Our Audit Service in Japan
Audit Service is a part of an assurance service. Our audit service also includes Review Service. Audit service is mainly a financial statement audit with internal control assessment. You would require a financial statement audit to put trust and transparency. If your subsidiary in Japan is not "a Large company" in accordance with Japan Company Act, the subsidiary is not required a statutory audit. Even then audit and review of financial information are required by the region head or the parent company in order to monitor the subsidiary activity and to ensure compliance and transparency.
Professionals for the Industry
We usually perform audit and quarterly review by a team of 2-3 members. Audit in-charge is assigned when he is an expert on the industry where your subsidiary or branch belongs. Most audit firms use young CPAs as staffs. Those staffs inquire of some responsible persons many times in order to understand the business your Japan subsidiary and branch operates. However, what CPAs needs to perform is to audit procedures to obtain audit evidence in order to confirm the accuracy of financial statements. When the auditors understand the industry, customary business practices, and the transactions, the skilled auditors could assess the risk and design the effective and efficient audit procedures shortly. That helps audit and quarterly review go through smoothly.
Lighten the Burden on Company
As our audit team member is professional and expert on the industry, Knowledge about the industry and the business process helps to perform efficient audit procedure and to make the subsidiary or the branch save time to correspond for audit.
Big 4 has broad knowledge database and uses unique audit methodology globally. That helps Japan team to work well and ensure good communication with the parent company or the regional head. However, the second tier audit firms do not have such a database and good audit methodology. Accordingly, those small audit firms take a lot of time to inquiry contracts and transactions for your subsidiary or branch.
Exactly, Shirokane CPA Firm is not an audit firm, but an alliance of professionals. Therefore, we could build the audit team tailored to the situation and environment of your subsidiary or branch.
Meet Your Budget
If your subsidiary is a significant component on your group audit, big 4 member firm is necessary. However, if you require your subsidiary or branch financial report audit to monitor it and to ensure the compliance, a local firm in Japan is much better. Local firms do not cost so much time to conduct an audit. Even second tires of audit firms and micro sized audit firm need at least JPY 3 million for one annual audit.
However, those audit firms do not deserve to cost so much because their staffs are not enough trained. Shirokane CPA Firm is actually not a firm, but an alliance of qualified professionals. Therefore, we could propose rational audit fee to meet your budget. We could propose JPY 500 thousand for each quarterly review, and JPY 1.5 million for an audit if your subsidiary or branch is a micro sized entity in Japan.
Shirokane CPA Firm Could
We provide assurance services for subsidiaries and branches in Japan. We understand you need a Big 4 audit firm when your company is a significant component in your group globally. However, if not, Shirokane CPA Firm would be recommended as an independent financial auditor. We could propose truly rational audit fee and provide you appropriate audit procedures to ensure trust and transparency.
We conduct our audit and quarterly review in accordance with International Audit Standards and the financial reporting framework your group needs. We pursuit efficient and effective audit procedures by the complete risk-approach.
Please contact us to ask a quote and our advice.
Free Quote After Questioning of Your Company.
Japan Statutory Audit
Most Japan subsidiaries do not need Japan statutory audit because Japan statutory audit on companies is required just by Japan Company Act and Financial Instruments and Exchange Act. In either case of those, if it needs Japan statutory audit, your subsidiary must be a not small and mid-sized company.
Japan Company Act Audit
Japan Company Act imposes annual audit on "the Large Company". The large company has to set the company organization of the accounting auditor, and the company where the accounting auditor is set has to take an annual audit. Only CPA or an audit firm could be the accounting auditor. Your subsidiary in Japan shall be "The Large Company" only when the capital amount is larger than JPY 500 million at the end of the fiscal year, or the total amount of liability is larger than JPY 20 billion on the financial statement approved at the annual shareholders' meeting.
Japan Financial Instruments and Exchange Act Audit
Financial Instruments and Exchange Act impose annual audit and quarterly reviews on public companies. Public companies are mainly a listed companies on Tokyo Stock Exchange.
Quote of Japan Company Act
Article 2 In this Act, the meanings of the terms listed in the following items shall be as prescribed respectively in those items:
(vi) "Large Company" means any Stock Company which satisfies any of the following requirements:
(a) that the amount of the stated capital in the balance sheet as of the end of its Most Recent Business Year (hereinafter in this (a) and (b) below referring to the balance sheet reported to the annual shareholders meeting under the provision of Article 439 in cases provided for in the first sentence of such Article, and referring to the balance sheet under Article 435(1) in cases where the first annual shareholders meeting after the incorporation of the Stock Company has not yet been held) is 500,000,000 yen or more; or
(b) that the total sum of the amounts in the liabilities section of the balance sheet as of the end of its Most Recent Business Year is 20,000,000,000 yen or more;
Article 328 (1) A Large Company (excluding a company which is not a Public Company, a Company with Audit and Supervisory Committee, and a Company with Nominating Committee, etc.) shall have a board of company auditors and a financial auditor.
(2) A Large Company which is not a Public Company shall have a financial auditor.
Article 329 (1) Officers (meaning directors, accounting advisors, and company auditors. The same shall apply hereinafter in this Section and in Article 371(4) and Article 394(3)) and financial auditors shall be elected by resolution of a shareholders meeting.
Article 330 The relationship between a Stock Company and its Officers or financial auditors shall be governed by the provisions of the mandate.
Article 436 (2) At Companies with Financial Auditor(s), the documents listed in the following items shall be audited by the persons listed in each such item pursuant to the applicable Ordinance of the Ministry of Justice:
(i) The Financial Statements and annexed detailed statements accompanying them which are referred to in paragraph (2) of the preceding Article: company auditors (or Audit and Supervisory Committee for a Company with Audit and Supervisory Committee, and audit committees for Companies with Nominating Committee, etc.) and financial auditors;