The JICPA, Financial Services Agency (FSA) and Certified Public Accountants and Auditing Oversight Board (CPAAOB) work together to design and implement the quality control system for audits in Japan in order to ensure high quality audits.
Overview of the Quality Control Review
The "Overview of the Quality Control Review 2022" summarizes the basic explanation and the operation status of the quality control review system and focuses on the overall view and trend analysis of the results of quality control reviews.
Roles of the JICPA
The Quality Control Committee of the JICPA includes both JICPA members and other highly experienced individuals from outside. The Committee is responsible for developing quality control review standards and procedures, instructing and supervising review teams, considering and approving quality control review reports, and providing letters of recommendations.
The Quality Control Review Teams review whether a firm's system of audit quality controls, both firm-wide and on an individual engagement basis, has been well designed in accordance with the JICPA Quality Control Standards, and determine whether quality control policies and procedures have been adequately implemented.
The Quality Control Oversight Board monitors effectiveness and independence of the overall review system based on the reports submitted by the Quality Control Committee and issues recommendations to the Quality Control Committee, when appropriate.
Roles of the CPAAOB
CPAAOB examines the reports submitted by the JICPA and carries out on-site inspections of the JICPA or audit firms, when appropriate. If the CPAAOB inspection finds that the JICPA has conducted an insufficient quality control reviews, or that an audit firm's quality control is insufficient and does not comply with laws and regulations, the CPAAOB may recommend the FSA to take relevant administrative measures.
Roles of the FSA
Based on the recommendations from the CPAAOB, the FSA will take necessary administrative measures, such as giving orders to improve business operations in firms and others.
Registration system for listed company audit firms
To ensure the quality control of audit firms that perform audits of listed companies, the JICPA requires all firms that audit listed companies to register with the registration system for listed company audit firms. The JICPA publishes the list of registered firms on its website, with the overview of the firms and their quality control systems.
List of listed company audit firms: http://tms.jicpa.or.jp/offios/pub/ (Japanese only)