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History of Accounting and Auditing System

  • Commercial Code of Japan was enacted.
  • Securities and Exchange Law was enacted.
  • Certified Public Accountants Law was enacted.
  • Financial Accounting Standards for Business Enterprises were issued.
  • The Japanese Institute of Certified Public Accountants (JICPA) was established as a self-disciplinary association.
  • The Regulations Concerning the Terminology, Forms and Preparation Methods of Financial
    Statements was issued.Auditing Standards and related rules were issued.
  • Audit by CPAs got required under the Securities and Exchange Law.
  • The Licensed Tax Accountant Law was enacted.
  • The publication, "Working Rules of Audit Reporting" was issued
  • The first "JICPA News" (a monthly professional magazine) was issued by the JICPA.
  • Financial Statements of companies whose shares were traded over-the-counter became subject to audit.
  • Measures to prevent the issuance of fraudulent financial statements were strengthened.
  • The JICPA was reorganized as a special public institution according to the amended CPA Law, which requires all CPAs to join the JICPA.
  • The first audit corporation was formed in accordance with the amended CPA Law.
  • Accounting Standards for Private Schools was issued.
  • The International Accounting Standards Committee (IASC) was established, of which the JICPA was one of the founding member.
  • Audit by CPAs got required under the Commercial Code
  • Accounting Standards for Consolidated Financial Statements was issued.
  • Audit of banks and insurance companies by CPAs required.
  • CPA audits of interim and consolidated financial statements began.
  • The International Federation of Accountants (IFAC) was established with the JICPA as a founding council member.
  • Accounting Standards for Foreign Currency Transactions were issued.
  • A board meeting of IASC was held in Tokyo.
  • The scope of audit by CPAs became expanded and strengthened due to revision of the Commercial Code.
  • Auditing manual was issued by the Auditing Committee of the JICPA.
  • 13th World Congress of Accountants held in Tokyo.
  • Some other international congresses such as IFAC Council, IAPC meeting, and CAPA Excom Meeting were also held in Japan.
  • Disclosure requirements for segment information was drastically revised.
  • Disclosure requirements for related-party transactions and market value information for marketable securities was amended.
  • Auditing Standards and related rules were drastically revised.
  • Part of the CPA Law relating to examinations and other issues were amended.
  • Commercial Code amended to strengthen shareholders' rights and statutory auditors' authority and to improve procedures for issuing debentures.
  • Accounting Standards for Foreign Currency Transactions amended.
  • Fiftieth Anniversary of the CPA Practice in Japan.
  • The Commercial Code was amended; the systems of stock exchange (kabushiki kokan) and stock transfer (kabushiki iten) were introduced.
  • The Business Accounting Council (BAC) issued the "Accounting Standard for Financial Instruments."
  • The BAC revised the “Accounting Standard for Foreign Currency Translation.”
  • The Accounting Standards Board of Japan (of the Financial Accounting Standards Foundation) was established as an accounting standards setter of Japan.
  • The BAC published the "Opinion concerning Revisions of the Auditing Standards" and the "Opinion concerning Revisions of the Interim Auditing Standards."
  • The BAC published the "Opinion concerning Establishment of the Accounting Standard for the Impairment of Fixed Assets."
  • Accompanied by the amendment of the Commercial Code, the Ministerial Decree concerning Financial Statements of Joint-Stock Companies (kabushiki-kaisha) and some other Ministerial Decrees were integrated into the Enforcement Regulations of the Commercial Code.
  • Auditing Standards were revised: "The Auditor's Consideration concerning the Going Concern Assumption" was issued.
  • The Certified Public Accountants Law was amended.
  • The CPA Investigation and Examination Board was reorganized into the CPAAOB to enhance auditor oversight.
  • The Commercial Code and other related laws and regulations were amended and reorganized into the Companies Act, effective 2006.
  • The Accounting Standards Board of Japan (ASBJ) and the International Accounting Standards Board (IASB) held their initial meeting on the joint project for convergence of accounting standards.
  • Standards on Quality Control for Audits were issued by the BAC.
  • The Securities and Exchange Law and other related laws were amended and reorganized into the Financial Instruments and Exchange Law. Under this law, the following measures became effective in the fiscal year beginning April 1, 2008:
    - Management's assessment of internal control over financial reporting and a CPA audit of the assessment
    - Introduction of quarterly financial reporting and CPA reviews
  • The ASBJ started a regular meeting with the Financial Accounting Standards Board (FASB) in pursuit of global convergence.
  • JICPA's Code of Ethics was comprehensively revised by incorporating IFAC's Code of Ethics.
  • European Commission announced that the Japanese GAAPs was found to be equivalent to IFRSs as adopted by the European Union
  • ASBJ completes the short-term project in the Tokyo Agreement
  • Auditing Standards were amended.
  • The BAC issued the "Opinion on the Application of International Financial Reporting Standards (IFRS) in Japan (Interim Report)."
  • Establishment of the IFRS Council, private sector promotion council to address Japanese roadmap towards IFRS implementation
  • Auditing Standards were amended.
  • The India-Japan Joint Working Group was created as a common platform between the two countries to exchange views on various issues arising out of application of or convergence with the IFRSs.
  • European Commission adopted the decision recognizing the equivalence of the audit oversight systems in ten countries including Japan.
  • The BAC issued "On the Revision of the Standards and Practice Standards for Management Assessment and Audit concerning Internal Control Over Financial Reporting (Council Opinions)."
  • The ASBJ and the IASB jointly announced their achievements under the Tokyo Agreement and their plans for closer co-operation.
  • JICPA issued the final reports of Quality Control Standards Committee Statement and Auditing Standards Committee Statements, corresponding to the clarified International Standards on Quality Control (ISQC) 1 and International Standards on Auditing (ISAs).
  • The IFRS Foundation decided to establish Asia-Oceania liaison office in Tokyo. Subsequently, it was approved for the operation of the office to start in November, 2012.

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