Compliance Responses and Action Plans

  • Compliance Responses and Action Plans

    IFAC members and associates have provided self-assessment information about the regulatory and standard-setting framework in their countries (Part 1) and their organizations' activities in addressing IFAC's membership requirements (Part 2) as described in the Statements of Membership Obligations. Based on an analysis of this information, they are developing SMO Action Plans for continuous development and improvement.

    Some organizations have qualified to submit SMO Action Plans on a biennial basis by meeting eligibility criteria. These organizations are indicated with an asterisk (*).

    In the interest of transparency and providing information to the profession, regulators, and other stakeholders, all responses and SMO Action Plans are accessible below.

    The Japanese Institute of Certified Public Accountants

     

    Introduction

    The information below has been submitted as part of the IFAC Member Body Compliance program. The Program has two components:

    Part 1: Assessment of the Regulatory and Standard-Setting Framework (provides information about regulatory requirements and standard-setting processes in member body countries); and
    Part 2: Assessment of Compliance (provides information on compliance by member bodies with the Statements of Membership Obligations). Part 2 of the Compliance Program will begin later this year, and the results will also be posted to the website.

    The responses to Part 1 are provided below. IFAC staff has reviewed the responses and, where necessary, validated them with external knowledgeable parties. A list of key terms is available to assist readers in understanding the responses.

    The purpose of this Part 1 Assessment is to collect information on the roles of IFAC member bodies and other organizations (including government, regulatory or other appointed authorities) with respect to:

    1. Setting auditing, accounting, ethics, public sector and education standards; and
    2. Regulating the accountancy profession.

    Sections 1 and 2 of Part 1 contain an introduction and instructions for member body respondents. For this reason, they are not included here, and the responses begin with Section 3.

    Questions or comments may be sent to complianceassessment@ifac.org.


    Section 3 -- Member Body General Information

    1. Country:

      Japan


    2. Name of member body:
      The Japanese Institute of Certified Public Accountants

      Or please specify name:



    3. Individual responsible for preparation:
      Yoichi Ota, International Affairs Director


    4. Date member body became a member of IFAC:
      Note: Please enter a numeric date (e.g., 12/2001, Month/Year)

      10 / 1977



    Questions 5 - 22 are for internal use only


    Section 3G -- Affiliations


    23. Please list those regional organizations to which your organization belongs (e.g., FEE, CAPA, ECSAFA, IAA, etc.):
      CAPA



    Section 4 -- Statutory Framework


    Responses to this section will provide a description of the legal framework governing the commercial aspects of auditing and financial reporting in your country.

    Section 4A -- The Companies Act or Commercial Code


    The following questions concern the Companies Act (the Act) or Commercial Code (the Code) or similar Legal authority in your country. If no Legal authority exists, or the Legal authority does not address particular questions, please indicate "N/A" for Not Applicable.

    24. What is the full name of:
      a). the Act or the Code: Commercial Code
      b). the Enacting body: Ministry of Justice
      c). date the Act or Code came into force: 08 / 2003


    25. How can IFAC obtain a copy of the Act or Code?
      Ministry of Public Management, Home Affairs, Posts and Telecommunications provide data base services. http://law.e-gov.go.jp/cgi-bin/idxsearch.cgi - (Japanese Only) EIBUN-HOREI-SHA, INC. Kiyose Building1st Floor, 4-7, Hirakawa-cho 2-chome, Chiyoda-ku, Tokyo, 102-0093 Japan TEL +81-3-5276-5955 FAX +81-3-5276-5572 http://www4.ocn.ne.jp/~ehs/


    26. Is the Act or Code available in English?
      Yes   No


    27. What are the types of entities covered by the Act or the Code?
      Please check all that apply.
      Listed entities   Other (please specify):
      Private companies   Other (please specify):
      Governmental   Other (please specify):
      Not-for-profit   Other (please specify):


    28. Is there a requirement for the following entities to prepare annual statutory financial statements? If YES, please describe the financial reporting requirements including the accounting standards to be followed.
      Please check all that apply.
        No Yes (If YES, please describe)
      Listed entities In accordance with Securities Exchange Laws. Listed companies are required to submit two sets of financial statements: one in accordance with the Commercial Code requirements and the other in accordance with the Securities and Exchange Law.
      Private companies Article 32 - 2 requires that Japanese GAAP should be applied in the following text: In construing the provisions concerning preparation of the books of account, authentic accounting practices shall be taken into consideration. Article 34 requires principle on valuation of properties. Enforcement regulations of Commercial Code require concrete requirement. Article 281 requires preparation of financial statements including income statement, balance sheet, business report, and proposals for appropriations of retained earnings.
      Governmental
      Not-for-profit
      Other (please describe)
      Other (please describe)


    29. Is there a statutory requirement for the following entities to be audited? If YES, describe the requirement including the auditing standards to be followed:
      Please check all that apply.
        No Yes (If YES, please describe)
      Listed entities Listed companies are required to be audited by the external auditors under the Securities Exchange Law. a. Only CPAs registered with the JICPA can perform the role of the external auditor.
      Private companies 1. All companies are required to be audited by corporate statutory auditors. Corporate statutory auditors are required to audit mainly governance of directors (just like an audit committee). 2.The Commercial code requires that large corporations, which fall into the following criteria shall be audited by both corporate statutory auditors and independent CPAs or audit corporations. a) Those with capital stock of 500 million yen or more or b)Those with total amount of liabilities of 20 billion yen or more. For corporate statutory auditors, there is no specific audit standards. Independent CPAs and audit corporations are required to follow the generally accepted auditing standards.
      Governmental
      Not-for-profit
      Other (please describe)
      Other (please describe)


    30. Are the auditors ("statutory auditors") that are appointed for audits required by the Act or Code ("statutory audits") appointed for a specific period?
      Yes   No
      If YES, please indicate the term of appointment: 1 Year(s)


    31. Who appoints the statutory auditors?
      Please check all that apply.
      Shareholders   Management
      Board of directors   Other (please specify):
      Audit committee   Other (please specify):
      Government agency   Other (please specify):


    32. Does the Act or Code require joint auditors for the statutory audit?
      Yes   No
      If yes, please describe the requirement:
      Yes and No.

      The Corporate Statutory Auditor is employed by the entity; however, it is independent from the directors. The primary focus of the Corporate Statutory Auditor is to govern the responsibilities of the directors in an entity.

      For large corporations, more than two corporate statutory auditors (two individuals) are required. There is no joint audit requirements for independent CPAs.


    33. Does the Act or Code require the rotation of the auditors or audit firms performing statutory audits?
      Yes   No
      If yes, please describe the requirement:
      In the new CPA Law, any engagement partner is legally required to rotate every seven years with a time-out period of two years regarding the following companies. Audit firm rotation is not required.

      - Companies to be audited under the Securities and Exchange Law.
      - Companies with capital stock of 10 billion yen or more or with the total amount of liabilities of 100 billion yen or more.



    Section 4B -- Securities Market Regulations


    Responses to this section will provide a description of the financial reporting and auditing requirements for listed entities in your country.

    34. What are (a) the major items of Legal authority for such requirements, (b) the Enacting body(ies) and (c) the latest amendment date? Please identify the specific articles or sections that pertain to auditing and financial reporting:
    1. the major items of Legal authority for such requirements

    2. the Enacting body(ies)

      The FSA (Financial Services Agency)

    3. the latest amendment date?

      July 2003


    35. How can IFAC obtain a copy of the Legal authority?
      Ministry of Public Management, Home Affairs, Posts and Telecommunications provide data base services.
      http://law.e-gov.go.jp/cgi-bin/idxsearch.cgi - (Japanese Only)


    36. Is the Legal authority available in English?
      Yes   No


    37. Are there any additional or alternative financial statement reporting requirements for listed entities that are not described in your answer to Question 28?
      Yes   No
      If YES, please describe the requirement:
      Securities and Exchange Law requires listed companies to comply with regulations regarding additional disclosure requirements such as the preparation of consolidated financial statements including cash flow statement with various additional footnote disclosure regarding related party transaction, derivatives, income tax allocation, retirement benefits, etc.


    38. Are there any additional auditing requirements that apply to listed entities other than those described in your answer to Question 29 (e.g., additional GAAS requirements, additional independence requirements, requirements to report to those charged with governance, etc.)?
      Yes   No
      If YES, please describe the requirement:
      Please also refer Question 33.

      The CPA Law prohibits audit firms from providing certain non-audit services to any audit client. This is applicable to audits for listed companies, which are required by the Securities and Exchange Law. This is also applicable to audits for certain large non-listed companies, which are required by the Commercial Code.


      Even though the scope of non-audit services that will be prohibited will be provided in the supplemental cabinet order, the following non-audit services are most likely to be prohibited:
      1 Services related to bookkeeping, financial documents, accounting books,
      2 Design of financial or accounting information systems,
      3 Services related to appraisal of the contribution-in-kind reports,
      4 Actuary services,
      5 Internal audit outsourcing services,
      6 Any service of dealing in, or being promoter of shares or other interests of audit clients,
      7 Other services that are equivalent to the above listed services, which may involve management decisions or lead to self-audit of the financial documents the auditor examines.

      It will be prohibited to provide these non-audit services to any clients that are required to be audited in accordance with Securities and Exchange Law and certain large companies for whom audit is required by the Commercial Code.


    39. Who appoints the statutory auditors of listed entities?
      Please check all that apply.
      Shareholders   Management
      Board of directors   Other (please specify):
      Audit committee   Other (please specify):
      Government agency   Other (please specify):


    40. Are auditors who perform audits of listed entities appointed for a specified period?
      Yes   No
      If YES, please indicate the term of appointment: 1 Year(s)


    41. Are joint auditors required for audits of listed entities?
      Yes   No
      If YES, please describe the requirement:


    42. Is rotation of the auditor or audit firm for audits of listed entities required?
      Yes   No
      If YES, please describe the requirement:
      Please refer to answers for Question 33 and 38.



    Section 5 -- Auditing Standards


    Responses to this section will provide a description of the legal and professional framework governing audit and other assurance standards in your country. The section focuses on the establishment of such standards. Please indicate the role your organization plays within this framework.

    Section 5A -- Statutory Framework


    43. Please provide the name of the Legal authority and/or self-regulatory rules that establish audit and other assurance standards in your country, the date of the last amendment of such authority or rules and the name of body responsible for setting audit and other assurance standards. If the standards are different for different entities (e.g., listed entities, private companies, governmental bodies, not-for-profit organizations, etc.), please specify the details that apply to each:
      Type of entity Name of
      applicable
      legal
      authority
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting audit and
      other assurance standards
      Listed entity Auditing Standards January 2002
      Other (please describe) All entities Practical Guideline for Audit May 2004 Auditing Standards Committee and Auditing and Assurance Practice Committee of JICPA
      Other (please describe)
      Other (please describe)

      a. How can IFAC obtain copies of these documents?

      <BAC>
      The Financial Services Agency (Japanese Only)
      http://www.fsa.go.jp/

      JICPA Library provides copy services. (Japanese Only)


      b. Are the documents available in English?
      Yes   No


    Section 5B -- Standard-Setting (Business Accounting Council “BAC” of the Financial Service Agency “FSA”)


    44. For Business Accounting Council “BAC” of the Financial Service Agency “FSA”, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      Regulator (enacting governmental body)

      b. Name of standards

      Auditing Standards.

      Article 3 of the Ordinance of the Cabinet Office concerning Examination of Financial Statements stipulates that auditing standards pronounced by the Business Accounting Council shall fall into the generally accepted auditing standards.

      Preface to the Auditing Standards issued by Business Accounting Council states that Business Accounting Council delegates its authority to develop implementation guidances to JICPA. Therefore, Japanese GAAS is represented by the combination of the auditing standards issued by the Business Accounting Council of the Financial Services Agency and the guidances issued by JICPA.


    45. How many voting members does the standard-setting body have?
      23 members


    46. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    47. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      The FSA selects the members. The Criteria are not disclosed, but the FSA considers the balances of members' background.


    48. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      Regulators


    49. What is the term of appointment for members?
      2 Year(s)


    50. For how many years has the standard-setting body been in existence?
      50 Year(s)


    51. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      0.00

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      110.0000



    52. To what entity is the standard-setting body accountable?
      Government and JICPA


    53. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      Both setters publish Exposure Drafts to receive public opinion.

      The BAC and JICPA have been sharing in the process of standard setting.

      The BAC develops core auditing standards that underline basic concepts for audits of financial statements.


    2. accessibility of meetings (i.e., public or private)



    3. approval process for final standards (i.e., majority required to approve final standards)

      Majority required

    4. other relevant due process activities



    54. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      30 Day(s)


    Section 5B -- Standard-Setting (Auditing Standards Committee and Auditing and Assurance Practice Committee of JICPA)


    44. For Auditing Standards Committee and Auditing and Assurance Practice Committee of JICPA, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      Professional body

      b. Name of standards

      Various Statements of auditing standards of the committee, etc.

      The JICPA Auditing and Assurance Practice Committee has issued more than 20 statements, which are largely modeled after ISA.


    45. How many voting members does the standard-setting body have?
      (ASC) 31 members (AAPC) 25 members


    46. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    47. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      Members are all experienced CPAs. JICPA Council selects the members.


    48. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      President of JICPA


    49. What is the term of appointment for members?
      3 Year(s)


    50. For how many years has the standard-setting body been in existence?
      30 Year(s)


    51. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      61,000

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      110.0000



    52. To what entity is the standard-setting body accountable?
      Government and JICPA


    53. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      Both setters publish Exposure Drafts to receive public opinion.

    2. accessibility of meetings (i.e., public or private)

      The meetings are not open to the public. Auditing and Assurance Practice Committee is equipped with a senior consultative function where the Advisory Council for Auditing Standards Committee formally enables representatives of various stakeholders such as preparers, regulators, users, academics and analysts to state their opinions in its standard-setting.

    3. approval process for final standards (i.e., majority required to approve final standards)



    4. other relevant due process activities

      Final standards by JICPA Committees requires majority approval of the Council.


    54. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      30 Day(s)



    Section 6 -- Ethics


    Responses to questions in this section will provide a description of the legal and professional framework governing ethics standards for accountants in your country. This section focuses on the establishment of such standards. Please indicate the role your organization plays within this framework.

    Section 6A -- Statutory Framework


    55. For each of the following types of professionals, please indicate the name of the Legal authority and/or self-regulatory rules establishing ethics standards for accountants and auditors in your country, the date of the last amendment of such authority or rules and the name of body responsible for setting the ethics standards.
      Type of professional covered Name of
      applicable
      legal
      authority
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting ethics standards
      Professional Accountants in Public Practice CPA Law 1. June 2003 The FSA (Financial Services Agency)
      Professional Accountants in Business JICPA Code of Ethics December 2003 JICPA (Ethics Committee and Discipline Committee)
      Professional Accountants in the Public Sector JICPA Code of Ethics December 2003 JICPA (Ethics Committee and Discipline Committee)
      Other (please describe) Professional Accountants in Public Practice JICPA Code of Ethics December 2003 JICPA (Ethics Committee and Discipline Committee)

      a. How can IFAC obtain copies of these documents?

      These documents can be obtained from JICPA but in Japanese. (Partial translation is available in English)

      b. Are the documents available in English?
      Yes   No


    Section 6B -- Standard-Setting (The FSA (Financial Services Agency))


    56. For The FSA (Financial Services Agency), please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      Regulator (Government)

      b. Name of standards

      CPA Law


    57. How many voting members does the standard-setting body have?
      0


    58. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe: Question is not applicable to the FSA.


    59. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      Question is not applicable to the FSA.


    60. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      Question is not applicable to the FSA.


    61. What is the term of appointment for members?
      1 Year(s)


    62. For how many years has the standard-setting body been in existence?
      1 Year(s)


    63. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      0.00

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      110.00



    64. To what entity is the standard-setting body accountable?
      This question is not applicable to the FSA.


    65. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      This question is not applicable to the FSA.

    2. accessibility of meetings (i.e., public or private)

      This question is not applicable to the FSA.

    3. approval process for final standards (i.e., majority required to approve final standards)

      This question is not applicable to the FSA.

    4. other relevant due process activities

      This question is not applicable to the FSA.


    66. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      1 Day(s)


    Section 6B -- Standard-Setting (JICPA (Ethics Committee and Discipline Committee))


    56. For JICPA (Ethics Committee and Discipline Committee), please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      Professional Body.

      (The function of the Discipline committee was previously included in the former Ethics Committee.)


      b. Name of standards

      Code of Ethics


    57. How many voting members does the standard-setting body have?
      10 Ethics Committee and 39 Discipline Committee


    58. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    59. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      Members are selected by the Council of JICPA following the best person for the job criteria.


    60. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      Members are appointed by JICPA Chairman and President.

      Ethics Committee has more than 40 years of existence.


    61. What is the term of appointment for members?
      3 Year(s)


    62. For how many years has the standard-setting body been in existence?
      Year(s)


    63. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      54,545

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      110.00



    64. To what entity is the standard-setting body accountable?
      JICPA committees are accountable to JICPA members.


    65. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      Exposures are made only to JICPA members.

    2. accessibility of meetings (i.e., public or private)

      The committee is private.

    3. approval process for final standards (i.e., majority required to approve final standards)

      Majority at JICPA Committees is required to approve final standards.

      Revision of the Code of Ethics requires approval by the Council and General Assembly.


    4. other relevant due process activities

      All resolutions of JICPA Committees are to be approved by the Council of JICPA.


    66. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      14 Day(s)



    Section 7 -- Education


    Responses to questions in this section will provide a description of how education requirements for the profession are established. Please indicate the role your organization plays within this process.

    Section 7A -- Education Requirements


    67. Please describe in general terms the education system in your country including the different stages of education from early childhood education through to tertiary level study. Please indicate which aspects / levels are compulsory as part of the national education system:
      6 years of elementary school and 3 years of junior-high school constitute compulsory education in Japan.

      The national education system sets 3 years of high school and 4 years of university, beyond compulsory education.


    68. Is there a legal authority or regulation that specifies the requirements for an individual to operate as an accountant or auditor in your country?
      Yes   No

      If YES, please provide the name and describe the requirements, including any relating to education, experience or qualifications.

      In order for a CPA candidate to be qualified as a CPA in Japan, CPA Law requires the candidate to pass national CPA examination, gain 2 years of practice experience and take 1 year of practice training and pass final assessment (examination) set by JICPA.


    69. Please select from below all the relevant key levels of requirements to obtain certification from your member body (i.e. to qualify as a certified or chartered accountant) and provide a general description of the requirement.
      Academic requirements
      Professional examinations
      Practical experience
      Final qualifying examination
      Other (please describe)


    70. Which of the following arrangements best describes who establishes the education requirements for the accounting profession in your country? Please select one option.
      A government ministry, department or agency establishes education requirements for the accounting profession with no additional requirements set by the member body(ies).
      A government ministry, department or agency establishes minimum education requirements for the accounting profession, and member body(ies) supplement these requirements.
      Member body(ies) establishes the education requirements for the accounting profession.
      Other (please describe)


    71. Please provide the name(s) of the relevant body in the government ministry, department, agency and / or member body who establishes the education requirements.
      The FSA, the CPA and Auditing Oversight Board (CPAAOB), JICPA

    1. A general description of the role of the relevant body(ies) including how it operates and its due process in establishing the education requirements.

    2. How many voting members does the relevant body(ies) have

      This question is not applicable to the FSA.

      CPAAOB has ten voting members

      Professional Education Committee has 31 members

    3. Are the members of the relevant body(ies) involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe: JICPA's committee is made up of CPAs who participate on a voluntary basis. The FSA and CPAAOB consist of full-time paid members and part-time paid members who earn their principal income elsewhere.

    4. For how many years has the body been in existence?

      40 Year(s)


    72. How would you describe the authority that the education requirements have?
      Requirements are legally-based
      Requirements are set in the constitution, by-laws or other rules of the relevant body(ies).
      Requirements are set in member body(ies) policy document(s).
      Other (please describe)

    72 a. How can IFAC obtain copies of these documents?
      Ministry of Public Management, Home Affairs, Posts and Telecommunications provide data base services.
      http://law.e-gov.go.jp/cgi-bin/idxsearch.cgi - (Japanese Only)

    72 b. Are these documents available in English?
      Yes   No


    73. Are the education requirements for accountants and auditors the same throughout your country, or do they differ among regions, provinces or states?
      Same   Different
      If different, please briefly describe the main differences:


    74. Please indicate the scenario that best describes who delivers the education and examination process for members of the profession. Please only select one option.
      The education program and final examination are delivered by the member body.
      The education program and final examination are delivered by the member body and other education institutions (e.g., universities, colleges, and others).
      The education program and final examination are delivered by education institutions (e.g., universities, colleges, and others).
      Other (please explain)


    75. Once qualified as a member of your professional body, can members offer their services directly to the public?
      Yes   No



    Section 7B -- Licensing


    76. Are there licensing requirements for auditors in your country?
      Yes (continue with Question 77)   No (proceed to Section 8)


    77. Who sets the requirements to obtain a license?
      CPA Law.


    78. What are the requirements to obtain a license (please select all relevant requirements.)?
      Academic study specific for obtaining a license
      Practical experience
      Licensing examination
      Final qualifying examination
      Other (please describe)


    79. Are there ongoing requirements to retain a license?
      Yes   No

      If YES, please select all relevant requirements.
      Continuing professional development
      Re-examination
      Other (please specify):


    80. What entity grants the license?
      JICPA under the oversight of the FSA.

      Only CPAs registered with the JICPA can perform the role of the external auditor.


    81. Describe any additional licensing requirements for auditors of listed entities (e.g., additional education requirements, registration, etc.).
      (None)



    Section 8 -- Public Sector Accounting Standards


    Responses to this section will provide a description of the legal and professional framework governing public sector accounting standards in your country. The section focuses on the establishment of such standards. Please indicate, where appropriate, the role of your organization within this framework.

    Section 8A -- Statutory Framework


    82. Please provide the name of the Legal authority and/or self-regulatory rules establishing public sector accounting standards in your country, the date of last amendment and the name of the body responsible for setting public sector accounting standards. If the standards are different for different entities (e.g., whole of government, ministry/department, statutory authority/agency, profit entity owned by government, state governments, local governments, other [please specify]), please specify the details that apply to each.
      Type of entity Name of
      legal
      authority
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting public sector
      accounting standards
      Whole of government N/A
      Ministry/department N/A
      Statutory authority/agency Accounting standards for incorporated administrative agencies March 2003 Ministry of Public Management, Home Affairs, Posts and Telecommunications
      Profit entity owned by government N/A
      State governments N/A
      Local governments N/A
      Other (please describe) The applicable rules/standards vary even within a single type of entity according to the laws/ordinances prescribing an entity's establishment. N/A
      Other (please describe)

      a. How can IFAC obtain copies of these documents?

      Ministry of Public Management, Home Affairs, Posts and Telecommunications provide data base services.
      http://law.e-gov.go.jp/cgi-bin/idxsearch.cgi - (Japanese Only)


      b. Are the documents available in English?
      Yes   No


    Section 8B -- Standard-Setting (Ministry of Public Management, Home Affairs, Posts and Telecommunications)


    83. For Ministry of Public Management, Home Affairs, Posts and Telecommunications, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      Government

      b. Name of standards

      Accounting Standards for Independent Administrative Institutions.

      Are the standards cash or accrual basis?
      accrual basis

      An accrual basis accounting standards is adopted in the accounting standards for independent administrative institutions and other public sector entities.
      These standards are prepared by the council in each ministry.


    84. How many voting members does the standard-setting body have?
      18


    85. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    86. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      Criteria are not disclosed, but balancing of member background is considered.


    87. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      Government


    88. What is the term of appointment for members?
      1 Year(s)


    89. For how many years has the standard-setting body been in existence?
      1 Year(s)


    90. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      0.00

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      110.0000



    91. To what entity is the standard-setting body accountable?
      Government


    92. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      Yes

    2. accessibility of meetings (i.e., public or private)

      The meetings are private.

    3. approval process for final standards (i.e., majority required to approve final standards)

      Approval of final standards requires majority.

    4. other relevant due process activities

      (none)


    93. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      31 Day(s)



    Section 9 -- Private Sector Accounting Standards


    Responses to the questions in this section will provide a description of the legal, statutory and professional framework governing private-sector accounting standards in your country. The section focuses on the establishment of such standards. Please indicate what role your organization plays within this framework.

    Section 9A -- Statutory Framework


    94. Please provide the name of the Legal authority and/or self-regulatory rules that establish private-sector accounting standards in your country, the date of last amendment, and the name of the body responsible for setting private sector accounting standards. If the standards are different for different entities (for example, listed entities, private companies, governmental organization, not for profit organizations, etc.), please specify the requirements that apply to each.
      Type of entity Name of legal
      authority or
      applicable
      rules
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting private sector
      accounting standards
      Listed entity Securities and Exchange Law July 2003 Accounting Standards Board of Japan (ASBJ)
      Other (please describe) Commercial Code August 2003 Accounting Standards Board of Japan (ASBJ)
      Other (please describe)
      Other (please describe)
      Other (please describe)

      a. How can IFAC obtain copies of these documents?

      Ministry of Public Management, Home Affairs, Posts and Telecommunications provide data base services.
      http://law.e-gov.go.jp/cgi-bin/idxsearch.cgi - (Japanese Only)


      b. Are the documents available in English?
      Yes   No


    Section 9B -- Standard-Setting (Accounting Standards Board of Japan (ASBJ))


    95. For Accounting Standards Board of Japan (ASBJ), please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      Private organization

      b. Name of standards

      1. Accounting Standard
      2. ASB Guidance
      3. Practical Issues Task Force Report


    96. How many voting members does the standard-setting body have?
      13


    97. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe: 2 employed / 11 voluntary


    98. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      Best person for the job selected from various sectors such as private industries, academics, auditors, and users.


    99. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      The Board of the Financial Accounting Standards Foundation


    100. What is the term of appointment for members?
      3 Year(s)


    101. For how many years has the standard-setting body been in existence?
      3 Year(s)


    102. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      7,230,054.00

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      110.0000



    103. To what entity is the standard-setting body accountable?
      The Board of the Financial Accounting Standards Foundation.


    104. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      Preceding the development of final standards, exposure drafts are published for public comments. Period of exposure is not less than one month, in principle.

    2. accessibility of meetings (i.e., public or private)

      Meetings of ASBJ are open to the public. Briefs of ASBJ meetings are published on the Website.

    3. approval process for final standards (i.e., majority required to approve final standards)

      Approval by at least 60% of the full members is required for publication of final standards and exposure drafts.

      However, the FSA has the final authority to endorse accounting standards developed by ASBJ in view of the public interests.


    4. other relevant due process activities

      - Technical committees for major projects are established within ASBJ, and meetings of technical committees are open to the public.
      - Holding a public hearing by ASBJ if needed.
      - Publishing issues papers for public comment, when necessary.
      - Period of exposure shall not be less than one month.
      - Dispositions of comments received on issue papers and exposure drafts are made open to the public on the Website.


    105. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      25 Day(s)



    Section 10 -- Monitoring (Quality Assurance) and Enforcement


    Responses to the questions in this section will provide a description of the legal and professional framework governing regulation of the profession in your country. Please indicate what role your organization plays within this framework.

    Section 10A -- Securities Market Regulatory Authority


    106. Name the authority that regulates the securities market:
      The Financial Service Agency (FSA) and the Securities and Exchange Surveillance Commission (SESC)


    107. What responsibilities does this organization have for monitoring and enforcing compliance with accounting, reporting or auditing requirements? Please identify the Legal authority that establishes that responsibility:
      Securities and Exchange Law and other related laws.

      The FSA is responsible for ensuring the stability of the financial system in Japan, protection of depositors, insurance policy-holders and securities investors, and smooth finance function through such measures as planning and policymaking concerning the financial system, inspection and supervision of private-sector financial institutions and surveillance of securities transactions, and performs extremely important roles for the sound development of the national economy.

      The primary mission of the SESC is to protect investors and maintain the integrity of the securities markets. To this end, they conduct inspections of securities companies, daily surveillance of securities markets, and investigations of securities fraud.


    108. Briefly describe the role of the regulatory authority as it relates to the following:
    1. regulation of the audit profession

      The FSA has oversight responsibilities over the accounting profession in Japan.
      The CPA examination is conducted by the Certified Public Accountant and Auditing Oversight Board of the FSA.

      The audit corporations and CPAs are subject to FSA requirements of reporting and submission of the necessary materials and are subject to disciplinary sanctions including suspension of practice or to order to dissolution. The audit corporations and CPAs are subject to examinations and inspections by the FSA. Under the CPA Law, when JICPA finds facts regarding its members that fall under a disciplinary provision, it is required to report them to the FSA. The FSA hears the opinions of the CPAAOB that reflects public opinion before it determines what sanctions are appropriate for CPAs and/or audit corporations. The FSA makes public notices of its disciplinary actions.

      The Constitution of JICPA includes provisions on members' obligations to observe the Code of Ethics and other resolutions of various committees including the Auditing Standards Committee, the Quality Control Review Committee, the Audit Practice and the Review Committee. Changes in the JICPA Constitution must be approved by the FSA.


    2. accounting and auditing standard-setting



    3. review of financial statements prepared by listed entities, and monitoring of their compliance with the accounting and disclosure requirements

      All Japanese publicly owned companies file their annual securities reports including financial statements audited by CPAs or audit corporations with the FSA within three months after the close of the fiscal year.



    Section 10B -- Stock Exchange


    109. Name the four largest stock exchangers (by market capitalization) and whether it is organized as a profit or not-for-profit organization:
      Profit Not
      for
      profit
      Stock Exchange
      Tokyo Stock Exchange
      Osaka Securities Exchange
      Nagoya Stock Exchange



    Section 10B -- Stock Exchange
    Tokyo Stock Exchange Details


    110. For Tokyo Stock Exchange, is there a mechanism at the stock exchange(s) for monitoring and enforcing financial reporting, accounting and auditing of listed entities?
      Yes   No

      If YES, please describe the following:

    1. How the monitoring and enforcement of financial reporting, accounting and auditing is conducted.

      They review financial reporting for compliance.

    2. The consequences of non-compliance with the financial reporting, accounting or auditing requirements.

      Delisting or suspension of transaction, etc.

    3. How enforcement actions are administered.

      By each stock exchange's inspection department.


    Section 10B -- Stock Exchange
    Osaka Securities Exchange Details


    110. For Osaka Securities Exchange, is there a mechanism at the stock exchange(s) for monitoring and enforcing financial reporting, accounting and auditing of listed entities?
      Yes   No

      If YES, please describe the following:

    1. How the monitoring and enforcement of financial reporting, accounting and auditing is conducted.

      They review financial reporting.

    2. The consequences of non-compliance with the financial reporting, accounting or auditing requirements.

      Delisting or suspension of transaction, etc.

    3. How enforcement actions are administered.

      By each stock exchange's inspection department.


    Section 10B -- Stock Exchange
    Nagoya Stock Exchange Details


    110. For Nagoya Stock Exchange, is there a mechanism at the stock exchange(s) for monitoring and enforcing financial reporting, accounting and auditing of listed entities?
      Yes   No

      If YES, please describe the following:

    1. How the monitoring and enforcement of financial reporting, accounting and auditing is conducted.

      They review financial reporting compliance.

    2. The consequences of non-compliance with the financial reporting, accounting or auditing requirements.

      Delisting or suspension of transaction, etc.

    3. How enforcement actions are administered.

      By each stock exchange's inspection department.



    Section 10C -- Regulatory Oversight of the Accounting Profession


    111. Has an audit profession oversight body been established (e.g., to oversee the external quality assurance review process, etc.)?
      Yes   No

      If NO, proceed to the next section.

      If YES, please describe :

    1. What are the name and duties of the oversight body?



    2. The number of members on the oversight body



    3. Its powers



    4. How the oversight body conducts or oversees a program of inspections to assess the degree of compliance of each audit firm/auditor with applicable auditing standards and regulations

      CPAAOB:
      Please refer to question 111


    5. The sanctions the oversight body may impose in the event of non-compliance

      FSA:
      To CPAs:
      The disciplinary actions for CPAs shall consist of the following four types:
      (1)Reprimand.
      (2)Suspension of practice for not more than two years.
      (3) Revocation of registration.
      (4) Order to modify its way of operations.

      To audit corporations:
      Reprimand or suspend in whole or part the practice for a period not exceeding two years, or order the dissolution of the audit corporation or order to modify its way of operations

      To JICPA:
      Order JICPA to modify its way of operations

      CPAAOB:
      The Board may, if deemed necessary, advise the FSA on matters relating to administrative and other actions to be taken in order to properly manage the practices of certified public accountants, or audit corporations and the administration of JICPA, based on the results of inspections


    6. How the oversight body is accountable to any public institution or body

      When the FSA has taken action to inflict disciplinary punishment under the provisions, it shall make a public notice on that.


    Section 10D -- Banks Regulatory Authority


    112. Name the authority that regulates the banks and similar financial institutions. Discuss how this authority differentiates between accounting requirements for regulatory reporting and general purpose external financial reporting:
      The FSA also regulates banks and therefore the answers to the following questions are same as section 10A.


    113. Discuss briefly the legal requirements with respect to monitoring and enforcement by the regulatory authority of accounting and auditing standards that apply to the banks and similar financial institutions:
      The same sets of accounting and auditing standards as public corporations are applied to banks. But certain additional disclosure requirements and practices are required of banks. The FSA may monitor bank accounting and auditing in this respect.


    114. Briefly describe the role of the regulatory authority as it relates to the following:
    1. regulation of the audit profession

      There is no difference between auditing/accounting standards of the banking sector and those of the other industries.

    2. accounting and auditing standard-setting

      There is no difference between auditing/accounting standards of the banking sector and those of the other industries.

    3. review of financial statements prepared by listed entities

      There is no difference between auditing/accounting standards of the banking sector and those of the other industries.

    4. enforcement of accounting, reporting and auditing requirements

      There is no difference between auditing/accounting standards of the banking sector and those of the other industries.



    Section 10E -- Non-Banking Financial Institutions Regulatory Authority


    115. Name the regulatory authority(ies) responsible for monitoring compliance with and enforcing accounting, reporting and auditing requirements imposed on non-banking institutions.
      There are various kinds of non-banking financial institutions in Japan. The FSA, Ministry of Economy, Trade and Industry and other authorities are responsible for them


    116. What is the source of Legal authority of the regulatory authority(ies)?
      Various laws.


    117. Briefly describe the role of the regulatory authority(ies) as it relates to the following:
    1. regulation of the audit profession

      There is no significant different requirement from other industries for non-banks.

    2. accounting and auditing standard-setting

      There is no significant different requirement from other industries for non-banks.

    3. review of financial statements prepared by listed entities

      There is no significant different requirement from other industries for non-banks.

    4. enforcement of accounting, reporting and auditing requirements

      There is no significant different requirement from other industries for non-banks.



    Section 10F -- Insurance Companies Regulatory Authority


    118. Name the regulatory authority responsible for monitoring compliance with and enforcing accounting, reporting and auditing requirements imposed on insurance companies.
      The FSA also regulates Insurance Companies, therefore the answers to the following questions are same as section 10A.


    119. What is the source of Legal authority of the regulatory authority(ies)?
      Insurance Business Law


    120. Briefly describe the role of the regulatory authority(ies) as it relates to the following
    1. regulation of the audit profession

      There is no difference between auditing/accounting standards of insurance companies and those of the other industries. But certain additional disclosure requirements and practices are required. The FSA may monitor insurance accounting and auditing in this respect.

    2. accounting and auditing standard-setting

      There is no difference between auditing/accounting standards of insurance companies and those of the other industries. But certain additional disclosure requirements and practices are required. The FSA may monitor insurance accounting and auditing in this respect.

    3. review of financial statements prepared by listed listed entities

      There is no difference between auditing/accounting standards of insurance companies and those of the other industries. But certain additional disclosure requirements and practices are required. The FSA may monitor insurance accounting and auditing in this respect.

    4. enforcement of accounting, reporting and auditing requirements

      There is no difference between auditing/accounting standards of insurance companies and those of the other industries. But certain additional disclosure requirements and practices are required. The FSA may monitor insurance accounting and auditing in this respect.



    Section 10G -- Other Regulatory Authority


    121. Name any other regulatory authority(ies) responsible for monitoring compliance with and enforcing accounting, reporting and auditing requirements.
      N/A


    122. What is the source of Legal authority of each regulatory authority?
      N/A


    123. Briefly describe the role of the regulatory authority(ies) as it relates to the following
    1. regulation of the audit profession

      N/A

    2. accounting and auditing standard-setting

      N/A

    3. review of financial statements prepared by listed listed entities

      N/A

    4. enforcement of accounting, reporting and auditing requirements

      N/A



    Section 10H -- Quality Assurance


    124. Does any organization of professional accountants/auditors organize a program of quality assurance review to monitor compliance with accounting, reporting and auditing requirements?
      Yes   No

      If NO, proceed to next Section.

      If YES, briefly describe the monitoring and enforcement mechanism.



    125. Under what authority does the organization conduct the program of quality assurance review?


    126. Who performs the review (e.g., one firm reviewing another firm, staff from the national professional organization, contractors, or a combination of these)?




    Section 10 I -- Investigation and Discipline


    127. Is there a process for investigating and disciplining the accounting profession in your country?

    128. Which of the following best describes the responsibility for the investigatory and disciplinary function in your country?
      Government or other agencies are solely responsible for this function.
      Government or other agencies have this responsibility, but the member body or bodies participate in the process.
      Government formally delegates this function to the member body or bodies, to exercise on its behalf.
      Member body or bodies have separate and independent processes that operate alongside processes of legal authorities.
      Other (please explain)


    129. Please indicate the name of the body or bodies responsible for investigation and discipline.
      FSA: CPAAOB
      JICPA: Discipline Committee (The function of the Discipline committee was previously included in the former Ethics Committee.)



    Responses to the remaining questions in this Section are required if your organization has responsibility for investigation and disciplinary actions.

    130. How many voting members does the body have?
      39


    131. Are the members of the body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe: CPAAOB: Please refer to question 111b. Discipline Committee: All members are involved on a voluntary basis.


    132. What are the criteria considered in selecting members of the body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      CPAAOB:
      Please refer to question 111b.

      Discipline Committee:
      All members are well experienced CPAs. JICPA's Council selects the members.



    133. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      CPAAOB: Please refer to 111b.


    134. What is the term of appointment for members?
      3 Year(s)


    135. For how many years has the body been in existence?
      40 Year(s)


    136. Please indicate the budget in US$ of the body for the last fiscal year.
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      4,545,000.00

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      110.0000 (specify currency)



    137. To what entity is the body accountable?
      CPAAOB:
      Discipline Committee: JICPA Committees are accountable for JICPA members



    138. Approximately how many days per year does the body meet in full session (including teleconferences)?
      24 Day(s)



     

     

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