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Investigation and Discipline

Audit Hotline on CPAs

In addition to the traditional "information-based" approach, JICPA adopted a "complaints-based" approach to investigate potential misconduct of members. Complaints-based actions are taken when JICPA receives a complaint against a member from another member or from the public. These complaints may be related to not only statutory audits required under the Financial Instruments and Exchange Act or Companies Act, but also statutory audits for schools and certain not-for-profit organizations.

The Audit Practice and Review Committee

Information collected through various measures is first reviewed by the Audit Practice and Review Committee. Audit Practice and Review Committee consists of 15 members and includes Executive Board members and Council members. The duties of the Audit Practice and Review Committee are to:

  • Investigate the performance of audit engagements and appropriateness of auditors' opinions, and provide the Chairman and President with the committee's opinion on recommendations or instructions to be issued to the members concerned as appropriate;
  • Determine whether or not further examination of the case by the Investigative Committee is necessary, and request the Chairman and President to further examine the case concerned where appropriate; and,
  • Report to the Chairman and President on any significant matters in terms of the quality control system of an audit firm identified during investigations.

Investigative Committee

When the Chairman and President requests the Investigative Committee to further investigate cases based on the determination of the Audit Practice and Review Committee, the investigative Committee starts its own investigation as to whether there is any violation of laws or regulations, or breaches of the JICPA Constitution and Regulations, and determines whether to recommend sanction to the Chairman and President. The Investigative Committee consists of 10 members and includes Executive Board members and Council members. The duties of The Investigative Committee are to:

  • Investigate cases referred matters from Audit Practice and Review Committee;
  • Investigate cases relating to ethical matters.

Disciplinary Committee

When the Chairman and President requests the Disciplinary Committee to review the cases based on the determination of the Investigative Committee, the Disciplinary Committee starts its own investigation as to whether there is any violation of laws or regulations, or breaches of the JICPA Constitution and Regulations, and determines sanctions to be imposed. Disciplinary Committee consists of seven members: five CPAs and two highly experienced individuals from outside the profession. The structures for investigation and disciplinary measure are independent of the Chairman and President, Deputy Presidents, Executive Board and the Council. CPAs in question are subject to inquiry and are required to report and submit necessary materials to the Disciplinary Committee. Disciplinary sanctions are as follows: a) a reprimand, b) a suspension of member rights for a certain period, c) a Withdrawal recommendation from membership, and d) a request to the FSA to revoke the CPA's qualification or to order the dissolution of the audit corporation and other sanctions stated in CPA Act.

Appeals Committee

When a member is not satisfied with the decision of the Disciplinary Committee, they are entitled to appeal to the Appeals Committee. The Appeals Committee consists of five members: three CPAs and two members outside of the profession. None of them are members of the Disciplinary Committee and are expected to make an impartial decision.

Audit Practice Monitoring Board

The Audit Practice Monitoring Board was established as a permanent body in 2001 in order to ensure the objectivity and transparency of JICPA's monitoring activities concerning audit practices. The Board consists of a member appointed by the JICPA Chairman and President, and five distinguished individuals from the outside of the profession such as industry, the stock exchange and academia. The duties of the Board are:

  • Review the activities of the JICPA Audit Practice and Review Committee, Investigative Committee, the Special Investigative Committee on Auditing Issue, the Disciplinary Committee and the Appeals Committee;
  • to make recommendations to the above committees based on the reviews; and
  • to make recommendations to the Chairman and President as to whether JICPA should publish the outlines of cases investigated by the above committees or not.

The meeting is held at quarterly intervals. The Board makes recommendations to improve the monitoring function of the JICPA as necessary.


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