Roles of CPAs in the Era of VUCA

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1. Introduction

Thank you as always for your understanding of and cooperation in our efforts to fulfill our mission.

 

Amid the uncertainty over containing the spread of COVID-19 infections, I would like to express my heartfelt respect and deepest gratitude to the healthcare professionals who are at the forefront of medical treatment day and night. I would further like to express my sincere condolences to all those who have lost loved ones to the disease, and I hope for a speedy recovery of those infected.

 

Some ten years ago, the term VUCA--an acronym of volatility, uncertainty, complexity, and ambiguity--began to be popularly used to describe a chaotic social and economic environment. Now that the COVID-19 pandemic has made us more keenly aware of VUCA than ever before, I would like to start the new year by sharing my thoughts with you as Chairman and President of the JICPA.

2. Addressing important issues on corporate financial reporting and auditing given the COVID-19 experience

As the COVID-19 crisis has forced us to fundamentally rethink how we live and work, I can foresee that new working styles such as remote work will become more widespread and eventually be considered normal. At the same time, the crisis also urges the entire society to accelerate digital transformation, or DX. As such, both businesses and auditors are required in their own capacity to accelerate initiatives to drive DX, put information and communication technology (ICT) infrastructure in place, and develop governance and internal control to adapt to such major changes. The JICPA will continue to explore how the new way of auditing should evolve and support our members along the way towards the future of auditing.

3. Contributing to structural change in economy and creation of virtuous cycle in post-corona era

Amid the COVID-19 catastrophe dealing a harsh blow to our economy and society, the government presented the "Comprehensive Economic Measures to Secure People s Lives and Livelihoods toward Relief and Hope" last December with the aims to protect the lives and livelihoods of the people, recover the economy and clear the path for new growth. The JICPA is committed to contributing to the measures by focusing on the following initiatives.

 

(1)Enhancing quality and ensuring reliability of corporate disclosure towards Green Society

The rapid spread of ESG investments along with the global trend towards a Green Society is urging companies to enhance the quality of non-financial disclosure. To respond to these movements, the JICPA has established the Special Committee on Corporate Disclosure and Corporate Governance. The Committee identified issues to be addressed to improve the usefulness and reliability of corporate disclosure and discussed the direction to be taken to address such issues, as well as the roles CPAs should play in this emerging field. These discussions were compiled into a report published last September. We are committed to continuing the discussion to contribute to enhancing quality of corporate disclosure and ensuring its reliability.

 

(2)Supporting growth of start-up companies

I believe that to sustain the Japanese economy after COVID-19 we must nurture start-ups as innovators and catalysts for restructuring industries. During the last year, the JICPA compiled and issued the "List of Freelance CPAs Providing IPO Support Services" and the "List of SMP Audit Firms Providing Auditing Services to Companies Seeking an IPO". These lists represent our commitment to facilitating the environment for CPAs and audit firms to provide adequate services to start ups depending on their growth stage.

 

(3)Supporting regional revitalization and SMEs

The COVID-19 crisis has caused the greater Tokyo area to register a net outflow of residents, which shows one of the signs of growing interest in living in regional areas. Under such a circumstance, the JICPA has regarded support for SMEs, which bolster the regional economy, as a pivotal measure for regional revitalization. Specifically, we will support SMEs through services that can leverage strengths of CPAs such as business and financial management consulting, business succession and M&A support, and tax support by strengthening cooperation primarily with administrative authorities, regional financial institutions, and business associations.

 

(4)Adapting to change in skill set required for CPAs

The COVID-19 crisis has triggered the acceleration of DX across all facets of society. The accountancy profession is no exception; we definitely need to enhance our knowledge and expertise concerning ICT and how to utilize data. In addition, the growing trend towards enhanced corporate disclosure is pushing CPAs to acquire new knowledge and expertise. The era of uncertainty requires CPAs to be more problem-solving driven than ever before, or in other words, it requires CPAs to be able to proactively identify issues, define problems to be addressed and take action to solve them. The JICPA will undertake initiatives to support CPAs to enhance their competency so that they are recognized by society for their contribution in supporting corporate activities and society at large.

 

(5)Contributing to education

Accounting knowledge tends to be thought of as required only for experts; however, the JICPA believes that it is essential for everyone to learn accounting to develop both life and business skills. This belief led to the Accounting Literacy Map--a summary of accounting knowledge to be developed throughout the lifetime--released last December. This map has been developed at the right time because a recent revision to the national curriculum guidelines requires junior high and high schools to teach their students how to use accounting information. The classes will start in a phased manner from April this year. The JICPA has taken this opportunity to support teachers by providing materials developed to be used in the classes. Going forward, we will remain committed to promoting accounting literacy.

4. Aiming to contribute to creating a safe society built on trust

In the era of VUCA, building trust in our society is ever more desired so as to achieve a world where people can live with peace of mind while balancing economic development with sustainability. We, as CPAs, have been building trust primarily through financial statement audit for 70 years since the establishment of the certified public accountant system. Furthermore, today, we have earned further trust through making contributions in diverse fields other than auditing by leveraging our capabilities. In the face of growing future uncertainty, it is important to build trust in our society and deliver peace of mind to people, and that's the role CPAs are expected to play. The JICPA is committed to supporting its CPA members so that they can effectively fulfill their role.

 

I strongly hope that this year will be filled with cheers and smiles from all of us working together to overcome the COVID-19 crisis. To conclude my New Year's message, I wish all of you good health and the best of success in all your endeavors.

 

 

Masahiko Tezuka

Chairman and President

 

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