Statutory Auditor in Japan

Statutory Auditor

Statutory Auditor Service

There are two types of the statutory auditor in Japan Kabushiki-Kaisha, generally called "KK". One is a company auditor called "Kansayaku", and the other is a financial auditor called "Kaikei-Kansanin". A financial auditor is an accounting auditor to conduct an outside audit based on generally accepted audit standards.

Our Statutory Auditor Service is to provide a professional to the position of a company auditor, "Kansayaku". Especially if you need an outside statutory auditor, called "SHAGAI-KANSAYAKU" in order to ensure the corporate governance, we CPAs are adequate because we are qualified independent professionals. Moreover, we are also specialists for Accounting and disclosure regulation in Japan.

We also provide a financial auditor of an accounting auditor as an audit service here

For a Mid-sized Company

Most Japan subsidiaries are small-sized or micro-sized companies. According to the data as of 2014, 362 companies of 557 in Tokyo had less capital amount of JPY 300 million. At those small and mid sized companies, one of the executive members at the parent company would be assigned as a company auditor to save cost. However, a small or a mid sized company needs more efficient monitoring with the understanding of Japanese employees.

Professional Advice

A mid and small sized Japan subsidiary would be required to develop the business in Japan market. Then, the how-to and knowledge for operating Japanese employees and building up a right strategy are necessary. Through monitoring the board meeting to discuss any company decisions, we professionals could provide qualified advice. Small and mid sized companies usually could not spend so much cost for consulting.

Rational Cost for Compliance

Please consider how much cost your group if the Japan subsidiaries had any issues in Japan. The CPA of an outside company auditor surely attend every board meeting to monitor other board members' operations and check the minute to be prepared on facts. We could contribute to building up more effective and efficient internal controls, and monitor any decision-making process with attending every board meeting.

Shirokane CPA Firm Could

We are all Japanese CPA or Japanese Licenced Tax Accountant, "ZEIRISHI". That enables us to understand the economic environment and the organization and the system of your company deeply and precisely. In most cases, the parent company assigns one of the senior positions of the executives as a company auditor of a Japan subsidiary. It seems adequate to monitor the Japan subsidiary. However, does it work enough and could it prevent a fraud or miss-judge based on misunderstanding of the last Japan market or the company situation?

We CPAs are professionals for financial fields, and also for internal controls and auditing. Moreover, Japan CPAs knows a lot of Japan companies' cases to make an error in operating their tasks. Even if your company is a foreign company, that hires much Japanese personnel. This is why a professional to Japan market and a Japan company would be better than a member of parent company executives. Therefore, the Japan professionals would meet the requirement.

We Shirokane CPA Firm is not a company but actually an alliance with qualified professionals. Therefore, we do not charge indirect cost and we could propose a reasonable fee to meet your budget.

Please contact us to ask a quote and our advice.

Staturoty Auditor (KANSAYAKU)

A statutory auditor is, called as KANSAYAKU, a corporate ausitor of an organ of a stock company established in accordance with Japan Company Act. A company auditor/company auditors are elected by resolution of a shareholders meeting in the same way as directors. This is different from audit committee in the US, which is drawn from members of the company's board of directors.

"Kansayaku" is different from a financial auditor that is another statutory auditor of a financial auditor to conduct a statutory independent audit. KK could set up without "kansayaku" if the KK is not a public company (a listed company). Most Japan subsidiaries could be without "Kansayaku" by describing it in the articles of incorporation. That is actually a very small and micro sized company case.

The Japan Audit & Supervisory Board Members Association

Quote of Japan Company Act.

Companies Act (Part I, Part II, Part III and Part IV (Tentative translation))

Article 381 (1) Company auditors shall audit the execution of duties by directors (or directors and accounting advisors for a Company with Accounting Advisor(s)). In such cases, company auditors shall prepare audit reports pursuant to the provisions of the applicable Ordinance of the Ministry of Justice.
(2) Company auditors may at any time request reports on the business from the directors and accounting advisors and managers and other employees, or investigate the status of the operations and financial status of the Company with Company Auditor(s).
(3) Company auditors may, if it is necessary for the purpose of performing duties of the company auditors, request reports on the business from a Subsidiary of the Company with Company Auditor(s), or investigate the status of the operations and financial status of its Subsidiary.
(4) The Subsidiary under the preceding paragraph may refuse the report or investigation under that paragraph if there are justifiable grounds.

Article 382 If company auditors find that directors engage in misconduct, or are likely to engage in such conduct, or that there are facts in violation of laws and regulations or the articles of incorporation or grossly improper facts, they shall report the same to the directors (or, for a Company with Board of Directors, to the board of directors) without delay.

Article 383 (1) Company auditors shall attend the board of directors meeting, and shall state their opinions if they find it necessary; provided, however, that, in cases where there are two or more company auditors, if there is a provision on the vote by Special Directors pursuant to the provisions of Article 373(1), the specific company auditor who shall attend the board of directors meeting under paragraph (2) of that Article shall be appointed by the company auditors from among the company auditors.
(2) In the case provided for in the preceding Article, if company auditors find it necessary, they may demand that the directors (or a Convenor in the case provided for in the proviso to Article 366(1)) call the board of directors meeting.
(3) In cases where, within five days from the day of the demand made pursuant to the provisions of preceding paragraph, a notice of calling of the board of directors meeting which designates as the day of the board of directors meeting a day falling within the period of two weeks from the day of the demand are not dispatched, the company auditors who made that demand may call the board of directors meeting.
(4) The provisions of the preceding two paragraphs shall not apply to the board of directors meeting under Article 373(2).