The Advisory Council on the Systems of Accounting and Auditing, set up by the Financial Services Agency to make recommendations to improve the external audit framework in Japan, published its report and recommendations earlier this year. An English translation of the report and recommendations was published this week: see here (pdf). The recommendations are grouped within five areas: the management of audit firms; the information given to the shareholders; detecting fraud; assessing audit quality; and the audit environment generally (including companies' governance arrangements). Creating an audit firm governance code is one of the recommendations made by the Advisory Council in its report. The report appears not to recommend the introduction, at this stage, of mandatory audit firm rotation but suggests, instead, that further analysis is undertaken by the FSA, exploring the experiences in other jurisdictions.
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