anyway."

Organizing accounting books and vouchers and keeping them in a state where transaction details can be explained is the company's role, not the tax office's.

Tax auditors will not search through warehouses and shelves to find documents and categorize transactions on behalf of the company.

Public questions for Last One Mile, Inc.

1. Which accounting period, account title, and legal entities did the 10 million yen discrepancy discussed in the training occur between?
2. Was the process of distributing the difference in equal amounts to each company actually carried out?
3. What is the amount that remains unresolved after temporarily recording unknown expenses under miscellaneous expenses or similar categories?
4. Are there any cases where corrective journal entries or restatements were not made when errors from prior years were discovered?
5. Have you ever processed transactions with unknown consumption tax rates uniformly at 8%?
6. Did the accounting auditor understand this training content and accounting operations?
7. Does the Audit and Supervisory Committee evaluate the decision to allow a discrepancy of 10 million yen as appropriate?

Accounting is not a set of numbers that can be treated casually as long as the company stays in business.

Streamlining accounting operations is necessary. However, reducing input fields and entering baseless figures are two different things. Allowing minor errors and arbitrarily allocating a 10 million yen difference are also two different things.

The phrase that there is no hindrance to business management does not prove the correctness of the accounting treatment.

What investors want to know is not whether Last One Mile Inc. is a company that can withstand a 10 million yen discrepancy, but whether the disclosed 10 million yen accurately represents actual sales, expenses, assets, or liabilities.