What's New (Mar, 2016)

March 14,2016

On March 8, 2016, JICPA issued Chairman and President Statement relating to the recommendation issued by the Advisory Council on the Systems of Accounting and Auditing (“the Council”) established under Financial Services Agency of Japan.

In view of the discussions on the issues such as the changing environment surrounding audit and the causes of the recent accounting fraud, the Council issued five pillars of recommendations that require further deliberations in order to ensure public trust in audit.

On top of the importance of the continuous efforts to perform audits with appropriate discharge of professional skepticism, JICPA urged all of its members to closely follow the items stated in the recommendation and be mindful of the developments in the system of audit.   

As discussed in the recommendation, given the high quality and transparent audit under effective governance structures and management of an audit firm, and with appropriate evaluation of a quality of an audit by an entity or its shareholders, a motivation to deliver quality audit on the part of auditors would be heightened, and this in turn, may lead to an entity or its shareholders finding more value in audit together with increased audit fees. This successful cycle of quality audit is expected to promote continuing confidence in CPA audit. As such, the Chairman and President Statement called on the members to note on this point and strive to succeed in confirming this virtuous cycle.

In ensuring public trust in capital markets, JICPA is committed to implement necessary measures for the improvements in the system, and particularly, JICPA is determined to take immediate actions on the items proposed in the recommendation, such as strengthening self-regulatory functions, promoting the use of IT in audits, as well as increasing the attractiveness of the CPA profession.

For the details of the recommendation by the Council, please visit:

http://www.fsa.go.jp/en/news/2016/20160308-1.html