Walking out of the Sega Headquarters building, the driver had already parked the car in front of the main entrance.
Sitting in the backseat, Takuya Nakayama lowered the window slightly. The evening breeze of Tokyo dispersed the stuffiness inside the car.
His mind was still calculating the details of the audit plan.
Consulting firms from Europe and America were expensive, but they provided more than just a plan; they provided a deterrent.
When the department heads at Sega knew that every one of their accounts would be reviewed by an internationally top-tier team, the cost and risk of cooking the books would increase exponentially.
This deterrent was exactly what he needed right now.
For the past two months, the scenery on Takuya Nakayama's desk had changed drastically.
Previously, it was piled with game concept art, project proposals, and test discs. Now, everything had been replaced by heavy volumes of "Modern Corporate Financial Management," "Principles of Auditing," and stacks of data reports stamped with various seals.
He spent his whole day immersed in these dull words and numbers.
Aside from the previous order given to Yoshimura to redo the reports and the arrangement for Hoshino to contact the North American audit team, he had cut off all other unnecessary work-related socializing.
As for the overall management of game development, Hisao Oguchi had taken full charge.
That morning, Hisao Oguchi knocked on the door and walked in, carrying a few documents.
"Managing Director, the final testing report for Sakura Wars 2 requires your signature." Oguchi placed the documents next to a pile of financial statements, moving gently for fear of messing up the account books that were arranged by date.
Takuya Nakayama looked up from A Detailed Guide to Japanese Tax Law, rubbed his sore eyes, took a signature pen, and quickly signed his name.
"As long as it hasn't exceeded the budget, you make the call on development matters." He pushed the documents back. "Oguchi-san, lately, I've been staring at numbers until my eyes go dark. Unless the sky is falling on your end, handle it yourself."
Oguchi collected the documents and, looking at the mountain of accounting books on the desk, quipped, "The way you're going, it's like you've returned to your days preparing for your graduation thesis at Tokyo Tech. Everyone's saying the Executive Managing Director is planning to take the CPA exam."
"If I were to take the certification exam, those people at ChuoAoyama would be out of a job." Takuya Nakayama threw his pen down, stretched, and said, "Alright, go do your work."
After sending Koguchi away, silence returned to the office.
Takuya Nakayama continued to flip through the sales details in his hands.
Department Head Yoshimura had submitted the revised report a few days ago.
This time, the data was much more detailed, with customer churn rates, accounts receivable aging analysis, and gross profit comparisons by region—every indicator was clearly listed.
Takuya Nakayama took his pen and marked it up.
Whenever he encountered accounting logic he didn't understand, he would grab the internal phone on his desk and call the junior staff in the relevant departments.
"Is Sato from the Second Finance Section there? This is Takuya Nakayama. Find the reversal vouchers for the returns and exchanges in the North America region from last month. Yes, that's the one, the $320,000 allowance for bad debts. Explain to me why this money didn't go through the standard approval channel but was instead parked in 'other receivables'?"
The sound of papers shuffling came from the other end of the line, accompanied by Sato's stuttering explanation.
Takuya Nakayama listened patiently until the end, then directly pointed out the core issue: "This accounting method is non-compliant. Separate this expense, write up an explanation, and submit it to me before you leave today."
He hung up the phone and made a note in his notebook.
This practice of bypassing department heads to ask subordinates about details had the entire Sega administrative system on edge. No one was shouting or slamming tables, nor was anyone being punished, but a few random spot-check calls every day were enough to keep those playing word games with their reports from sleeping soundly.
This was exactly the effect Takuya Nakayama wanted.
Before the new audit mechanism was fully implemented, he needed to make those below understand that there were eyes above, watching where every cent went.
In the afternoon, Director Hoshino knocked on the door, bringing the latest news from North America.
"Managing Director, the partners at PricewaterhouseCoopers' New York headquarters have replied. They are very interested in our dual-track audit plan and are willing to send an independent team led by a senior partner to be stationed at Sega. The quote has been sent over." Hoshino handed over a fax.
Takuya Nakayama took it and glanced at the amount.
"It's not cheap," he said, placing the fax under a paperweight. "But this money is well spent. Make the arrangements; I will bring this topic up at next week's board meeting. In the next few days, sound out the other directors privately and explain the pros and cons clearly to them. Sega isn't short on cash right now; spending a little to ensure financial security is a calculation they can easily make."
"Understood. Department Head Yoshimura has been much better behaved lately. Since the Sales Department implemented the new performance appraisal system, everyone is focused on collection rates, and the incidence of channel stuffing has decreased significantly," Hoshino added in his report.
"That's just treating the symptoms. When the North American audit team arrives and digs through the old bad debts, that will be getting to the root of the problem," Nakayama Takuya said, taking a sip of his coffee. "Alright, please continue to follow up with PwC on your end."
After Hoshino left, Nakayama Takuya checked his watch; there was still some time before he had to get off work.
He gathered a few organized notebooks and went upstairs to find Nakayama Hayao.
The door to the president's office was half-open.
Nakayama Takuya knocked twice and pushed the door open.
Nakayama Hayao was wearing his reading glasses, reading an industry internal reference report.
"Finished reading the books?" The old man took off his glasses and pointed to the sofa opposite him.
"I've finished two, and I'm still chewing through the other three." Takuya Nakayama sat down on the sofa and placed his notebook on the coffee table. "I'm here to turn in my homework."
Hayao Nakayama opened the notebooks.
They were densely packed with calculations for various financial indicators, as well as annotations on the changes in Sega's cash flow over the past few years.
"Armchair theory," the old man commented, his tone betraying satisfaction. "No matter how much theory you learn, if you don't go out and roll around in the market, you're still just a bookworm."
"That's why I'm auditing the accounts," Takuya Nakayama said, leaning back against the sofa. "You don't realize it until you check, but while Sega's book profits look bright, there are quite a few hidden reefs beneath the surface. Especially with payments from overseas channels—the arrears are more serious than I expected."
"Clear water has no fish. In business, especially international business, there's no such thing as perfectly clean accounts," Hayao Nakayama said, picking up his teacup and taking a sip. "But you have to hold the bottom line. You've been making little moves down there lately. Yoshimura and a few of the old timers in the finance department have complained to me privately several times. They say you're auditing over their heads, making everyone nervous."
"If they have any complaints, have them come directly to me," Takuya Nakayama said with a smile. "I'm just asking about the situation; I'm not arresting anyone. If they have nothing to hide, what are they afraid of?"
"Don't wind the tension too tight. You're the Executive Managing Director now, not a member of the supervisory committee," Hayao Nakayama reminded him. "Focus on the big picture. Your job is to manage direction and policy, not to audit every single invoice."
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