Auditing Standards (Tentative Version)

October 2012
Board of Audit* This translation is to be used solely as reference material to aid in the understanding of the original
Japanese text of Auditing Standards (Tentative Version).

October 2012

Formulation and Publication of the Auditing Standards(Tentative Version)
The Board of Audit (the Board) has formulated its Auditing Standards (Tentative Version) and hereby
makes it public.
The Board has been engaged in rigorous auditing based on related laws and regulations, including theConstitution of Japan and the Board of Audit Act. However, since the work of the Board is not always
visible to the people of Japan, it is not always easy for them to gain full understanding of the audit
activities that the Board actually carries out.
The Auditing Standards (Tentative Version) was thus developed to systematize the basic approach,aims, scope and methods of the Board’s audit activities, in an easy-to-understand manner, and to makeit public: it aims to maintain and improve its officials’ qualities and abilities, ensure audit quality andincrease the effectiveness of its audit, maintain and improve transparency of the Board’s audit
activities and thereby respond further to the public’s expectations.
The Auditing Standards (Tentative Version) formulated to achieve these aims has the following
characteristics:
The Auditing Standards (Tentative Version) systematizes i) the existing laws and regulations
relating to the Board’s work, ii) its internal rules, and iii) other guidelines including Basic
Policy on Audit, in a clear fashion.
The Auditing Standards (Tentative Version) does not presuppose reasonable assurance
engagement of financial statements, but presupposes audit activities which aim at identifying
improper or unreasonable financial management, as well as business operations or
project/program implementation relating to such financial management.
The Auditing Standards (Tentative Version) will be continuously revised in light of socioeconomic development, so as to respond to the expectations of the people.

The Auditing Standards (Tentative Version) is structured as follows:
Preamble
Chapter 1 Aims of Audit
Chapter 2 Fundamental Principles of Auditing
Chapter 3 Conduct of Audit
Chapter 4 Pursuing the Liabilities of Officials Who Handle the Accounting and Examination
Regarding the Handling of Financial Management
Chapter 5 Reporting of Audit ResultsEnd

Auditing Standards (Tentative Version)
October 19th 2012
Board of Audit

Contents
Preamble

1

Chapter 1 – Aims of Audit

3

Chapter 2 – Fundamental Principles of Auditing

4

Article 1 – Basic Matters Relating to the Board of Audit

4

1 – Ensuring Independence
2 – Ensuring Objectivity and Expertise3 – Quality Management of Audit Work
4 – Information Management
Article 2 – Fundamental Matters Relating to Officials of the Board of Audit

5

1 – Maintaining Fairness
2 – Improving Professional Competence
3 – Due Care as a Professional Auditor
4 – Confidentiality of Information
5 – Reporting, Instruction and Supervision of the Progress of Audit
Work
Chapter 3 – Conduct of Audit
Article 1 – Fundamental Matters Regarding Conducting an Audit

6
6

1 – Coverage and Scope of Audits
2 – Supervision of Financial Management
3 – Perspectives of Audits
4 – Verification of Final Accounts
Article 2 – Planning of Audit

7

1 – Preparation of Basic Policy on Audit
2 – Preparation of Audit Plans
Article 3 – Conducting an Audit

8

1 – Auditing Methods
2 – Gathering Evidence and Related Activities.
3 – Presentation of Opinions to and/or Demand for Measures from
Auditees
4 – Follow-up Audit on Audit Findings
Article 4 – Matters to be Given Attention in Planning and Conducting an
Audit

10

1 – Cross-Sectoral Audits and Related Matters
2 – Expeditious and Flexible Auditing3 – Auditing in view of the Status of Internal Control
Chapter 4 – Pursuing the Liabilities of Officials Who Handle the Accounting and

12

Examination Regarding the Handling of Financial Management
Article 1 – Pursuing the Liabilities of Officials Who Handle the Accounting

12

1 – Adjudication of Liabilities for an Indemnity
2 – Demand for Disciplinary Action
3 – Reporting to the Public Prosecutor’s Office
Article 2 – Examination Regarding the Handling of Financial Management of

12

the State
Chapter 5 – Reporting of Audit Results

13

Article 1 – Basic Matters Regarding the Reporting of Audit Results

13

Article 2 – Reporting the Audit Results

13

Article 3 – Matters to be Recorded in the Audit Report

14

1 – Verification of Final Accounts
2 – Individual Audit Results
3 – Special Report to the Diet and the Cabinet, Special Report on
Audit Requested by the Diet and Report on Specific Audit
Subjects
4 – Demand for Disciplinary Action against and Adjudication for
Accounting Officials
5 – Other Matters Considered to be Necessary by the Board of
Audit

■ Preamble
The aims of audit carried out by the Board of Audit (the Board) are, through continuously auditing
the final accounts of the revenues and expenditures of the State and the accounts provided for by law,
to supervise financial management, to ensure its adequacy and to rectify any defects and to verify
the final accounts of the revenues and expenditures of the State based on the results of its audit. The
Board makes every effort to conduct audits in response to the expectations of the people and takes
due account of socio-economic development. Against the backdrop of high public awareness of all
fiscal and administrative issues including the preservation of sound public finances, those
expectations towards the Board are higher than ever.

With regard to this situation, by formulating this Auditing Standards (Tentative Version), the Board
sets out the norms to be complied with and basic procedures that it and its officials follow in audit
work. This Auditing Standards (Tentative Version) will contribute to maintaining and improving thequalities and abilities of the officials, while also publicly declaring the Board’s responsibility toensure audit quality and to maintain and improve the effectiveness of its auditing.

Systematically arranging the Board’s audit activities including its basic approach, aims, scope, andmethods, in the form of Auditing Standards (Tentative Version), and publicizing it, is important infurther improving the accountability of the Board for its auditing, and serves to meet the expectationsof the people. The wide dissemination to the public of the way its audit is carried out is also a sharedrequirement of every country’s Supreme Audit Institution.

Based on the above recognition, the Board has formulated and made public this Auditing Standards(Tentative Version) with the aim of providing a broad outline of its activities including the basic
approach to auditing and audit methods. This Auditing Standards (Tentative Version) was formulated
in compliance with various laws and regulations such as the Constitution of Japan, the Board of Audit
Act, the Public Finance Act, and the Public Accounting Act, as well as the procedures prescribed by
the internal rules of the Board, and it also incorporates as basic principles those audit methods whichhave been developed through the accumulation of audit activities and regarded as working rules. As
a result, the source of normativity of each provision contained in the Auditing Standards (Tentative
Version) is derived from the laws and regulations on which that provision is founded.

‐1‐

Each country has its own public finance system and public sector accounting system, and therefore
the public sector audit system based on these systems is also different from that of other countries.
The characteristic of the audit carried out by the Board is that the Board continuously conducts audit,
aims to supervise financial management to ensure its adequacy and to rectify any defects, and places
importance on its audit to identify improper or unreasonable financial management, as well as
business operations or project/program implementation relating to such financial management. Thus,
although the Auditing Standards (Tentative Version) pays due attention to the standards used indeveloped countries, as well as international standards, it is formulated based on the public sector
audit system of Japan.

Finally, the Board will continuously revise the Auditing Standards (Tentative Version) in light ofsocio-economic development, so as to respond to the expectations of the people; in addition, it will
undertake continuous, persistent efforts to strengthen the transparency and effectiveness of its
auditing.

‐2‐

■ Chapter 1 – Aims of Audit
The Board of Audit (the Board), as a constitutional institution1 , audits the final accounts of therevenues and expenditures of the State and also the accounts provided for by law, is responsible forsupervising financial management, and continuously conducts audit2 from an independent, fair andunbiased standpoint with the aim of ensuring the adequacy of financial management and rectifying
any defects3 as well as verifying the final accounts of the revenues and expenditures of the State
based on the results of its audit4. The Board reports to the Diet and hence the people the results of its
audit5, which it conducts in terms of accuracy, regularity, economy, efficiency, effectiveness, andfrom other perspectives necessary for auditing6. The Board thereby contributes to maintaining andimproving the soundness and transparency of the public administrative and financial activities of theState by reflecting the results of its audit in future budget formulation and execution.

1

Constitution of Japan, Article 902

Board of Audit Act, Article 20, paragraph (2)3

Board of Audit Act, Article 20, paragraph (1) and (2)4Board of Audit Act, Article 21

5Constitution of Japan, Article 90, paragraph (1); Board of Audit Act, Article 30-2, Article 30-3

6

Board of Audit Act, Article 20, paragraph (3)‐3‐■ Chapter 2 – Fundamental Principles of Auditing
Article 1 – Basic Matters Relating to the Board of Audit
1. Ensuring Independence(1) The Board of Audit (the Board) is independent from the Cabinet7.
(2) The Board conducts audit work from a fair and unbiased standpoint, so as to achieve its
intended aims.
(3) The Board makes decisions with respect to the matters provided for by applicable laws
and regulations through the Audit Commission 8

consisting of three equal

Commissioners9 whose status is guaranteed10; its decisions are free from any constraints.
2. Ensuring Objectivity and Expertise(1) The Board carries out audit work and makes its decisions based on objective facts andprofessional judgment.
(2) The Board aims to improve the expertise of its officials through encouraging them toaccumulate expert knowledge and share it among themselves. As one element of thisconstant effort, it continually carries out training of its officials. Through theimplementation of this training, in order to improve the officials’ qualities and abilities,
it enhances the expert knowledge and auditing skills of individual officials according totheir level of audit experience and gains an understanding of the results of the training
and puts in place appropriate measures to maintain the necessary level of expert
knowledge and auditing skills of its officials.
3. Quality Management of Audit Work
(1) The Board consistently endeavors to maintain and improve the quality of its audit work,by complying with applicable laws and regulations, its budget, and other prescribed
procedures, when it is conducting such work.
(2) In order to ensure the quality of its audit work, the Board specifies and complies withquality control procedures for each stage of its audit work including preparation of Audit
Plans, conduct of a field audit, deliberations of draft reports of audit results, and theirreporting. These quality control procedures include i) establishment of facts by inquiring
7

Constitution of Japan, Article 90; Board of Audit Act, Article 1

8

Board of Audit Act, Article 11; Ordinance Enforcing the Board of Audit Act, Article 6

9

Board of Audit Act, Article 2

10

Board of Audit Act, Article 8‐4‐into relevant entities11, ii) multilevel deliberations of draft reports of audit results, and iii)
review of the draft reports of the audit results from the perspective of a third party byofficials in charge of auditing other than those who were involved in the preparation of
the draft concerned.
4. Information Management
The Board properly manages information prepared or obtained in the course of its audit work.
Article 2 – Fundamental Matters Relating to Officials of the Board of Audit
1. Maintaining Fairness
Officials in charge of auditing perform their duties with a fair and unbiased attitude,
maintaining objectivity and acting with integrity.
2. Improving Professional Competence
Officials in charge of auditing, as professional auditors, continuously endeavor to increase
the expert knowledge they have gained through practical experience and improve their audit
skills.
3. Due Care as a Professional Auditor
Officials in charge of auditing, in conducting audits, pay due care as professional auditors,
and always bear in mind the possibility that illegal or improper matters, or matters requiring
improvements, may exist.
4. Confidentiality of Information
Officials shall not divulge any information that may have come to their knowledge in thecourse of their duties, nor use it for their own purposes.
5. Reporting, Instruction and Supervision of the Progress of Audit Work
(1) Officials who have conducted audits report on the progress of audit work in a timely
manner in accordance with the prescribed procedures to their supervisors.
(2) The supervisors fully understand the audit activities performed by officials under them,and based on such understanding, in order to ensure that following audit activities arecarried out appropriately, they instruct and supervise those officials under them in atimely and appropriate manner.

11

Board of Audit Act, Article 26‐5‐

■ Chapter 3 – Conduct of Audit
Article 1 – Fundamental Matters Regarding Conducting an Audit
1. Coverage and Scope of Audits(1) The Board of Audit (the Board) audits the final accounts of the revenues and expendituresof the State pursuant to the provisions of the Constitution12, and also audits, as provided
for by law, subjects that it must audit as well as those that it may audit if it finds it
necessary to do so13 . The Board notifies the parties concerned when it determines toaudit14 the entities subject to audit which it finds it necessary to do so.
(2) The Board conducts audit irrespective of whether it has audited the same subject inquestion in the past, and to the extent and depth required at that time.
(3) The scope of the Board’s audit is not limited to the processing of financial transactions,but includes business operations and project/program implementation relating to financial
management, in order to determine, from a broader perspective, that financial
management is being handled in a proper manner.
2. Supervision of Financial Management
The Board continuously conducts audit, supervises financial management, ensures its
adequacy, and rectifies any defects15.
3. Perspectives of Audits(1) The Board conducts audit from the following perspectives16:
a. Accuracy: Whether the final accounts accurately reflect the financial status such as
the execution of the budgets
b. Regularity: Whether the financial management is properly conducted in conformity
with the approved budgets, laws, Cabinet Orders, or other regulations
c. Economy: Whether the business operations, project/program implementation orbudget execution is administered with the minimum cost

12

Constitution of Japan, Article 90, paragraph (1)13

Board of Audit Act, Article 20, paragraph (1), Article 22, Article 23, paragraph (1)14

Board of Audit Act, Article 23, paragraph (2)15

Board of Audit Act, Article 20, paragraph (2)16Board of Audit Act, Article 20, paragraph (3)‐6‐d. Efficiency: Whether the business operations, project/program implementation orbudget execution produces the maximum result with the given cost or has the best
cost-efficient result
e. Effectiveness: Whether the business operations, project/program implementation orbudget execution achieves the intended results and produces the expected outcome
f. Other perspectives necessary for auditing: Any other perspectives necessary forauditing in addition to those listed above(2) In conducting audit from the perspectives listed above, the Board takes a broad
perspective, including such viewpoints as: whether fair competition in public bidding has
been ensured; whether sound finances have been maintained within juridical persons
whose capital is contributed by the government; whether existing businesses, projects andprograms need to be continued; whether business operations and projects/programs havebeen carried out, taking into account evaluations of risks inherent in them; and whether
transparency and accountability are being ensured in financial management, business
operations and project/program implementation.
4. Verification of Final Accounts
The Board verifies the final accounts of the revenues and expenditures of the State based on
the results of its audit17.
Article 2 – Planning of Audit
1. Preparation of Basic Policy on Audit
Each year the Board prepares its Basic Policy on Audit, indicating areas and other related
matters, on which audit activities will mainly be focused in order to ensure basic control of
its audit work. It then prepares Audit Plans each year based on this Basic Policy on Audit.
2. Preparation of Audit Plans(1) The Board prepares Audit Plans so as to conduct audits efficiently and effectively, andachieve its aims. In preparing the Audit Plans, priority audit matters are determined, on
the basis of sufficient analysis and review of the nature of business operations, the scaleof the budget, the status of internal control, the status of past audits, the socio-economic
circumstances, deliberations in the Diet, media coverage, and other relevant points of theentities whose financial management is subject to audit (hereafter referred to as“auditees”).
17

Board of Audit Act, Article 21‐7‐

(2) In cases where, after preparation of the Audit Plans, a necessity to carry out a review ofpriority and/or other audit matters has arisen, such as when a request has been received
from the Diet to carry out an audit18 and the Audit Commission has decided to do so19,
or there is a need to expeditiously audit matters of high public concern, or a new situation
has been identified during the course of an audit, the Board responds flexibly with suchmeasures as making necessary changes to the Audit Plans.
Article 3 – Conducting an Audit
1. Auditing Methods
The Board conducts audits based on the Audit Plans it prepares, fully exercising its authority
to the auditees, as follows.
(1) The Board conducts in-office audits at the office of the Board, by such means as carryingout documentary audits of statements of accounts, which summarize the records ofaccounting of the auditees, and documentary evidence, such as contracts, receipts or otherrelated documents, submitted based on the provisions of the Board of Audit Act20.
(2) The Board conducts a field audit dispatching its officials to the auditees, based on theprovisions of the Board of Audit Act 21 , so as to appropriately determine the actual
situation in which financial management is handled, and business operations andprojects/programs are implemented, by those auditees. In carrying out a field audit, thefollowing points are considered fundamental:
a. For an efficient and effective field audit, using the information gained from in-officeauditsb. Reviewing accounting records as well as materials and results backing up thoserecords on site, and interviewing employees of the auditeec. Adequately understanding and determining the status of the business operation andproject/program implementation by visiting the sites subject to audit, for example,
where management and operations of facilities and/or construction are taking place,as necessary

18

Diet Law, Article 105

19

Ordinance Enforcing the Board of Audit Act, Article 6, item (i)20

Board of Audit Act, Article 24

21

Board of Audit Act, Article 25‐8‐(3) In addition to information gathered through in-office audit and a field audit, any otherinformation, including information gained through the following methods provided forby the Board of Audit Act, is used:a.

Information gained through requesting auditees to submit their books, documents,

other materials, or reports; or through questioning relevant entities or requesting therelevant entities to appear22b.

Information gained through reports submitted by the head of the relevant ministry

or agency, or other responsible person equivalent thereto, where a crime in relation to
the accounting has been revealed, or where loss of cash, securities or other properties
has been discovered, concerning financial management of auditees23
c. Information or opinions gained from reference materials, evaluation reports and/or
other related documents, submitted by government agencies, public entities, and otherparties on request24(4) In order to complement the above information and knowledge, information submitted
from external sources, and information generally available, are also used afterinvestigating its accuracy.
2. Gathering Evidence and Related Activities(1) The Board, in conducting audit, gathers, compiles and stores any sufficient and accurate
reference materials which it considers necessary to ensure objective fact-finding andadequate judgment.
(2) The Board adequately records, compiles and stores any necessary matters relating to theaudit activities it has carried out, based on the prescribed methods, in written form.
3. Presentation of Opinions to and/or Demand for Measures from Auditees
The Board presents its opinions to, or demands auditees as follows, to take measuresdepending on the situation identified through conducting an audit.
(1) If there are matters that the Board finds, in the course of its audit, there are items that
violate laws and regulations on financial management or that are improper, it investigatesthe causes and immediately presents its opinions on the financial management to the headof the relevant ministry or agency or a relevant person, or demands them to take22

Board of Audit Act, Article 26

23

Board of Audit Act, Article 27

24

Board of Audit Act, Article 28‐9‐appropriate measures for the financial management, and has them take measures torectify and improve subsequent financial management25.
(2) If the Board finds, as a result of its audit, that unreasonable or inappropriate situations
exist in financial management, business operations or project/program implementation,and that relevant laws and regulations, systems, or administration requires improvement
in order to eliminate their cause, the Board presents its opinions to the competentauthorities or other responsible parties or demand them to take measures for the
improvement26.
4. Follow-up Audit on Audit Findings
The Board, in subsequent audits, appropriately determines the status of measures set in place
to rectify improper or unreasonable matters and other concerns, or to prevent theirreoccurrence, with regard to audit findings described in the reports of such audit results27. It
then enhances the effectiveness of audit results through addressing cases where the saidmeasures are not sufficient, as appropriate.
Article 4 – Matters to be Given Attention in Planning and Conducting an Audit
1. Cross-Sectoral Audits and Related Matters(1) The Board conducts cross-sectoral audits, depending on the situation, with respect toprograms implemented cross-sectorally by a number of auditees, or to matters that arecommon or related to a number of auditees.
(2) In cases where the Board has discovered improper matters in one section or in a part ofthe business operations, project/program implementation or budget execution of anauditee, it investigates, depending on the situation, whether similar matters have arisen inother sections or in other parts of the business operations, project/program
implementation or budget execution.
(3) In cases where the Board has discovered improper matters within an auditee, it
investigates, depending on the situation, whether similar matters arose in previous fiscal
years.
2. Expeditious and Flexible Auditing

25

Board of Audit Act, Article 34

26

Board of Audit Act, Article 36

27

Board of Audit Act, Article 29, item (vii), item (viii)‐10‐

The Board responds in a timely and appropriate manner when there are matters of high publicconcern, by conducting audits expeditiously and flexibly as required.
3. Auditing in view of the Status of Internal Control
The Board pays due attention to the effectiveness of internal control within the auditees. In
addition, it responds appropriately with such measures as requesting improvements ofinternal control as necessary, in order for the internal control to function sufficiently and thus
to ensure the adequacy of financial management.

‐11‐

■ Chapter 4 – Pursuing the Liabilities of Officials Who Handle the Accounting andExamination Regarding the Handling of Financial Management
Article 1 – Pursuing the Liabilities of Officials Who Handle the Accounting
1. Adjudication of Liabilities for an Indemnity
The Board of Audit (the Board) adjudicates whether an official who handles accounting,such as an official responsible for cash handling, is liable to indemnify, after examining
whether they fall under requirements for a liabilities for an indemnity as provided for by law,for instance where they have in fact caused damage to the State through their failure to
exercise the due care of a prudent manager28.
2. Demand for Disciplinary Action
If the Board has concluded, as a result of its audit or for other reasons, that an official who
handles accounting falls under requirements provided for by law such as causing substantial
damage to the State intentionally or by gross negligence, it demands the person or persons
who appointed them, or who is in a supervisory role to take disciplinary action29.
3. Reporting to the Public Prosecutor’s Office
If the Board concludes, as a result of its audit, that an official who handles the accounting
for the State has committed a crime in the course of duty, it notifies the Public Prosecutor’s
Office of the case30.
Article 2 – Examination Regarding the Handling of Financial Management of the State
If the Board has been requested by an interested party to examine the handling of financial
management conducted by an official who handles the accounting for the State, the Board
examines that official’s handling. If the Board, as a result of the examination, concludes that thehandling needs to be corrected, it notifies its judgement to the competent authorities or other
responsible parties31.

28

Board of Audit Act, Article 32, paragraph (1), Article 32, paragraph (2); Act on the Responsibilities ofGovernment Employees Who Execute the Budget, Article 4, paragraph (1), Article 5, paragraph (1),Article 8, paragraph (3), Article 9, paragraph (2), Article 10, paragraph (3), Article 11, paragraph (2)29

Board of Audit Act, Article 31; Act on the Responsibilities of Government Employees Who Execute theBudget, Article 6, paragraph (1), Article 9, paragraph (2)30

Board of Audit Act, Article 33

31

Board of Audit Act, Article 35, paragraph (1)‐12‐■ Chapter 5 – Reporting of Audit Results
Article 1 – Basic Matters Regarding the Reporting of Audit Results(1) The Board of Audit (the Board) reports the audit results after the following discreet
deliberative procedures, in order to ensure that those results are fair and adequate, and canbe trusted.
a. In reporting audit results, deliberations by the Audit Commission are conducted after
multilevel deliberations within the General Executive Bureau. In the deliberations within
the General Executive Bureau, draft reports of audit results are reviewed from theperspective of a third party by officials in charge of auditing other than those who wereinvolved in the preparation of the draft concerned, in order to ensure objective factfinding and adequate judgment.
b. The Audit Commission decides whether audit results should be reported, and thecontents of the report, based on comprehensive examination of each element of thecontents of the audit results, such as the factual situation relating to the audit results, thescale, materiality, causes, breadth of the matter in question, and any other pertinent
factors.
(2) The Board gives an accurate and brief account of its audit results in language that is easy tounderstand, so that the people can understand its contents.
Article 2 – Reporting the Audit Results(1) The Board discloses the audit results in each of the following reports:
a. The Audit Report:
The Board prepares the Audit Report pursuant to the provisions of the Constitution32
containing the results of audit of final accounts of the revenues and expenditures of theState and of the accounts provided for by law33 and submits them to the Cabinet (*).
b. Special Report to the Diet and the Cabinet:
The Board, at any time, reports to the Diet and the Cabinet on matters on which theBoard has presented its opinions or for which measures are demanded pursuant to theprovisions of the Board of Audit Act, or on other matters that the Board finds it
particularly necessary to report34.
32

Constitution of Japan, Article 90, paragraph (1)33

Board of Audit Act, Article 29; Ordinance Enforcing the Board of Audit Act, Article 15

34

Board of Audit Act, Article 30-2

‐13‐

c. Special Report on Audit Requested by the Diet:
When the Board has conducted an audit of the specific matters requested by the Diet
under the provisions of the Diet Law35, it reports the results of that audit to the Diet
pursuant to the provisions of the Board of Audit Act36.
d. Report on Audit of National Property:
The Board prepares the National Property Audit Report containing the results of auditof “the financial statements on increases or decreases in national property and current
totals” and “the financial statements on the status of national property gratuitous loans”,
based on the provisions of the National Property Act37, and submits the National Property
Audit Report to the Cabinet (*).
(2) The Board conducts audits of documents relating to final accounts pursuant to the Act on
Special Accounts38 and any other separate laws39, and sends notices to the Cabinet whichstate that it has completed the audit along with its submission of those documents relating to
final accounts (*).
(*) These reports will be submitted or reported to the Diet by the Cabinet.

Article 3 – Matters to be Recorded in the Audit Report
The Board records the following matters in the Audit Report, based on the provisions of the Board
of Audit Act and the Ordinance for Enforcement of the Board of Audit Act.
1. Verification of Final Accounts
The Board records in the Audit Report the fact that it has verified the final accounts of theState, and the fact that its auditing of the statements of accounts and related matters has been
completed. Specifically, it records the following matters:① Verification of the final accounts of the State40② Completion of audit of the financial statements of Fund for Smooth Management of
National Tax Revenue③ Completion of audit of the final accounts of government related institutions

35

Diet Law, Article 105

36

Board of Audit Act, Article 30-337

National Property Act, Article 34, paragraph (2), Article 37, paragraph (2)38Act on Special Accounts, Article 19, paragraph (2)39Broadcasting Act, Article 74, paragraph (3)40

Board of Audit Act, Article 29, item (i)‐14‐④ Comparison between the amounts in the final accounts of the State and the amounts inthe statement of accounts submitted by the Bank of Japan41⑤ Payments from the reserve fund that have not gone through the procedures for obtaining
the Diet’s approval42
2. Individual Audit Results(1) The Board records the following matters as individual audit results in the Audit Report:
a. Improprieties:
Matters which the Board finds, as a result of its audit, to be in violation of the law,
Cabinet Order, or the approved budget, or to be improprieties43
b. Presentation of Opinions and/or Demand for Measures:
Matters on which the Board has presented its opinions or for which measures aredemanded from auditees, and the results thereof44
c. Measures Taken:
Matters for which the auditee took measures for improvement in response to thefindings of the Board
d. Special Description:
Matters which the Board, as a result of its audit, finds it particularly necessary torecord in the Audit Report in order to draw the attention of the publice. Status of Corrective Actions for Improprieties and Follow-up to Measures Taken:
The status of corrective actions for “improprieties”, and the implementation status of
measures relating to “measures taken”(2) When recording individual audit results in the Audit Report, the Board includes asummary of the business operations, projects/programs, and other concerns subject toaudit, and the results of the audit. The results of the audit, as a general principle, include
the audit’s perspective, viewpoint, subject, and methods, and causes which became clear
during its course.
3. Special Report to the Diet and the Cabinet, Special Report on Audit Requested by theDiet and Report on Specific Audit Subjects

41

Board of Audit Act, Article 29, item (ii)42

Board of Audit Act, Article 29, item (iv)

43

Board of Audit Act, Article 29, item (iii)

44

Board of Audit Act, Article 29, item (vii), item (viii)‐15‐

The Board describes, in the Audit Report, Special Report to the Diet and the Cabinet, andSpecial Report on audits requested by the Diet. In addition, it includes in the Audit Report
the progress of auditing regarding specific audit subjects which, among its audit activities,
the Board finds it necessary to record in the Audit Report, as “report on specific audit
subjects”.
4. Demand for Disciplinary Action against and Adjudication for Accounting Officials
The Board includes in the Audit Report any demands for disciplinary action and the results
thereof when it has demanded disciplinary action45. It also includes in the Audit Report the
number of cases, relevant monetary figures, and a summary of the important cases when it
has adjudicated the liabilities for an indemnity46.
5. Other Matters Considered to be Necessary by the Board of Audit
The Board also includes in the Audit Report matters it reported to the Public Prosecutor’s
Office, matters on which it made settlement decisions that correction is necessary after
examination, and any other matters it considers necessary47.

45

Board of Audit Act, Article 29, item (v)46

Board of Audit Act, Article 29, item (vi)

47

Ordinance Enforcing the Board of Audit Act, Article 15‐16‐