What's New (Apr, 2008)

JICPA introduced a registration system for firms which audit listed companies in April 2007 with the aims of improving the effectiveness of the quality control review, enhancing the quality control systems of audit firms that audit listed companies (both of which tend to have wide public influence) and ensuring confidence in CPA audits in capital markets. As part of this system, the Quality Control Committee proposed sanctions against registered audit firms. On March 17, 2008, the Quality Control Oversight Board, which consists of JICPA members and some knowledgeable persons as non members, deliberated upon the matter. JICPA announced the result of the deliberations on March 26, 2008 (available in Japanese only).

On March 26, 2008, JICPA Council approved a partial amendment of the Application Guidance of the Conceptual Framework of Independence to conform to the amended CPA Act of 2007. The amendment took effect on April 1, 2008.

In response to the new requirements for auditors when they discover fraudulent conduct under the Financial Instruments and Exchange Act, the JICPA Auditing Standards Committee revised its statements No. 35 "The Auditor's Responsibility to Consider Fraud in an Audit of Financial Statements", and No.11 "Illegal Acts" . These statements are effective for audits of financial statements for periods beginning on or after April 1, 2008.

As various statements of auditing standards have been issued since the development of Auditing Standards Committee Statement No. 26, inconsistencies have arisen. To address this matter, the Auditing Standards Committee reviewed and revised the codification and glossary. This statement became effective on March 26, 2008.

To respond to the amendment of the CPA Act and relevant regulations and to the introduction of audits of management's assessment of internal control over financial reporting and reviews of quarterly financial statements, the Quality Control Standards Committee and the Auditing Standards Committee deliberated upon the need to revise their guidance related to quality controls of audits. As a result, the Quality Control Standards Committee revised its Statement No.1 "Quality Control for Firms that Perform Audits", and the Auditing Standards Committee revised its Statement No.32 "Quality Control for Audits". These statements are effective for audits of financial statements for periods beginning on or after April 1, 2008.

In response to the amendment of the CPA Act and relevant regulations, the Auditing and Assurance Practice Committee revised its statement No.75 "Practical Guideline on Preparation of Auditor's Report". Major revisions include:

the addition of examples, since the amended CPA Act allows audit corporations to be organized with limited liability

a revision regarding the date of the auditor’s report of audits under the Financial Instruments and Exchange Act

The revised statement is effective for auditor's reports that are issued on or after April 1, 2008.

The Financial Instruments and Exchange Act requires public companies to report on their internal control of financial reporting and to submit quarterly financial reports for fiscal years starting on and after April 1, 2008. To address these new requirements, the Law and Regulation Committee issued Research Report No. 6 “An engagement letter for audits and reviews”. This report is intended to summarize matters that require special consideration when preparing agreements of audit or review engagements, and provides illustrative examples of agreements based on such considerations.

 

ISA 210 (Redrafted), "Agreeing the Terms of Audit Engagements" http://www.hp.jicpa.or.jp/specialized_field/files/4-48-210-2-20080415.pdf  　(pdf・5P・24KB)

ISA 710 (Redrafted), "Comparative Information—Corresponding Figures and Comparative Financial Statements" http://www.hp.jicpa.or.j/specialized_field/files/4-48-710-2-20080415.pdf   (pdf・4P・20KB)

 

 

On March 31st, 2008, the JICPA submitted comments on Exposure Draft of International Auditing and Assurance Standards Board (IAASB);

 

ISA 501 (Redrafted), "Audit Evidence Regarding Specific Financial Statement Account Balances and Disclosures" www.hp.jicpa.or.jp/specialized_field/files/4-24-501-2-20080331.pdf  (pdf3P18KB)

ISA 520 (Redrafted), "Analytical Procedures"        www.hp.jicpa.or.jp/specialized_field/files/4-24-520-2-20080331.pdf   (pdf3P18KB)