Annual
Report2021

Philosophy

Contents

The Mission of the CPA and the Role of the JICPA

Message from the Chairman and President ................ 2

Japan’s Certified Public Accountants Act states that “The mission of certified public accountants, as auditing and accounting
professionals, shall be to ensure such matters as the fair business activities of companies and the protection of investors andcreditors by securing the reliability of financial documents and any other information concerning finance from an independent
standpoint, thereby contributing to the sound development of the national economy.” The Act defines the purpose of theJapanese Institute of Certified Public Accountants (JICPA) as upholding the professionalism of CPAs as well as guiding, connecting, and supervising Japan’s CPAs.

TaglineSpecial Feature 1
Responses to the COVID-19 Pandemic ........................... 6
1 Participation in the Networking Group on Corporate

CPAs are required to wear their JICPA membership badge at all times while working.
The badge’s design is a collection of simple squares enclosed in an ellipse. The repetition ofsquares, which evoke stability, represents the community of CPAs, who safeguard the stability of
economic society, while the ellipse they form invokes the globe, representing the pride that CPAs
take in protecting the global economy.

2 Implementation Status
3 CPE Obligation Fulfillment
5 Annual Conference

2 Publication of Chairman & President Statements andAudit Considerations

Building Confidence in CPAs .................................................... 36

3 Non-Profit and Public Sector Accounting and Taxation

1 JICPA Online Conference

4 Communication

2 Initiatives in Auditing and Accounting

Special Dialogue .......................................................................................... 8
Yuri Okina, Chairperson of the Japan Research Institute andMasahiko Tezuka, JICPA Chairman and President

Special Feature 2
Initiatives for a Changing Society ....................................... 12
1 Corporate Operations and Closing of Accounts andMeeting Social Needs ....................................................................... 40
1 Responding to IPO-Related Needs

Interview with Deputy President Giichi Yanagisawa
2 Tax System Reform Requests and Recommendations
3 Recommendations Regarding Public Spending

Securing and Developing Human Resources ........ 46
1 Maintain and improve the qualifications of CPAs who utilize

Auditing under Remote Work Conditions

Membership Badge

1 Overview

4 CPE System Review Project TeamYear-End Closing of Accounts and Auditing

5 Fundraising

The Japanese Institute of Certified Public Accountants adopted“Engage in the Public Interest” as its official tagline in July 2013.
CPAs serve as accounting and audit professionals, and the JICPA
provides instruction and oversight to maintain and improve confidence in their work. This understanding, along with our desire thatboth the JICPA and its members continue to contribute to society,is reflected in our tagline.

Continuing Professional Education System ........... 34

2 High-Quality, Reliable Corporate Disclosure
3 Requests Related to Recovery-Oriented Tax Systems Afterthe Lifting of the State of Emergency

their skills as outside directors and corporate auditors, as
in-house accountants, or in public sector accounting, andsupport their work
2 Develop professionals who can express professional opin-

4 Institute Operations Using Online Technologies

ions internationally and provide them opportunities andsupport to do so
3 Increase the appeal of the CPA profession by supporting

the professional success of female CPAs

Who We Are

Public Relations ....................................................................................... 49
Activities ............................................................................................................ 17
History ................................................................................................................. 18
Overview of the CPA Profession ........................................... 20
1 Audits by CPAs

Interview with the Executive Board Member in Charge of
Basic Accounting Education, Makie Suzuki

Stakeholder Engagement ............................................................. 25..............

26

Self-Regulation Initiatives ............................................................ 28

3 Quality Control at Audit Firms

1 Initiatives Aimed at Building a Sustainable Society

4 Basic Accounting Education

What We Do

2 Individual Case Review

Social Contribution Activities ................................................... 50

3 Hello! Accounting

3 Areas of CPA Activity

1 Self-Regulation Overview

2 CPA System Information Sessions

2 Support for Emerging Countries

2 Number of Accounting Auditors

Management Policy and Strategic Targets

1 Broadening Public Understanding of CPAs

How We Operate
Organization ................................................................................................. 57
1 Governance System
2 Regional Chapters
3 Administrative Offices

Financial Summary ............................................................................... 64
1 Revenue Structure
2 Fiscal 2021 Financial Results

1Message from the Chairman and President

Information Disclosure, Auditing and theContribution that CPAs Can Make in a
Rapidly Changing Society—
The Foundations for Building Trust
Masahiko Tezuka, Chairman and President of JICPA

Amid the increased uncertainty about the future brought about by the COVID-19 pandemic, building trust in society ismore important than ever to achieving environmental and social sustainability alongside economic development inorder to create a world where we can all live with peace of mind.
Over the more than 70 years since Japan’s CPA system was established, CPAs have continually helped build trust
through financial statement audits. At this time of immense change throughout society, we must reexamine how
CPAs should best carry out their mission of building trust going forward.

Auditing in a Post-Pandemic World
Faced with the unprecedented difficulties of the COVID-19
pandemic, I believe that we must clearly define the criteriaof quality in auditing that this new era demands.
One type of audit focuses first and foremost on meeting
Japan’s Auditing Standards and avoiding any serious concerns or revisions from the JICPA’s quality control review orthe inspections performed by the Certified Public
Accountants and Auditing Oversight Board. Let us call this“compliance-oriented auditing.” While such complianceconsiderations are important, society clearly expects morefrom auditing. Going forward, auditors must be consciousof the need to articulate the meaning of audit quality beyond
compliance-oriented audits and set concrete goals and takeaction to realize such quality.
Looking at the audit quality reports put out by audit firms
every year, it is evident that an increasing number of auditors are working toward what we might call “value-added
audits,” mentioning such priorities as improving audit timeliness, speed, efficiency and accuracy; increasing the precision of data analysis; providing insight to companies
being audited; offering constructive advice to help prevent
fraud; using ICT and data analysis technologies to overcome the limits of time and place; and providing value thathelps improve corporate frameworks. Using auditing tohelp improve the information disclosure frameworks ofcompanies under audit can also help to reduce improper
disclosure and thereby increase trust in corporate disclosure,2

creating peace of mind for the users of audited information. Furthermore, this can help reinforce the soundness oflisted companies that issue stocks and bonds, in turnimproving the quality of listed financial instruments. I
hope to see CPAs involved in auditing strive to achieve
value-added audits while taking care to maintain their
independence as auditors.
Realizing value-added audits will require investment on
the part of auditors, in line with their specific needs, tocreate information infrastructure, adopt data analysis
tools, build overseas networks, and secure and develop
human resources.
The COVID-19 pandemic forced many people and companies to shift to remote work. Around the world, a portionof this shift will likely prove permanent, remaining as a viable
mode of working even after the pandemic. In order to
respond to such changes, auditors will need to invest insuch areas as information infrastructure and communication
skills training for their human resources.
In addition, initiatives to alleviate the heavy workloads of
CPAs involved in auditing will also be crucial. This has
become an increasingly pressing issue in recent years.
There are certain tasks in the auditing process that need notnecessarily be performed by a CPA and could benefit fromstandardization. Developing innovative new approaches,such as advancing standardization to allow certain tasks to
be assigned to non-CPA staff, outsourcing, and robotic

3Message from the Chairman and President

process automation (RPA), will enable us to achieve faster,
more precise results while also saving time for CPAs. It will
benefit auditors to pursue such innovations in line with their
specific circumstances.
Recent years have seen marked advances in economic
globalization, and today, it is common for listed Japanesecompanies to have important business locations overseas.
To effectively audit the consolidated groups of such global
companies, audit firms need to secure overseas networks

and enhance their ability to communicate smoothly withoverseas entities.
I believe that by steadily making such investments, innovating and building up a track record of value-added audits
year after year, we can realize audits that are truly trusted by
the companies being audited and by their investors andother stakeholders. In the areas that require more than theefforts of individual auditors, the JICPA will develop concretemeasures to offer support.

Audit Quality for a New Era

Auditors must define audit quality in terms suited to their specific circumstances
and work to achieve it• Steadily provide value-added audits year after year

TrustedauditsValue-added
auditsCompliance-oriented audits• Improve timeliness, speed, efficiency, and accuracy• Increase precision in data analysis• Provide insight to companies being audited• Offer constructive advice to help prevent fraud and strengthen internal control• Utilize ICT and other technologies to overcome limits of time and place• Provide valuable suggestions from management and governance perspectives• Carry out audit procedures in accordance with laws, regulations, and Japan’s Auditing Standards• No serious concerns or revisions from outside inspections or quality control review

Full Application of the Key Audit Matters
From the fiscal year ended March 2021, the Key Audit
Matters (KAMs) must be included in audit reports under the
Financial Instruments and Exchange Act. Auditors should
proactively work to enhance disclosure, aware that investors are paying increasing attention to the quality of auditing
and the KAM content of their audit reports.
In addition, in the process of formulating KAM-related content, it will be important for auditors to communicate moreconstructively and robustly with corporate executives andcorporate auditors on such topics as business risks, thevalidity of management’s forecasts and estimates, theappropriateness of accounting methods and disclosure, andthe status of corporate governance and internal control systems. By doing so, auditors can help enhance the soundness of corporate management and trust in disclosure.
The JICPA is implementing necessary measures, suchas preparing KAM case studies and offering training aimed
at enhancing KAM-related content, to ensure that the
introduction of the KAMs serves to enhance the provisionof information to investors about the process leading up to
an audit result and to reinforce audit transparency andtrust in audits.

Adapting to Expanding Corporate Disclosure and Securing Trust
Over the past several years, support for the Sustainable
Development Goals (SDGs) has rapidly expanded worldwide, and social and economic sustainability is an increasingly important factor in investment decisions. ESG
investment volumes have seen explosive growth, prompting
forceful calls from investors and others for the establishment

4of unified standards for non-financial disclosure, including
ESG data. In 2019, the JICPA established the Special
Committee on Corporate Disclosure and Governance toadvance discussions about the form that corporate disclosure should take, and on May 14, 2021, the committee
published a discussion paper titled “Key Issues in

Enhancing Usefulness of and Trust in Corporate Disclosure— Supporting sustainable value creation cycle throughinteraction between disclosure and governance."
Within the realm of ESG issues, environmental and social
aspects have conventionally been outside the purview ofCPAs. Nevertheless, corporate disclosure is a core area ofexpertise for CPAs, and the content of said disclosure isexpanding, so we must adapt accordingly. The rising

importance of non-financial information will surely lead to a
growing need, on the part of the users of corporate information, to ensure confidence in such information. To meetthis societal need, CPAs must proactively contribute toensuring trust in non-financial information. The JICPA will
implement concrete measures to this end in such areas as
developing training programs and guidelines for carryingout assurance services.

Creating Conditions that Enable CPAs to Contribute Even More
The acronym VUCA (short for volatility, uncertainty, complexity, and ambiguity) is used to describe chaotic and confusing social and economic conditions. More than a year
into the COVID-19 pandemic, I feel the weight of VUCA
more than ever before.
My term as president of JICPA extends to July 2022.
During that time, I will work to promote the branding of the
CPA certification based on the value that CPAs can provide
to society in an era of VUCA and to formulate a mediumterm vision for the CPA industry in ten years’ time.
As I mentioned at the top, in this time of uncertainty, I
believe that what society needs most is trust and the peaceof mind that trust engenders. The JICPA will strive to create
the conditions that enable CPAs to foster trust in society
and contribute to the realization of a more prosperous world
by faithfully carrying out their duty of providing accountability, which is the core of our profession. The number of registered CPAs in Japan currently stands at about 32,500.
Leveraging their capabilities, these professionals are greatly

expanding the range of areas in which they contribute,beyond auditing. Furthermore, the profession is young—
67% of registered CPAs are under the age of 50. I believethat we can help solve a wide range of social issues from along-term perspective through such efforts as fostering
start-ups, supporting small and medium-sized companies,
revitalizing regional areas, improving the governance of public institutions, and promoting accounting literacy education.
In implementing various initiatives aimed at overcoming thechallenges of the COVID-19 pandemic, I have seen clearlyjust how wide-ranging the JICPA’s stakeholders are. I willcontinue to focus my efforts on reinforcing the relationshipsof trust between the JICPA and its stakeholders andexpanding cooperation based on that trust, so that CPAs
can do even more to contribute to solving social issues.
CPAs will continue to use their wealth of abilities androbust networks to contribute to the creation of a societythat is abundant in trust. We look forward to your continued
guidance and support.

5

Special Feature 1

Responses to the COVID-19 Pandemic
In 2020, the COVID-19 pandemic created the need to operate under unprecedented crisis conditions. While putting
the highest priority to the health and safety of its members and the staff of audit firms and companies, the JICPA
worked in close cooperation with related government bodies and organizations to secure adequate time for theclosing of corporate accounts and auditing in order to secure confidence in capital markets.

1

Participation in the Networking Group on Corporate Year-End Closing of Accounts and Auditing

In April 2020, the Financial Services Agency established the Networking Group on Corporate Year-End Closing of Accounts
and Auditing to share information among market actors and discuss the situation and responses regarding the closing ofcorporate accounts and auditing amid the COVID-19 pandemic. JICPA president Tezuka and Deputy President Ogura took
part in this group.
Under normal circumstances, the number of audits that must be performed between April and June is immense—it includes
those for the more than 2,400 listed companies in Japan with fiscal years ending in March as well as audits of non-listed companies mandated by the Companies Act and of non-profit organizations. Due to disruptions caused by the pandemic, however, in 2020, the ordinary schedule did not provide enough time
Postponements of Listed Companies’ Results and General Meetings offor procedures related to the closing of accounts and auditing,Shareholders
raising concerns that the accuracy and reliability of disclosure(April 1–June 30, 2020; JICPA survey)
could be seriously affected. Accordingly, within the Networking
Results Announcement Postponements
Group, the JICPA expressed its views regarding the need toApprox.
companies
secure adequate time for the closing of accounts and auditing.
(of which, approx. 600 had March fiscal year-ends)
On April 15, 2020, the Networking Group issued a statement
General Meeting of Shareholders Postponements
titled “Corporate Year-End Closing of Accounts, Auditing andShareholders Meeting in Response to the Increasing Impact ofPostponed (record date unchanged)
4 companies
COVID-19 (Novel Coronavirus),” requesting that companies
Postponed (record date changed)
61 companies
and audit firms prepare to respond flexibly and appropriately toPartially postponed
32 companies
companies
irregularly scheduled closing of accounts and auditing.

2

Audit Considerations related to COVID-19

The JICPA has published audit considerations for its members to facilitate the smooth execution of auditing during the pandemic. In addition, on March 23, 2021, we set up a hotline for consultation regarding auditing during the pandemic, mainly tooffer guidance related to the approach described in “Audit Considerations related to COVID-19 (Part 7).”
Audit Considerations related to COVID-19
Published

Title

March 18, 2020

Summary

1.A udit procedures (inventory observation, etc.)
Audit
2.Audits of companies whose fiscal year-ends
Consideration
have already passed(Part 1)
3.Audit of internal control
4.Extension of audit schedule, etc.

1.Basic approach to auditing in environments
Auditof high uncertainty
April 10, 2020
Consideration(Updated May 12, 2020)
2.Auditing accounting estimates(Part 2)
3.Going concern assumption

750

101

Extraordinary meetings

1.Extension of the deadline for filing of annual
Audit
securities reports, etc.
April 15, 2020
Consideration(Updated April 20, 2020)
2.Auditing financial statements prepared in(Part 3)
accordance with the Companies Act

Publication of Chairman & President Statements and Audit Considerations

1

Chairman & President Statements

On April 7, 2020, the Japanese government declared a state of emergency regarding the COVID-19 pandemic. In response,
the JICPA issued a Chairman & President Statement instructing its members and associate members to comply with governmental and other requests and guidelines in order to prevent the spread of infection and protect the public.
Subsequently, the JICPA issued further Chairman & President Statements as needed, such as reiterating the instruction tocomply with governmental and other requests and guidelines, as well as urging cooperation with companies undergoingaudits in line with the statement from the Networking Group on Corporate Year-End Closing of Accounts and Auditing (seetable at right).
In addition, more than a year into the pandemic, with a great deal of work still being performed remotely, it was especially important to appropriately assess audit risk before auditing. At the sametime, the Key Audit Matters (KAMs) were applied from reporting
Chairman & President Statements
for the fiscal year ended March 2021. In light of these factors, on
April 7, 2020
About the State of Emergency Declaration
February 4, 2021, the JICPA and Japan Audit & Supervisory
About the Statement from the Networking Group on Corporate
Board Members Association jointly published a Chairman &April 15, 2020
Year-End Closing of Accounts and Auditing
President Statement on handling the closing of accounts for
May 7, 2020
About the State of Emergency Extension
the year ending March 2021, encouraging ample communicaJanuary 7, 2021
About the State of Emergency Declaration
tion with corporate auditors and other relevant parties.

6

April 22, 2020

Title

Summary

1.Accounting treatment of fixed costs during
operation / business suspension
Audit
Consideration 2.Considerations for banks and other financial(Part 4)
institutions regarding allowance for credit
losses

1.Considerations on modified opinions due tothe auditor’s inability to obtain sufficient
Audit
May 8, 2020
appropriate audit evidence
Consideration(Updated May 15, 2020)(Part 5)
2.Considerations of written representations
from the management

June 30, 2020

Quarterly review considerations (impairment
Audit
of fixed assets, assessing recoverability ofConsideration deferred tax assets, additional disclosures(Part 6)(accounting estimates), going concern
assumption)

March 2, 2021

1.Approach to incorporating effects of COVID19 in accounting estimates publicized by
Audit
the Accounting Standards Board of Japan
Consideration
2.Communication with management and(Part 7)those charged with governance in a timely
and appropriate manner

4 companies

3
2

Published

Non-Profit and Public Sector Accounting and Taxation

The COVID-19 pandemic caused delays in the closing of accounts and auditing of many independent administrative entities andnational university corporations, making it potentially difficult for them to meet the financial statement filing deadline established in
Article 38 of the Act on General Rules for Incorporated Administrative Agencies. Accordingly, on May 1, 2020, the JICPA submitted to the minister in charge of independent administrative entity affairs a request that such filings be handled flexibly.
In addition, the JICPA discussed measures to extend corporate tax filing deadlines with the National Tax Agency.

4

Communication

The JICPA set up a dedicated page on its website about COVID-19, titled“Responses to Coronavirus (COVID-19).” We have used this page to post publications from the JICPA and related organizations and quickly publish English translations of the JICPA’s Chairman & President statements and Audit Considerations
related to COVID-19 in order to provide necessary information in a timely manner tousers in and outside Japan.

5

Fundraising

The JICPA raised relief funds to support healthcare workers
operating in difficult crisis circumstances as well as children
and their families overseas as a way of addressing the pandemic in countries with fragile healthcare systems. We donateda total of ¥5,554,000.

Recipient

Donations

AmountJapanese Red Cross Society

105¥2,750,000

National Center for Global Health and Medicine

69¥1,533,000

Japan Committee for UNICEF

64¥1,271,000

7Special Dialogue

We invited Yuri Okina, Chairperson of the Japan
Research Institute, Limited, and Chair of the
Cabinet Office’s “Choosing the Future 2.0”
Committee to discuss the role of CPAs and the
JICPA as society adapts to the changes imposed
by COVID-19.
(Dialogue held April 6, 2021)

Yuri Okina
Completed an MBA at Keio Business School and went to work at the
Bank of Japan in 1984. Entered the Japan Research Institute in 1992.
After becoming Chief Economist in 2000, she served as Counselor andVice Chairperson before assuming the role of Chairperson of the Institutein 2018. Completed a doctorate in economics at Kyoto University in 2011.

The Macro Perspective Needed During
the COVID-19 Pandemic
Tezuka Over the past decade or so, I have repeatedly
encountered the term “VUCA.”1 During the COVID-19 pandemic, I have particularly experienced the impact of VUCA.
During and after the pandemic, what social and economicchanges do you think will be necessary in Japan?
Okina The suggestions drafted in 2014 that became thebasis for Choosing the Future 2.0 also proposed threegoals. The first was to raise productivity. Japan is expected
to see a major decline in population, so the country’s continued growth will require improvements in added-value
productivity and advances in digitization, as well as an
economy that develops human capital and produces excellent goods and services at appropriate prices. The second
goal is to enrich regional areas with better economic opportunities. Even as the overall population undergoes considerable change, we should work toward a society in which
regional areas are each appealing in their own right, places
where people can work and prosper. The last goal is to
respond to the low birth rate. I think that the COVID-19 pandemic has only reinforced awareness of the importance ofshifting the tide of Japan’s low birth rate.
In an era of VUCA, enabling a wide range of people toparticipate professionally and securing resilience are key.
The mingling of diverse people sparks innovation. Given thewide variety of crises we face, now and going forward,

8

using creativity and problem solving to enhance resilience
will be extremely important. I hope that the conditions wefind ourselves in now will help spur improvements in addedvalue productivity, transforming society as more people, forexample, work remotely to enjoy the quality of life in regional
areas and take advantage of work style reforms.
I think that the question now is not whether to allow diversity or not; diversity is precisely where value resides. An
organization can only achieve diversity by accommodating
diverse life styles and diverse work styles. Through the pandemic, we have gained options to do many things remotely,such as telecommuting and online education. This positive
step opens up new possibilities, for example, to live inregional areas and raise children while working remotely.
Seniors who are no longer able to live independently will bebetter able to continue to engage with society, and the
reduced need to commute will help break down barriers toworking for people with disabilities. Many obstacles andhurdles remain, but it will be crucial to effectively combine
these new, remote options with in-person aspects of life
and work.
Tezuka In terms of enabling diverse individuals to participate
professionally, under my predecessor, Aiko Sekine, our firstfemale president, the JICPA established the Women in
Accounting Professional Promotion Council and KPIs
regarding the professional engagement of women. Our initiatives to raise the proportion of women among successful
CPA examination candidates to 30% by fiscal 2031 are
beginning to yield results. The proportion of women amongsuch candidates rose from fiscal 2020 to fiscal 2021 andcurrently stands at 24.6%.
We have also set the target of raising the proportion of
women among JICPA members and associate members to
30% by fiscal 2049, the year that will mark the 100th anniversary of Japan’s CPA system. This ratio currently stands
at 15.5%.
What are your thoughts on the professional participationof women?
Okina The issue of the M-shaped curve2 in the rate of
women in the workforce by age is beginning to improve.
However, challenges related to regular employment remain.
Regular employment is highest among women in their late20s, but falls precipitously after that, in an L-shaped curve.
The rate of women in irregular employment who would prefer to be in regular employment is extremely high. Moreover,
the COVID-19 pandemic has devastated the restaurant,
tourism, and other industries with high rates of female participation, and that includes single mothers. To effectively
increase female participation in the workforce, we need toconsider such individuals in a more inclusive way.
Looking at corporate management, companies should
work to increase the rate of women in management not only
as external directors, but from the inside, including as executive officers.
The World Economic Forum’s Global Gender Gap Report
2021 ranked Japan 120th among 156 countries in genderequality. As this illustrates, there is a very long way to go.
Finally, to create environments where women can continue

working with peace of mind over the long term and be promoted inside companies, I think that achieving a healthy
work-life balance for both women and men will be crucial.

Business Models Going Forward
Tezuka What kind of changes do corporate business models need to make? What do you see as the role of, forexample, digital transformation (DX)?
Okina The need for DX is one of the factors behind Japan’s
lagging productivity. This is particularly the case with smalland medium-sized companies, and an area in which thegovernment is now offering support.
Business models are changing in response to the COVID19 pandemic and its aftermath. Given the lack of clarity
about the future, how can businesses anticipate changes in
the ways people think in order to create new products andservices? I think that the answer lies in advancing open
innovation with diverse partners, working together to build
new business models, and aggressively investing in
non-tangible assets to advance corporate transformation.
Looking at the ratios of investment in intangible assets toGDP, Japan is on par with Germany, but well below theUnited States or the United Kingdom. Similarly, the contribution of the quality of human capital to Japan’s total factor
productivity (TFP)3 is relatively low. In the United States,
investment in intangible assets is increasing and driving

9

Special Dialogue

growth in corporate value. Accelerating digitization, investing in human capital and otherwise expanding organizational capabilities will be key.
Tezuka Japanese companies are often said to have a long
history of management that values all stakeholders, not justshareholders, based on a long-term perspective. This isexemplified by the traditional philosophy, called Sampo
Yoshi, of doing business that benefits the seller, the buyer,
and the community. Some have said, however, that thechallenging post-bubble economy led to an increasing
focus on securing annual profits, causing companies togradually lose this long-term perspective and with it theirability to grow. What do you think?
Okina Japan’s economic bubble burst because of nearsighted corporate management. Many companies went
insolvent. I think that an important factor in determining
which companies survived was whether or not they realized
the need to respond to major long-term shifts, such as
Japan’s decreasing population. Although businesses inJapan did follow the Sampo Yoshi philosophy, over time,with the advent of quarterly disclosure and other changes, I
think they shifted their focus somewhat toward short-term
profit. Since the bubble burst, at the macro level, as companies have reduced their excess debt and gotten leaner, withincreasing internal reserves, they have once again secured
the breathing room needed for long-term thinking. And,
since the advent of Abenomics, the cheaper yen has helped
ease the short-term pressure on manufacturing industries,
in particular. In any case, I think the emergence of discussions of sustainability and the current momentum toward
long-term thinking in management is a very good thing.
Continually hiring and effectively developing humanresources is crucial to long-term corporate growth. With the
COVID-19 pandemic, more value has been placed on diversity, and I think we may see advances in mid-career hiring

10

and the mobility of talent. Hiring based on specific job skills
for specific roles is rapidly becoming more common in
Japanese companies. Going forward, I think that corporate
growth will be contingent on finding ways to balance theunique strengths of Japanese companies with greater
human resource fluidity.

work to expand these functions to cover nonfinancial information as well.
Okina I am sure that the reliability guaranteed by CPAs willcontribute greatly to economic and social development.
Tezuka Thank you.

The Importance of Non-Financial
Disclosure

Revitalizing Regional Areas

Tezuka Intangible assets account for a growing portion of
corporate value, but these assets are notoriously hard toquantify or reflect in financial statements. Accordingly,
investors are increasingly calling for more robust disclosureof non-financial information, including ESG data, to better
assess corporate value and management sustainability.
What is your perspective on this shift?
Okina In the manufacturing era, tangible assets were whatmattered. In the IT and digital era, if the strengths of a company’s intangible assets aren’t apparent to its stakeholders,neither is its real corporate value. This is not sustainable. For
example, looking at human capital, companies need disclosure that includes engagement, covering such factors as
their initiatives to develop human resources, secure diversity, promote mid-career hiring, and implement educational
programs. Furthermore, for information related to organizational capabilities and other aspects of management, it will
be important to consider not only what should be disclosed,
but where the information can be disclosed most effectively.
Tezuka Recently, I have noticed that when disclosure
becomes obligatory, the companies that respond robustly
also change their behavior. The question is whether disclosed information truly reflects the reality of the company,or is just a hollow formality. What are your thoughts about
the reliability of material disclosure?
Okina It will be increasingly important. There have been
numerous instances of manipulated financial results in thepast, but manipulation of non-financial information is evenharder to detect. Comparability is poorer, so finding ways of
ensuring the reliability of disclosure is important. I think that
CPAs will have an extremely important role to play in developing solutions to these issues.
Tezuka When it comes to environmental, social, and governance (ESG) issues, CPAs are highly knowledgeable about
governance, but few have developed a deep and broad
understanding of environmental and social issues. However,the big audit firms boast large numbers of specialists. Goingforward, I think that CPAs will need to augment their own
knowledge while working with a diverse range of specialists
in order to ensure the reliability of disclosure. CPAs currently
audit financial statements and certify their accuracy; we will

Tezuka The JICPA has designated regional revitalization as apriority. As part of our efforts, a special August 2020 editionof the Accounting & Audit Journal featured contributions of
CPAs to achieving the SDGs, highlighting their activities invarious regions and fields.
What kinds of challenges face regional revitalization, andhow do you think CPAs can contribute?
Okina The regional areas of Japan are home to many manufacturing companies. Professor Yutaka Matsuo of the
University of Tokyo School of Engineering is an expert in AI.
At a meeting on Choosing the Future 2.0, he acknowledgedthat Japan trails the United States and China in terms of AI,
but pointed out that combining manufacturing technologies
and AI may provide a way to leverage Japan’s strengths.
Using remote work and online learning, it is now becoming
possible for individuals to live or work from two locations,rather than being forced make a binary choice between amajor city or a regional area. It will be important to leverage
the major changes enabled by DX and new insights in revitalization efforts.
Social welfare corporations, medical corporations anduniversities are also closely connected to regional areas.
CPAs will have important roles to play in terms of supporting the active development of these organizations, in addition to companies, and the initiatives of the people
connected to them.
Tezuka I believe that social welfare and medical institutions
are one of your areas of expertise. Social welfare corporation and medical corporations over a certain size are now
required to have an accounting auditor. What are yourthoughts on this change?
Okina As demographic graying advances, nursing andmedical care will be extremely important industries. These
industries will require digitization, coordination, and M&A
to maintain essential operations as the population
declines. As with other types of corporations, advice fromthe perspective of CPAs on how to operate sustainably will
prove crucial.
Tezuka The special edition of the journal I mentioned isintended to illustrate the needs for CPAs in regional areas,
particularly for accountants who are currently working inmajor cities and would like to move to regional areas but arehesitating. What’s more, a major audit firm recently
announced that it would allow employees from all parts of
its corporate group to move to regional areas.
Okina That’s a very positive move. Allowing diverse work
styles like that may help to make the organization itself more
dynamic, as well.
Tezuka If employees are allowed to move, they can also
contribute more easily to regional areas on a volunteer basis.
I hope to we will continue to see this trend strengthen.

In Closing
Tezuka Would you like to share any final thoughts?

The COVID-19 pandemic has triggered majorchanges in the thinking of people globally. The harsh reality
is that, to survive in this new world, companies must explore
new business models with an awareness of sustainability.
Leveraging their expert knowledge, CPAs have provided
trust and reliability to information that is indispensable tocompanies and society. Going forward, we will need themto continue fulfilling this role from a long-term perspective,
taking into account the latest major developments in theworld and staying alert to the initiatives of individual companies. This will require their understanding of professional
ethics, as well as robust communication and a commitment
to the future. I look forward to seeing how CPAs will continue to make great contributions to the overall development
and enrichment of society.
Tezuka Thank you very much for taking the time for this discussion today.
Okina Thank you.
Okina

1. V
 UCA: An acronym for volatility, uncertainty, complexity, and ambiguity used todescribe conditions marked by major environmental changes and difficulty forecasting the future.
2. W hen plotted on a graph, the rate of employment for women in Japan by age
resembles the shape of an M. The rate declines in their late 20s and 30s (aswomen marry and start families), then rises again from their 40s onward (as theirchildren get older).
3. T otal factor productivity (TFP): An indicator of productivity that indicates the contribution of such factors as technological innovation that cannot be explained byquantitative changes in capital or labor.

11Special Feature 2

Initiatives for a Changing Society
The COVID-19 pandemic has caused major changes to ways of living and working. The adoption of new work styles,
including remote work, and the pace of digital transformation (DX) across society are accelerating. At the same time,with corporate governance reforms and the expansion of ESG investing in recent years, the corporate disclosure
environment is changing. The JICPA is advancing initiatives to examine the new forms auditing should take to support transitioning economic structures and create virtuous cycles as society evolves.

1

Corporate Operations and Closing of Accounts and Auditing under Remote Work Conditions

Propelled by the COVID-19 pandemic, remote work is rapidly becoming commonplace. The JICPA is advancing measures to
respond to reforms in the operational processes and internal controls of companies (such as doing away with requirementsthat documents be physically stamped). Furthermore, in July 2020, the JICPA established the Remote Work Response Project
Team to advance reforms in auditing procedures, such as using digital audit evidence and digitally confirming balances. This
team is working to formulate suggestions and considerations regarding remote work.
Overview of measures

1.Identifying overall issues and challenges related to remote work2

High-Quality, Reliable Corporate Disclosure

In recent years, society’s needs for comprehensive corporate disclosure have grown, encompassing not only financial but also
non-financial information. Against this backdrop, corporate disclosure is undergoing major changes, including a growing
emphasis on dialogue between companies and investors.
Given these circumstances, the JICPA believes in the importance of increasing the utility and reliability of corporate disclosure
to increase its value to users and organically connecting it to corporate governance to help achieve sustainable value creation. In
September 2019, the JICPA launched the Corporate Disclosure and Governance Special Committee to further these priorities.
The Special Committee includes investors and external corporate directors as external experts. With their help, it identified
challenges related to increasing the utility and reliability of corporate disclosure and discussed ways to address them.
Furthermore, the Special Committee discussed the role that CPAs should play in supporting corporate disclosure and in
September 2020 put out an interim report titled "Key Issues towards Useful and Reliable Corporate Disclosure — Realizing a
Sustainable Value Creation Cycle through Interaction between Disclosure and Governance."
Through dialogue with diverse actors involved in corporate disclosure, we will continue to study governance, processes,
and disclosure systems conducive to enhancing the quality and reliability of overall corporate disclosure.

Corporate disclosure initiatives (in Japanese)
https://jicpa.or.jp/specialized_field/corporate_reporting/Issues from companies’ perspectives
2.Identifying issues related to operational
process and internal control reforms

3.Studying mechanisms for guaranteeing theauthenticity of digital information

Key Issues Raised in the Interim ReportThree aspects

Issues to be addressed

TopicsIssues from auditors’ perspectives
1 Corporate governance
4.Promoting and identifying issues related tothe use of digital audit evidence

5.Identifying issues related to digitizing audit
reports

6.Identifying practical issues related to shifting
to digital balance confirmation

7.Information security (identifying issues related
to remote work)• Meaning of corporate disclosure andwhat it should be from the viewpoint of
establishing governance• Internal controls to ensure the quality ofnarrative information

8.Other matters that members are likely tobenefit from knowing
2 Investor stewardship• Challenges of corporate disclosure fromthe viewpoint of enabling investors todisplay stewardship
Corporate operations and closing of accounts and auditing under remote work conditions (in Japanese)
https://jicpa.or.jp/specialized_field/remote/Publications in Fiscal 2021 (in Japanese)
Dec. 25, 2020	Remote Work Series No. 1: “Considerations for Auditing Using Digital Materials and Channels: Methods via Auditors’ Websites”
Remote Work Series No. 2: “Considerations In Relation to Remote Attendance at Physical Inventory Counting”
Feb. 12, 2021 Remote Work Series No. 3: “Audit Considerations In Relation to Authentication of Evidence Converted to PDF Format”
Remote Work Series No. 4: “Considerations for Dealing with Restrictions on In-Person Audits of Constituent Units, Etc.”
Remote Work Series No. 5: “Remote Meetings and the Use of Remote Meeting Tools”
Mar. 19, 2021 Remote Work Series No. 6: “Considerations for Auditing Regarding Confirmations Using Email”

12

3 Audits and assurance• Roles to be played by auditors in thedisclosure of narrative information• Position of narrative information from theviewpoint of improving the quality offinancial statements audits• Responsibilities of the board of
directors, audit committee, audit &supervisory committee and boardof auditors• Internal controls over narrative
information• Disclosure in time for the exercise
of voting rights• Response to the needs of bothactive and passive investors• Disclosure that enables monitoringof financial and non-financial
performance and progress instrategies• Disclosure of operation of
governance• Need for auditors to have higher
point of view (understanding ofstrategies, business models andthe needs of investors)• Auditors’ involvement in narrative
reporting• Dialogue with management andcooperation with those charged
with governance

Structure of reporting media and information• System of disclosure documents• Response to need to grasp the overall picture and need toanalyze individual detailed information• Enhancement of disclosure of past performance
Reporting frameworks and standards• Development and convergence of international frameworks,
standards, etc.
• Building structure of domestic guidance and sharing of basic
principles
Interaction between corporate disclosure and governance• Roles of the board of directors in corporate disclosure• Management/supervisory process and disclosure process
Audit and assurance to improve reliability• Improvement of corporate disclosure quality and audit andassurance• Strengthening dialogue and cooperation between external
auditors and those charged with governance (directors,
corporate auditors, etc.)• Reliability of non-financial information• Awareness raising and capacity building of CPAs

13

Special Feature 2
Initiatives for a Changing Society

3

Requests Related to Recovery-Oriented Tax Systems After the Lifting of theState of Emergency

Each year, the JICPA publishes “Tax System Opinions and Requests” and “Recommendations Regarding the Tax System.” In2020, however, the COVID-19 pandemic and the ensuing prevention measures created unprecedented circumstances worldwide, significantly affecting the Japanese economy. Accordingly, the JICPA also published “Requests Related to RecoveryOriented Tax Systems After the Lifting of the State of Emergency (Supplement to Tax System Opinions and Requests),” which
focused on the new normal conditions after the lifting of Japan’s state of emergency, as well as aspects of corporate and economic recovery.
This document comprised a total of 12 requests categorized under the three perspectives listed below.

I

Assistance for Companies and Individuals Facing Economic Hardship

1. C orporate taxation (including income tax withholding)

2. Individual taxation(1) Establish an employment promotion tax system not limited by geographic area to minimize the increase in
unemployment(1) Expand income tax deductions for increased childcare
expenses borne by households due to school closures(2) Issue public statements clarifying that subsidies for
expenses paid by companies to employees related topreventing COVID-19 infection are not included in entertainment expenses and not taxed as employee income(2) Establish a refund carryback system for losses arisingfrom transfers of stocks, etc.

II Improving Corporate Financial Operations and Promoting Sustainable Growth
1. Corporate taxation

2. Corporate and individual taxation(1) Eliminate deduction limits on carryforwards of losses forthe fiscal year that blue returns are filed(1) Support M&A aimed at rescuing companies by establishing systems similar to the open innovation promotion tax
system and angel tax system(2) Broadly reduce local taxes that are not based on income(3) Eliminate limits on expensing entertainment costs for acertain period after measures to prevent the spread of
infection were put in place

III Promoting Public Health and Building a Nation Resilient to Infectious Disease
1. Corporate taxation

2. Individual taxation(1) Expand the categories of special investigational researchunder the investigational research expense tax deduction
system(1) Allow the application of deductions for medical expenses
and the self-medication tax deduction system to expenses related to preventing the spread of COVID-19, such as
those for purchasing masks(2) Allow revenue from contracted clinical trials to be included
in revenue from healthcare services covered by social
health insurance, which must be 80% or more of an organization’s total revenue for it to be classified as a specificmedical corporation

4

Institute Operations Using Online Technologies

In fiscal 2021, many events had to be cancelled, postponed, or held in a different form than originally planned. The JICPA converted many events previously held in person to an online format and implemented various institute operations in new forms.

1

Annual Conference

On September 11, 2020, the JICPA held its 41st Annual Conference online. Although the 2020 conference was originally scheduled to be held in Sapporo, to prevent the spread of COVID-19, it was held online for the first time ever,allowing members to participate remotely.
The main theme of the 2020 event was “The time is now—utilizing new technologies to expand the activities of CPAs
across a wide range of fields.” The conference served as an opportunity to better understand new technologies and tolearn and think about ways to utilize them in a rapidly changing external environment.
The morning portion of the conference featured a presentation from President Tezuka and a video message fromPresident In-Ki Joo of the International Federation of Accountants (IFAC). This was followed by a commemorative lecture from Tsuyoshi Yano (Director, Manufacturing Industries Policy Office, Ministry of Economy, Trade and Industry) on
the topic of how manufacturing industries can survive amid uncertainty,
focusing on the dynamic capabilities and digital transformation necessary going forward. The afternoon portion of the conference consistedof eight research presentations covering a wide range of fields, fromauditing to accounting, tax work, ethics, and IT.
A total of 1,600 JICPA members took part in this year’s conference,higher than the average in an ordinary year. The conference thus
underlined the significance of online events that members can easily
participate in, no matter where they are in Japan or overseas.

2

Hello! Accounting“Hello! Accounting” is a free accounting class for elementary and junior high school students implemented as part of
the JICPA’s efforts to promote basic accounting education.
Though normally held in a classroom space, to prevent the spread of COVID-19, in fiscal 2021, it was held online forthe first time.
Using chat software, participants and teachers were able to interact in real time, making each class lively and fun.

(2) Add COVID-19 antibody tests and vaccines to the categoryof “Efforts to maintain and improve health and prevent illness” under the self-medication tax deduction system

Online Lessons in Fiscal 2021
Classes forschools:

5 times
102 participants

Classes open to 9 times
the public:
578 participants

Poster for online “Hello! Accounting” lessons

14

Lesson being taught at a regional chapter

15

Who We Are

Activities
The JICPA was established under the Certified Public Accountants Act for the purpose of guiding, connecting, and supervising CPAs as well as performing administrative work related to CPA registration. As a self-regulatory body, the JICPA engages
in a variety of activities under the tagline “Engage in the Public Interest.” These include activities related to ensuring professional ethics, maintaining and improving the credentials of its members, and upholding the quality of their work.
Article 3 of the JICPA Constitution outlines the Institute’s activities as follows.

The Activities of the Japanese Institute of Certified Public Accountants(JICPA Constitution, Article 3)
1 Establish standards of professional ethics for CPAs to abide by and work to maintain and improve
such ethics.

Who We Are
The JICPA is Japan’s only self-regulatory body of CPAs. As mandated
by the Certified Public Accountants Act, the JICPA strives to guide,connect, and supervise CPAs well as improve their credentials so thatthey can carry out their mission.

2 Implement measures to improve the qualifications of members, such as holding lectures andstudy sessions related to the work of members.
3 Conduct research on the theory and practice of auditing, promote the use and adoption ofauditing standards, and establish auditing systems.
4 Conduct research on the theory and practice of accounting, promote the use and adoption of
accounting principles, and establish corporate and other accounting systems.
5 Conduct research on the CPA system and the duties (including tax-related duties) of CPAs, and issue
recommendations and provide consultation to governmental and regulatory agencies as necessary.
6 Design and implement measures to support proper auditing by members.
7 Provide necessary support to members with regard to the work of CPAs, including providing
consultation and materials.
8 Provide mediation to help resolve disputes over the work of CPAs.
9 Design and implement measures for the education and training of individuals who pass the
CPA examinations.
: Perform administrative tasks related to the registration of CPAs, junior accountants, CPAs of othercountries, and specified partners of audit companies.
A Other operations necessary to achieve the purpose of the Institute.

17

Who We Are

Who We Are

History
The Genesis and Evolution of the CPA System
Japan’s professional accountant system dates back to the 1927 establishment of the profession of accountant based on the
Accountant Law. The period immediately after World War II brought advances in democratizing the nation’s economy, including breaking up the zaibatsu industrial and financial conglomerates as well as the enactment of the Securities Exchange Law
in 1948. In the same year, the Accountant Law was abolished and replaced with the Certified Public Accountants Act. In
1949, eight stock exchanges, including those of Tokyo, Osaka, and Nagoya, were opened, and 1951 brought the first CPA
audits under the Securities Exchange Law. The CPA system thus emerged from the securities market’s need to ensure thetrustworthiness of financial statements.
As the securities market expanded, the importance of CPA audits grew, and the Certified Public Accountants Act wasamended accordingly. In 1966, to facilitate organized audits of increasingly large-scale corporate activities, a system of audit
Early Development

corporations bearing unlimited joint liability was introduced.
With audits of schools beginning in 1967 and the introduction of CPA audits based on the Law of Special Measures of theCommercial Code in 1974, CPA skills were no longer restricted to the securities market, and the need for them spreadthroughout broader society. The 2003 amendment to the Certified Public Accountants Act put the mission of CPAs in Article 1of the Act and reinforced CPA independence. The following amendment of the Act, in 2007, strengthened the quality management, governance, and disclosure requirements for audit corporations; reinforced the independence and position of auditors;
and revised the oversight and liability of audit corporations.
The Audit Firm Governance Code was released in 2017, and the 2018 amendment of Japan’s Auditing Standards introduced the Key Audit Matters (KAMs). These and other initiatives are being advanced to enhance audit transparency.
In these ways, Japan’s CPA system has evolved in step with the changes and development of the corporate community.
At the same time, companies, a primary subject of auditing, have undergone advances in corporate governance, including
the introduction of internal control auditing at listed companies in 2008 and the application of the Corporate Governance Codein 2015. CPAs, who perform audits, and companies, which undergo them, are each working in their own roles to secure confidence in capital markets.

GrowthReformThe foundations of the CPA system are established

Growing in step with Japan’s rapid economic riseTransforming for a future of trust1948 The Certified Public Accountants Act established; Securities Exchange
Law rewritten
1949 The Japanese Institute of Certified Public Accountants founded;
Financial Accounting Standards for Business Enterprises issued
1950 Auditing Standards and Working Rules for Fieldwork (interim reporting)issued1951 The CPA audit system enters effect1953 The JICPA becomes an incorporated association

1956 Auditing Standards and Working Rules for Fieldwork amended;
Working Rules of Audit Reporting issued
1961 Stock exchanges open second sections

1991 Auditing Standards, Working Rules for Fieldwork, and Working Rules of
Audit Reporting amended
1998 Continuing professional education (CPE) system launched
Commemorative ceremony and other activities marking the 50th
anniversary of the CPA system held

Expansion in firms requiring auditing
1962 Cost Accounting Standards issued
1965 Discovery of numerous companies committing accounting fraud
Auditing Standards revised
1966 Certified Public Accountants Act amended
The JICPA becomes a corporation;
The audit corporation system enters effect1967 CPA audits of schools begin
1973 The International Accounting Standards Committee (IASC) established;
Commemorative ceremony and other activities marking the 25th
anniversary of the CPA system held
1974 CPA audits under the Law of Special Measures of the Commercial Code begin
1977 System for CPA audits of consolidated financial statements enters effect(audits of equity method accounting begin in 1983);
System for CPA audits of interim financial statements enters effect;
The International Federation of Accountants (IFAC) established1987 The 13th World Congress of Accountants held in Tokyo“Big Bang” accounting reforms begin
1999 Audit firm quality management review system enters effect
2001 Financial Accounting Standards Foundation (FASF) and AccountingStandards Board of Japan (ASBJ) established
Audit Practice Monitoring Board established
JICPA Building completed
2002 Auditing Standards amended
2003 Certified Public Accountants Act amended
CPA examination system reformed
2004 The JICPA becomes a special private corporation
Continuous professional education (CPE) system written into law
2005 Companies Act established
The Auditing Standards and Interim Auditing Standards amended; theStandards on Quality Control for Audits established2006 Financial Instruments and Exchange Act established

Evolution

Accelerating expansion of CPA work inJapan and abroad
2007 The 17th Conference of the Confederation of Asian and Pacific Accountants(CAPA Osaka 2007) held
Registration system for listed company audit firms enters effect
The Certified Public Accountants Act amended
Limited liability partnership system for audit firms enters effect2008 Internal control auditing and quarterly review systems enter effectCommemorative ceremonies and lectures marking the 60th
anniversary of the CPA system held
2009 Decision to allow voluntary adoption of International Financial ReportingStandards (IFRS)
2010 Tax Affairs Subcommittee established2012 Internal Accountants Council established;
The IFRS Foundation’s Asia-Oceania Office established in Tokyo
2013 Audit Risk Response Standards established2014 Auditing Standards amended
Provisions of the Companies Act regarding the selection and dismissal of
accounting auditors amended;
Public Accounting Council established2015 Corporate Governance Code enters effect2016 CPA audits of social welfare corporations and medical corporations begin;
Basic Accounting Education Promotion Council established;
Women in Accounting Professional Promotion Council established2017 Audit Firm Governance Code published;Council for Accountants Serving as Outside Directors andCorporate Auditors established2018 Commemorative ceremonies and lectures marking the 70th
anniversary of the CPA system held
2019 CPA audits of agricultural cooperatives begin
Self-Regulation Monitoring Board established
2020 Auditing Standards amended

The Offices of theJapanese Institute ofCertified Public
Accountants

18

Oct. 1949–May 1956
Leased space on the 1st floor of theformer Tokyo Chamber of Commerceand Industry building(Chiyoda-ku, Tokyo)

May 1956–June 1963
Leased space on the 5th floor of the
Daido Seimei Building(Chuo-ku, Tokyo)

June 1963–Feb. 1966
Leased space on the 1st floor of theTokyo Chamber of Commerce andIndustry Building(Chiyoda-ku, Tokyo)

Feb. 1966–Nov. 1969
Leased space on the 4th floor and in
the basement of the Tokyo Shoken
Building(Chuo-ku, Tokyo)

Nov. 1969–June 1977
Leased space on the 3rd and 4th
floors of the Kabuki Kaikan(Chuo-ku, Tokyo)

Jun. 1977–Nov. 2001
Previous JICPA Building(Bunkyo-ku, Tokyo)

Nov. 2001–
Current JICPA Building(Chiyoda-ku, Tokyo)

19

Who We Are

Who We Are

Overview of the CPA Profession
1

Audits by CPAs

2

Japan’s CPA system was created alongside post-war securities market reforms, positioning CPAs as expert auditors forlisted companies.
Subsequently, the Law of Special Measures of the Commercial Code made audits of listed companies mandatory, after
which audits of a wider range of organizations became mandated by law, steadily expanding the fields in which CPAs perform
audits. In recent years, the use of CPA audits in the non-profit sector has been increasing, and, based on the Revised
Agricultural Cooperative Law promulgated on April 1, 2016, from fiscal 2020 onward, agricultural cooperatives with more than
¥20 billion in deposits and cooperative associations with more than ¥20 billion in liabilities will be required by law to undergo
audits by accounting auditors (CPAs or audit corporations).

The number of CPAs in Japan is steadily rising. As of March 31, 2021, the number of CPAs stood at 32,478.
1951 saw the first registration of female CPAs (2 individuals). Today, approximately 15% of Japan’s CPAs are women. The
portion of successful CPA examination candidates who are women has been around 20% in recent years, reaching 24.6% in
2020, indicating that the proportion of women among CPAs will continue to increase going forward.
We have established targets regarding the proportion of women among our members and associate members and among
successful CPA examination candidates. We are examining measures to achieve these targets (see page 48).
CPAs by Gender (At December 31)(Year)The main types of audit performed by CPAs are as follows.

1950

Statutory Audits (Audits Required by Laws and Regulations)• Audits based on the Financial Instruments andExchange Act
Documents related to the financial calculations contained in
the securities reports (balance sheets, profit and loss statements, and other statements) submitted by specified securities issuers must receive an audit certification by a CPA or
audit corporation (Article 193-2, paragraphs 1 and 2).

Number of Accounting Auditors• Audits based on the Companies Act
Large companies, companies with a board of corporate
auditors, and companies with nominating and other committees must retain an accounting auditor (Companies Act
articles 327 and 328). Furthermore, any stock company
that so designates in its articles of incorporation may retain
an accounting auditor.

1960(Persons)

241 (241/0)

Men

1,244 (1,240/4)
4,196 (4,171/25)

1970

6,064 (5,996/68)

1980

8,817 (8,590/227)

1990

13,226 (12,235/991)

2000

21,289 (18,742/2,547)

2010

32,490 (27,777/4,713)

2020

Statutory audits include audits of the following:• Mutual life insurance companies• Public interest incorporated associations and foundations• Special purpose companies• General incorporated associations and foundations• Investment corporations• Consumer cooperative associations• Limited partnerships for investment• The University of the Air Foundation• Limited liability beneficiary certificate issuing trusts• Agricultural credit fund associations• Incorporated schools that receive national or regional
public subsidies• The Norinchukin Bank

• Incorporated schools applying for an act of endowment• Reports on expenses, etc., made using party subsidies
based on the Political Party Subsidies Act• Shinkin banks• Social welfare corporations• Credit unions• Medical corporations• Labor banks• Independent administrative entities• Virtual currency exchange service providers as specified
in the Payment Services Act• Regional independent administrative entities• Agricultural cooperatives• National university corporations and the Inter-University
Research Institute Corporation

To become a CPA, an applicant must pass the CPA examinations (multiple-choice tests and essay tests), complete at least
two years of practical experience, undergo a professional accountancy education program administered by the JapanFoundation for Accounting Education and Learning, and pass a final assessment by the JICPA. After confirmation from theprime minister, the applicant’s name is added to the register of CPAs.
Steps to Registering as a CPA

CPA Examinations

Multiple-choicetests(four subjects)

Pass

Essay test
(five subjects)

Practical experience
Pass• Obtain the requisite credits• Final assessment by the JICPA(five subjects)
Registration

Non-statutory audits include audits of the following:• Audits of financial statements of companies not subject
to statutory audits• Special-purpose financial statements

Certified Public
Accountant

Experience in administrative support, etc.

• Minimum of two years   • May occur before or after examinations

International audits include audits of the following:

20

Women

Figures in parentheses show the numbers of men and women, respectively.

• Companies with shares listed on overseas exchanges orthat are applying for such listing• Overseas branches, subsidiaries, and joint ventures ofJapanese companies• Companies that have procured or seek to procure
funding overseas• Japanese branches and subsidiaries ofoverseas companies

21

Who We Are

Who We Are

Overview of the CPA Profession

CPA Examination Applicants and Number of Final Successful Candidates (numbers for 1989 and earlier are those for the previous two-tier test system)

2(Persons)

Successful candidates

Applicants (right axis)

3,000

30,00021,255
16,310

528

1,500

2,730

4,025

4,942

5,735

10,265

10,870 12,532 13,231

1,102
596
70

0

1949

212

242

283

1959

1969

1979

1989

1,337

1,335

0

786

1999

2004

2009

2014

2019

2020 (Year)• Individuals qualified to be a junior accountant• Successful CPA examination candidates• Specified partners of audit corporations

Professional Accountants in Business (PAIB)

CPAs work at corporations and other public and private organizations. The number of CPAs working at organizations otherthan CPA offices and audit companies has been rising in recent years.

4

CPAs of Japan and of other countries practicing in Japan are required to register as members of the JICPA. In addition, thetypes of individuals shown below may become associate members of the JICPA (non-mandatory).
• Individuals qualified to be a CPA in Japan or anothercountry• Junior accountants

CPAs provide counsel and advice in all areas of management, including drafting management strategy, capital procurement,
establishing internal controls, securities listing, organizational reform, and due diligence.

3

2,229
1,378

Consulting(Persons)

Outside Directors and Corporate Auditors

Japan’s Corporate Governance Code for listed companies was adopted in 2015 and amended in June 2018. The Code statesthat “Companies should appoint at least two independent directors” and that “persons with appropriate experience and skills aswell as necessary knowledge on finance, accounting, and the law should be appointed as kansayaku [corporate auditors].* In
particular, at least one person who has sufficient expertise in finance and accounting should be appointed as kansayaku.” Inaccordance with these provisions, the number of CPAs serving as outside directors and corporate auditors has been rising, andcurrently stands at more than half of all listed companies.
* Also known as Audit & Supervisory Board Members
To support CPAs working in a variety of fields, the JICPA has established a number of specialized councils. The number ofregistered members of each council and of the working groups, etc., within each council are as follows (as of March 31, 2021).
Name

3

Areas of CPA Activity

TargetSmall and medium-sized audit firms that
audit listed companies

Tax-Related Work Council

CPAs who perform tax-related work

Members:
Associate members:

Public Accounting Council

CPAs working in the public and NPO sectors

Social Security Working Group
Members:
2,640
Audit corporations on theworking group’s list:
88
Regional Public Entity Accounting and Auditing Working Group
Members:
913
Associate members:
2,048Internal Accountant Council

CPAs that are employees of corporations

Professional Accountants in Business Network
Members:
2,174
Associate members:
476

Council for Accountants Serving as
Outside Directors and Corporate Auditors

CPAs serving as outside directors andcorporate auditors

Council for Accountants Serving as Outside Directors and Corporate
Auditors Network
Members:
1,415
Associate members:
997

Women in Accounting Professional
Promotion Council

Female JICPA members/associate members

In addition to accounting, CPAs work in a wide range of fields and roles in society as accounting experts.

1

Tax-Related Work

By registering as a tax accountant, CPAs can carry out tax-related work. These CPAs prepare tax declarations, provide
tax-related consultation, and use their wide-ranging knowledge to provide counsel and advice in specialized tax matters, suchas tax duties related to M&A and international taxation.

CPAs That Are Registered Tax Accountants(as of March 31, 2021)

Registered tax accountants
10,446(32%)

22

Members

Small and Medium-Sized Audit Firm
Liaison Council

453 corporations and firms
8,916
6,116

5,999

JICPA Members

32,47823

What We Do

Stakeholder Engagement
The scope of activities for CPAs is expanding, and the JICPA’s stakeholders are also increasing, both in number and diversity.
To ensure that CPAs can carry out their mission, the JICPA is proactively collaborating and communicating with stakeholders
to build and enhance relationships of trust.
• Setting standards, preparing policies of practice and other publications, and discussing issues related to implementation, etc.
• Submitting opinions during public comment periods

Government
Responding to requests for comments,
making TV appearances, holding press
conferences (See page 49)

What We Do
The JICPA implements a range of institute operations to contribute to
the advancement of CPAs and the establishment and development ofa fair economic society so that CPAs can better carry out their mission.

• Participation in academic
conferences• Setting standards, preparing
policies of practice andother publications, and discussing issues related to
implementation, etc.

• Submitting opinions during public comment periods• Participation in international
conferences

Mass media

Requests related to industry issues that
require legal amendments, etc.

Legislature
Japanese
Certified Public
Accountant
Politics
Federation

Academics

Economiccommunity

JICPA

International
institutions

Expertorganizations
Market actors

Setting standards, preparing policies of practice and other publications, and discussing
issues related to implementation, etc.

Lectures and Appearances by the Chairman
JICPA chairman and president Tezuka attended numerous external lecture events. This provided opportunities to engage indiscussions with many stakeholders and reflect their opinions in the JICPA’s operations. The main external lecture events that
he attended in fiscal 2021 are as follows.
Aug. 29, 2020	Lecture at the 37th Annual Conference of the Japanese Association for International
Accounting Studies
Topic: Corporate disclosure and changes in corporate behavior
Oct. 27, 2020	Breakout panel discussion appearance at the Japan Productivity Center’s 65th
Anniversary Conference
Topic: Customer value-oriented management going forward—policies for sustainable
management
Nov. 21, 2020 Spoke at the 13th Annual Conference of the Japan Internal Control Research Association
Dec. 17, 2020	Lecture for the Japan Association of Corporate Directors
Topic: Issues brought to light by the closing of accounts and auditing during the
COVID-19 pandemic

Chairman Tezuka speaking during the Japan
Productivity Center’s 65th Anniversary Conference
breakout panel discussion

Appearance at the Japan Productivity Center’s 65th Anniversary Conference (in Japanese)
https://jicpa.or.jp/news/weekly/2020/10/20201031fii.html#movement

25

What We Do

What We Do

Management Policy

Strategic Targets

The JICPA is an expert professional organization of CPAs, who are responsible for ensuring confidence in information while contributing to sound organizational governance. As such, the JICPA has, over the years, revised
existing forms of CPA auditing many times, proactively working to reform and improve the audit system.
Over the past several years, systematic efforts to improve audits have made great progress. For precisely thisreason, President Tezuka and the entire executive team have determined that the JICPA must now look beyond
accounting audits and undertake efforts to reform institute operations from a long-term perspective, envisioning
the CPA industry in 10 or 20 years. To this end, they established the slogan shown below. Building from thisslogan, to define a vision and values for the JICPA, based on the mission of CPAs outlined in the Certified
Public Accountants Act and our current tagline, “Engage in the Public Interest,” we laid out the JICPA’s mission.
In doing so, we identified issues that we must address and established five strategic targets to this end.

Six Key Issues• Reforming accounting audits• Involvement in the formulation of
accounting and auditing standards• Adapting to changes in corporate
disclosure

Strategic Target 1

Slogan“Move Forward to the Future”• Meeting society’s needs for CPA work
• Adapting to rapid membership gains andthe growing diversity of our members

Build Confidence in CPAs

Japan’s CPA system was created in 1948 to audit the financial statements of listed companies. Over the more than 70
intervening years, CPAs have worked constantly to protect confidence in capital markets through financial audits.
Society’s need for our profession and the contribution CPAs provide through their work are both fundamentally rooted insociety’s confidence in financial audits. We will continue working to build that confidence while also working to reinforce
hands-on auditing skill.
Strategic Target 2

The JICPA’s Mission• Adapting to changes in corporate activities
and technological innovation

Enhance Stakeholder Engagement

To fulfill the mission of CPAs contributing to the sound development of the national economy, coordination with a wide
range of stakeholders, including governmental bodies, market actors, and international institutions, is essential. By promoting constructive dialogue with stakeholders, we will strive to further build up relationships of trust.

• Build social confidence in CPAs
• Support the enhancement of the professional abilities of our members• Offer opportunities for members to exercise such abilities to contribute to society

VisionA professional organization, trusted by both its members and society, that makes the greatest possible
contribution to sound economic development and therealization of greater wellbeing throughout society

Aiming to realize thevision by achieving thestrategic targets

Values• We put the trust of our members and other stakeholders first• We esteem foresight, strategic thinking, and creativity• We strive to engage in constructive discussion and collaboration with stakeholders• We esteem mutual aid and cooperation and strive for open, highly productive
institute operations

26

Strategic Target 3

Secure and Develop Human Resources

The globalization of corporate activities, AI and other technological innovation, and other such factors are driving significant changes in the environment surrounding CPAs. Given these changes, to ensure that CPAs will continue to contribute to society in the future, we will redefine the qualities and abilities necessary in a CPA.
Furthermore, with efforts to promote the professional participation of women and growing numbers of CPAs working
within companies or as external corporate officers, the sphere of CPA activity has been growing increasingly diverse inrecent years. In response to this shift, we will advance diversity and inclusion initiatives.
Strategic Target 4

Meet Society’s Needs

Japan is facing many serious challenges, including a declining population and birth rate, demographic graying, and the
depopulation of regional areas. As such, enhancing the productivity and ensuring the management soundness of organizations deeply connected to the public interest is an urgent task.
Accordingly, the range of entities subject to CPA audits is expanding to include incorporated schools, regional public
entities, medical corporations, social welfare corporations, and agricultural cooperatives. We will work to ensure thatthrough audits and other work, CPAs contribute to the soundness of such organizations’ operations while contributing
to governance reforms and productivity gains, thereby supporting the revitalization of regional areas.
Strategic Target 5

Enhance the Productivity and Transparency of Institute Operations

Enhancing the productivity of the JICPA will be essential to achieving these strategic targets. As such, we are advancing
organizational reforms, including revising our governance system and promoting work style reforms for institute staff.
In addition, we are working to enhance transparency to fulfill the JICPA’s duty of accountability by providing timely,
appropriate information to society.

27What We Do

What We Do

Self-Regulation Initiatives
1

2

Self-Regulation Overview

Audit Practice Review and Investigatory Committee

Role and Function of Self-Regulation
As a self-regulatory body charged with maintaining the credentials of CPAs at a high level, the JICPA conducts activities to guide, connect, and supervise its members; seeks
to maintain and improve the quality of the work of CPAs;
and implements initiatives to ensure society’s confidence inthe work of CPAs.
The JICPA’s self-regulation comprises two core functions.
The first is individual case review, which examines suchmatters as the audit implementation status and appropriateness of audit opinions concerning individual audit
engagements and issues involving the professional ethicsof CPAs. The second is the quality control review system,
which provides guidance and supervision regarding thequality control systems of audit firms.
The JICPA operates under the self-regulatory apparatus
shown at right. Increasing transparency, providing society
with timely information, and ensuring clear, satisfying explanations are prioritized as key issues.

Self-Regulatory Framework
Individual case review

Audit firm quality management

Self-Regulatory Monitoring Conference
Monitoring

Review Board for Appropriate ProceduresNote: Only when a request
for review is madeDisciplinary Committee

Note: Only when a request
for review is madeQuality Control Committee

Audit Practice Review andInvestigatory Committee

Self-Regulatory Monitoring Conference
The purpose of the Self-Regulatory Monitoring Conference is to monitor the JICPA’s overall self-regulatory operations andcases in which improvement is required to ensure a properly functioning system for self-regulation and secure greater understanding from society, as well as to provide opinions and advice based on a broader perspective encompassing capital markets and social impact.
The Self-Regulatory Monitoring Conference comprises eight members. In light of the importance of securing independence andtransparency, seven of these members are outside members (one of whom is also an outside Council Member of the JICPA).
Self-Regulatory Monitoring Conference Members (As of March 31, 2021)
Hisashi Yamaura*	Outside Council Member, JICPA; Professor Emeritus, Meiji University; former
Commissioner, Board of Audit)

Hiroshi Miyake*	Attorney
Toshifumi Goto*	Chairperson, Japan Audit & Supervisory Board Members Association
Mari Kobayashi*	Professor, Waseda University

Individual Case Review

The Audit Practice Review and Investigatory Committee examines and investigates the implementation of audits by JICPA
members and the appropriateness of their audit opinions on individual audit engagements, such as those related to companies’ timely disclosure, matters reported in the media, and audit hotline reports. Based on its findings, the JICPA chairman
then issues recommendations or instructions as necessary.
The committee also reviews and investigates matters concerning issues of ethics related to JICPA members and associate
members, as well as other matters referred to it in accordance with the JICPA Constitution. Based on its findings, the JICPA
chairman then issues recommendations or instructions to the members or associate members in question as necessary.
Furthermore, when there is concern that a member or associate member may have violated laws, regulations, or the JICPA
Constitution or other rules, the committee conducts a review and investigation. If the committee determines that there had
been such a violation and that it requires review to determine whether disciplinary action is warranted, the JICPA chairman
requests a review by the Disciplinary Committee.
The Audit Practice Review and Investigatory Committee comprises no more than 17 members, of whom two are outside experts.
The committee issues compilations of the suggestions it has made based on its reviews to JICPA members for use as reference in the auditing work of CPAs.

Disciplinary Committee
The Disciplinary Committee accurately and equitably evaluates matters for which it has received a review request from the
JICPA chairman based on the Audit Practice Review and Investigatory Committee’s disciplinary action proposals. The committee determines the disciplinary actions to be imposed and informs the members or associate members in question.
The Disciplinary Committee comprises seven members, of whom two are outside experts.
The committee issues compilations of cases it has decided to JICPA members as a resource to help them audit appropriately and to maintain and improve their professional ethics.
JICPA members and associate members who have been sentenced to disciplinary action by the Disciplinary Committee
may request a review by the Review Board for Appropriate Procedures if a procedural violation or significant factual error could
have affected the outcome of the Disciplinary Committee’s review.
The Review Board for Appropriate Procedures reviews such requests and either returns cases to the Disciplinary Committee
or dismisses them.

Types of Disciplinary Sanctions
The following five types of disciplinary action may be imposed by the JICPA.

Hirano Takeshi*	Managing Governor, Japan Exchange Regulation
Mari Sono	Former Commissioner, Securities and Exchange Surveillance Commission
Masataka Miyazono*	President, Government Pension Investment Fund
Manabu Morimoto*	Vice Chairman, Japan Securities Dealers Association

1 R eprimand
2 S uspension of the membership rights granted by the JICPA Constitution
3 E xpulsion from the JICPA (associate members only)

4 R ecommended deregistration from the JICPA
5 Request to the Financial Services Agency to impose such sanctions as
striking the individual from the CPA registry or issuing a dissolution
order to an audit corporation (May be combined with items 1–4)

Names marked with * are outside experts.

Summaries of the proceedings of the Self-Regulatory Monitoring Conference and the materials used at its meetings are published on the JICPA’s website.

When investigations find that matters examined require improvement but do not warrant disciplinary sanctions, the bodies
involved issue recommendations or instructions as needed.

Internal and External Disclosure of Disciplinary Sanctions
Self-Regulatory Monitoring Conference proceedings summaries and meeting materials (in Japanese)
https://jicpa.or.jp/about/activity/self-regulatory/quality/monitoring.html

28

Disciplinary sanctions imposed by the JICPA are, per the JICPA Constitution, internally disclosed to members via the JICPA website (on a page only accessible to members and associate members), the JICPA newsletter, and postings in the JICPA offices.
Furthermore, the disciplinary sanctions imposed may be disclosed publicly if the severity of the underlying matter exceeds acertain threshold or the said matter is of great interest or import to society and the JICPA chairman deems doing so necessary
in order to secure the confidence of society in the JICPA and the CPA system.
Summaries of cases that are still under investigation may also be disclosed publicly if the JICPA chairman deems doing sonecessary in order to secure the confidence of society in the JICPA and the CPA system.

29

What We Do

What We Do

Self-Regulation Initiatives

Data: Individual Case Reviews
Reviews undertaken in fiscal 2021 are summarized in the chart below. Note that an overview of the activities of the individual
case review system is published separately (in Japanese).
Reviews in Fiscal 2021 (April 1, 2020 to March 31, 2021)(Cases)Audit Practice Review and Investigatory Committee
Reviews completedCases carried forward

44

New cases

21

34

Requested review by the
Disciplinary Committee

15¹

Cases carried forward to thenext fiscal year

31

(Cases)(Cases)Disciplinary Committee

New cases1

13¹

Quality Control at Audit Firms

1

Quality Control Review System

In light of the provisions of the Certified Public Accountants Act and the public significance of auditing, since fiscal 2000, the
JICPA has operated a quality control review system for audit firms (audit corporations and CPAs). The system is aimed atmaintaining and improving the quality of auditing as well as securing society’s confidence in audits.
Quality control reviews entail reviewing the status and implementation of the quality control systems of audit firms, notifying
them of the results, issuing recommendations for improvement or imposing appropriate measures as needed, and receiving
reports on the status of improvements made based on such recommendations. The system helps maintain and improve thequality of audits conducted by audit firms. The quality control review system is not intended to badger, penalize, or interfere in
the formation of audit opinions by audit firms.

Review Board for Appropriate Procedures

Reviews completedCases carried forward

3

4

Requested review by the
Review Board forAppropriate Procedures

1²

Cases carried forward to thenext fiscal year

10
(Cases)4

Recommendation

1

1

Reviews completed0

New cases

2²

Cases carried forward to thenext fiscal year3

Shareholders, investors, etc.

Completed Disciplinary Committee cases by result³
Disciplinary sanction

Cases carried forward

Disclosure

1. These numbers differ due to cases that were closed after the Audit
Practice Review and Investigatory Committee decided to request areview by the Disciplinary Committee but before such request was made.

Audit

2. These numbers differ because the Disciplinary Committee’s tabulation isbased on number of cases, while the Review Board for Appropriate
Procedures’ tabulation is based on the number of requests for review.
3. The total of figures in this table differs from the number of reviews completed presented above because one case resulted in both a disciplinary
action and a recommendation.

Companies
Financial statements

JICPA

Quality control
review

Quality Control Committee

Audit firm
Audit team

Individual case review system activity summary (in Japanese)
https://jicpa.or.jp/about/activity/self-regulatory/inspection/

Disciplinary Sanctions Imposed in Fiscal 2021 (April 1, 2020–March 31, 2021)(Cases)Individuals

Audit Corporations

Type of sanction

Actions¹

Reprimand

43

Suspension of membership rights

13

Recommended deregistration

44

Sanction request filed with the FSA

38

Expulsion

6²

Reprimand0

Suspension of membership rights

1

Recommended deregistration

0

Sanction request filed with the FSA

0

1. The number of individuals for the individuals category and the number ofcorporations for the audit corporations category.
2. The number of expulsions based on decisions of the Disciplinary
Committee was zero.
Associate members who are more than one year delinquent in the payment of standard membership fees or chapter fees (see “1 Revenue
Structure” on page 64) and remain delinquent after receiving requests forpayment are subject to disciplinary action by decision of the Council. The
above number of expulsions reflects such decisions.

The system includes two types of quality control reviews. The first is a regular review, which examines an audit firm’s overall
quality management system and its operation. The second is a special review, which is conducted when needed to examine
quality management in specific fields of the audit firm involved or the quality management system and its operation with regard
to specific audit engagements.
The Quality Control Committee conducts quality control reviews and prepares a quality control review report containing its
findings pertaining to the status of the audit firm’s quality control system and its operation. This report is issued to the audit firm.
In principle, quality control review reports may not be disclosed to any third party. However, audit firms may disclose to third
parties summaries of their most recent quality control review results in the audit quality reports that they prepare.
Furthermore, audit firms are required to, at a minimum, communicate a summary of the findings regarding their quality control
systems and their operation to the client’s corporate auditors when the engagement involves companies that are legally boundto retain an accounting auditor (such as large companies defined in the Certified Public Accountants Act) or shinkin banks.
Amendments to the JICPA Constitution made in July 2019 revised the quality control review system and registration system
for audit firms that engage in audits of listed companies (see page 33) to enhance effectiveness and transparency. Quality
control reviews from fiscal 2021 are based on the new system.
More information about the quality control review system and its implementation in fiscal 2021 is available in the Overview of
the Quality Control Review fiscal 2021.

Overview of the quality control review fiscal 2021 (in Japanese)
https://jicpa.or.jp/about/activity/self-regulatory/quality/

30

31

What We Do

What We Do

Self-Regulation Initiatives

Data: Regular Quality Control Reviews
The number of audit firms undergoing regular reviews each fiscal year and a summary of the fiscal 2021 regular review results
are presented below.
Audit Firms Subject to Regular Review(Firms)Audit firms subject to regular review (left scale)

Audit firms that underwent regular review (right scale)

300(Firms)

150

247

238

234

200

86

95

93

215

89

210

209
101

197

198

96

190

206

100

84

83

100

50

56

56

0

Measures Based on Quality Control Review Results
Based on the results of a quality control review, the Quality Control Committee may decide to impose one of three types ofmeasures on audit firms found to have inadequate quality control. These are warning, stern warning, and admonishment thatthe audit firm withdraw from all or part of its auditing work.
When an audit firm registered on the roster of audit firms that engage in audits of listed companies or the roster of associate
registered audit firms (see below) is admonished to withdraw from its auditing work based on the results of a quality control
review, a decision will also be made regarding the striking of the firm from such roster.
Monitoring by the Certified Public Accountants and Auditing Oversight Board
The Certified Public Accountants and Auditing Oversight Board (CPAAOB) is a government organ established within the
Financial Services Agency based on the Certified Public Accountants Act. The main operations of the CPAAOB are administering the CPA examinations, reviewing and examining audit firms, and investigations and deliberations related to disciplinary
sanctions for CPAs.
Based on the Certified Public Accountants Act, since fiscal 2005, the JICPA has reported on the status of quality control
reviews to the CPAAOB, and the CPAAOB monitors such reviews.

0

2012

2013

2014

2015

2016

2017

2018

2019

2020

Fiscal 2021 Regular Review Results
Result with extremely significant deficiencies

1 firmCarried over to the next fiscal year

Result with significant deficiencies

1 firm

2 firms

Regular reviews offirms conducted

56

Result without significant deficiencies

52 firms

firms

2

2021 (Fiscal year)

Registration System for Audit Firms that Engage in Audits of Listed Companies

To further strengthen the audit quality control systems of audit firms that have audit agreements with listed companies, the
JICPA introduced a registration system for such audit firms in 2007. The Listed Company Audit Firm Subcommittee, established within the Quality Control Committee, maintains an official roster of audit firms that engage in audits of listed companies
as well as a roster of associate registered audit firms* that is published on the JICPA website. Through quality control reviews,
the subcommittee makes decisions on allowing firms to be registered and related measures.
Audit firms that have been denied registration or been removed from these rosters may request a review by the Review
Board for Appropriate Procedures if a procedural violation or significant factual error could have affected the Quality Control
Committee’s decision.
The securities listing regulations of financial instrument exchanges in Japan require listed companies to engage auditors that areregistered on the roster of audit firms that engage in audits of listed companies or the roster of associate registered audit firms.
* Audit firms that aim to audit listed companies in the future may, depending on whether they have specific plans to form audit engagements with a listed company, apply forregistration on the roster of associate registered audit firms in accordance with the stipulations of the JICPA Constitution. If such application is approved, they are registeredon the roster of associate registered audit firms.

Roster of audit firms that engage in audits of listed companies and roster of associate registered audit firms (in Japanese)
http://tms.jicpa.or.jp/offios/pub/

32

Type of regular review conclusion

Description

Firms Registered on the Roster of Audit Firms That Engage in Audits of Listed Companies

Result without significant
deficiencies

Presented when a regular review finds that the conditions of both 1. and 2., below, are met.
1. No significant non-conformities with quality management standards were found in the audit firm’s quality control
system or its operation as of the end of the period covered by the review.
2. No significant non-conformities with the audit firm’s quality control system were found in the audit firm’s quality control
system or its operation during the period covered by the review.

Result with significant deficiencies

Presented when, as a result of a regular review, there is concern about the possibility of material non-compliance withprofessional standards or applicable laws and regulations in the audit firm’s quality control system or its operation

Result with extremely significant
deficiencies

Presented when, as a result of a regular review, there is concern about the possibility of extremely material
non-compliance with professional standards or applicable laws and regulations in the audit firm’s quality control systemor its operation(Firms)March 31, 2020

March 31, 2021

Audit firms that engage in audits of listed companies

118

127

Associate registered audit firms

18

13

Total

136

140

33

What We Do

What We Do

Continuing Professional Education System
1

Overview

3

To maintain and enhance the qualifications of CPAs as specialized professionals and ensure that they adapt to changes in theaudit environment, CPAs are required to take courses through the continuing professional education (CPE) system.
The CPE system was launched in 1998 on a voluntary basis, in which the JICPA provided support for members’ self-directedstudy. In 2002, CPE was made mandatory for members as a facet of the JICPA’s self-regulation and, since 2004, CPAs havebeen legally required to earn credits under the system by Article 28 of the Certified Public Accountants Act.
The CPE system comprises mainly a curriculum designed to help enhance professional ethics and specialized knowledge
and skills. CPAs must earn at least 120 credits (equivalent to 120 hours of education) every three fiscal years, including certain
mandatory training.

The percentage of CPAs who have fulfilled their CPE obligations in each fiscal year is shown below. In fiscal 2020, more than
98% completed their annual CPE obligations.
CPE Obligation Fulfillment Rate
（%）
100

97.6

Mandatory Training under the CPE System

Members who fail to meet their CPE obligations are subject to sanctions, which may include the publication of their names,
suspension of member privileges, the filing of requests for disciplinary action by the Financial Services Agency, and prohibition
from engaging in auditing.
Information on the training and education of individual CPAs (indicating either that their CPE obligations were fulfilled, not fulfilled, or exempted) is available through the CPA search system on the JICPA’s website (in Japanese).

CPA Search System (in Japanese)
https://www.jicpa.or.jp/cpa_search/ms.php

34

98.6

98.6

2016

2017

98.8

98.6

98.5

2019

2020 (Fiscal year)

0

2013

4

Implementation Status

CPE credits can be earned in several ways, including
attending group seminars, taking e-learning courses, andreading specified journal articles and submitting reports.
A breakdown of group seminars held in fiscal 2021 by
field covered is provided in the table at right.
Seminars cover topics aimed at honing professional andexpert knowledge in such areas as auditing and ethics. In
light of the COVID-19 pandemic, the JICPA has expanded
and reinforced e-learning and remote training to secureadequate training opportunities for members.

97.9

98.3

97

• Professional ethics training• Audit quality and fraud risk training (for CPAs engaged in statutory audits)• Tax-related training

2

CPE Obligation Fulfillment

Seminars held

Field

Ethics and related topics

Seminars held

2014

2015

2018

CPE System Review Project Team

Almost two decades have passed since CPE became mandatory for JICPA members. In December 2020, the JICPA established the CPE System Review Project Team to examine problems in the current system and its implementation.
The project team included outside experts. With their advice, the team examined the functioning of the overall system andprepared a report of its findings.
The report offers suggestions regarding the direction that the CPE system should work toward with the aim of solving problems with the current system. These suggestions are grouped under the perspectives of development related to the objectivesof CPE; system improvements to appropriately track training completion; implementing effective training; providing diverse andappealing training content; and utilizing an output approach.
Building on the project team’s report, the Continuing Professional Education Committee will study ways of operating thesystem to improve its effectiveness and the aspects of the system that need to be changed.

184

Accounting

94

Auditing (including fraud case study)

394

Taxes

249

Consulting

114

Organizational environments

81

Skills

51

Total

1,167

5

Annual Conference

Since 1979, the JICPA has held an annual conference in which CPAs, outside experts, and business professionals fromacross the country present their research. This conference is aimed at sharing knowledge, enhancing the capabilities of participants, and communicating with the public.
Normally, the annual conference is organized by one of the regional chapters. However, in fiscal 2021, to prevent the spreadof COVID-19, the event was held online. See page 15 for more details.

35

What We Do

What We Do

Building Confidence in CPAs
Panel Discussion 1

1

JICPA Online Conference

1

Purpose and Objective• Topic
Building capital markets with integrity and vigor—The roles of capital market actors and the future outlook

As lifespans in Japan grow longer, capital markets are becoming more important than ever since they serve as a means ofasset formation for the public and a way of supplying capital for growth to companies.
The JICPA Online Conference event served as an occasion for CPAs to reaffirm their mission in order to better fulfill theirsocial role in realizing orderly capital markets that have integrity and vigor. Aimed at encouraging dialogue and cooperation
between capital market actors, the conference’s theme was contributing to the formation of capital markets with integrity andvigor. With a wide range of capital market stakeholders participating as speakers and panelists, the JICPA Online Conference
was recorded in advance and then streamed online.
Though originally planned as an in-person event, to prevent the spread of COVID-19, the event was recorded on March 18,
2021 and made available to the public online on April 13 and 17.

• Speakers
Panelists
Toshitake Inoue (Deputy Director-General, Policy and Markets Bureau,
Financial Services Agency)
Masami Katakura (Chairwoman & CEO, Ernst & Young ShinNihon LLC)
Akira Kiyota (Director & Representative Executive Officer, Group CEO,Japan Exchange Group, Inc.)
Eiji Hayashida (Special Advisor, JFE Holdings, Inc.)
Masataka Miyazono (President, Government Pension Investment Fund)

Moderator
Masahiko Tezuka (Chairman and President, JICPA)

2

Program• SummaryKeynote Lecture• Topic
Governance reforms and initiatives to secure
confidence in accounting audits in light of theeffects of the COVID-19 pandemic• Speaker
Tomoyuki Furusawa (Director-General, Policy andMarkets Bureau, Financial Services Agency)• Summary
The lecture began with a discussion of the measures
implemented by the Networking Group on Corporate
Year-End Closing of Accounts and Auditing to facilitate
the corporate closing of accounts and auditing during
the pandemic. Next, Mr. Furusawa discussed corporate
governance reforms, including the functions of boards of
directors, securing diversity among key corporate personnel, the advance of sustainability initiatives, and governanceinitiatives to increase confidence in auditing. On the topic of increasing confidence in accounting audits, he explained
efforts to inspect individual measures while maintaining an overall view of the current three-tier structure—the hard law(the Certified Public Accountants Act), the Auditing Standards and Standard on Quality Control for Audits, and the softlaw (the Audit Firm Governance Code). Finally, regarding the development of international human resources, as theactivities of those involved in corporate accounting and auditing in Japan are growing increasingly international, Mr.
Furusawa spoke about how the conference would be a venue for open and inclusive discussions not confined merely
to raising the quality of audit firms, but serving the public interest in capital markets as a whole, communicating the rolethat audit firms must play in developing international human resources on a variety of fronts and in serving as the foundation for their activities.

The participants, as actors in capital markets, discussed issues facing Japan as well as initiatives and challenges in
specific industries. Topics covered included the way that capital markets should aim to grow and the functions soughtfrom them; evaluations of the revisions to Japan’s Corporate Governance Code and how it should evolve going forward; multi-stakeholder approaches to corporate disclosure; and leveraging the enhancement of non-financial
information disclosure to improve corporate value. Finally, they discussed current initiatives for preventing corporate
accounting fraud and what such initiatives should look like going forward in terms of realizing capital markets marked
by integrity and vigor. Discussing the roles expected of CPAs and audit firms now and going forward, the participants
talked about the extreme importance of providing confidence to capital markets by fulfilling duties of accountability
through auditing.

Panel Discussion 2• Topic
Developing Accounting Professionals and the Necessary Skills—Expectations for CPAs
• Speakers
Panelists
Takaaki Ino (CEO, PricewaterhouseCoopers Aarata LLC)
Mari Kobayashi (Professor, Graduate School of Political Science, Waseda
University)
Hisakatsu Sakurai (Chairperson, Certified Public Accountants andAuditing Oversight Board)
Kazuyuki Masu (Member of the Board, Executive Vice President and
CFO, Mitsubishi Corporation)

Moderator
Giichi Yanagisawa (Deputy President, JICPA)• Summary
Economic globalization and the rapid advance of digital technologies are causing major changes in the economic environment. In this context, the panel discussed expectations for CPAs in capital markets, as well as the skills and qualities they will need going forward as CPAs increasingly work at not only audit firms, but ordinary companies, investment
firms, standard-setting organizations, and in a variety of other fields. The panel also discussed the growing importancefor CPAs of not only knowledge and skills, but maintaining sophisticated professional ethics in order to improve audit
quality, as well as what kind of measures can be effective for ensuring such professional ethics.

36

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What We Do

What We Do

Building Confidence in CPAs

2

Initiatives in Auditing and Accounting

CPA audits are an important part of the infrastructure of capital markets. Accordingly, to meet the expectations of stakeholders and to maintain and improve confidence in audits, the JICPA coordinates with relevant government agencies and relatedorganizations to implement a variety of initiatives. We also provide information as needed to facilitate the understanding of new
accounting standards and their smooth implementation.

1

Initiatives Related to the Introduction of the Key Audit Matters

Initiatives Related to Application of Accounting Standard and Guidance for Revenue Recognition

In March 2018, the Accounting Standards Board of Japan (ASBJ) issued the ASBJ Statement No. 29, Accounting Standard
for Revenue Recognition, and Guidance No. 30, Implementation Guidance on Accounting Standard for Revenue Recognition(hereinafter collectively the “Revenue Standard”), which constitute a comprehensive accounting standard for revenue recognition in Japan. Application of this standard is mandatory for fiscal years beginning on or after April 1, 2021.
The Revenue Standard incorporates basically all the provisions of IFRS 15, Revenue from Contracts with Customers. As
such, it will be important to consider its application to ordinary corporate transactions based on a full understanding of IFRS
15. As the application of the Revenue Standard will have a significant impact on the work of CPAs, the JICPA has not only
contributed to its development, but implemented initiatives to promote understanding of the standard among its members.
1. Contribution to the Standard’s Development
In 2015, the ASBJ began preliminary development for an accounting standard to recognize revenue in Japan based on IFRS
15. Since the start of this process, the JICPA has sought to contribute to the development of a high-quality standard by sending experts to sit on a revenue recognition expert committee and contributing opinions on reports of issues regarding application and public drafts.
Since the Revenue Standard was issued in March 2018, we have continued working to promote the development of more
appropriate accounting standards in light of the Revenue Standard’s practical application.
2. Training
To inform JICPA members of the Revenue Standard, during our August 2020 nationwide summer training, we invited the CPA
Profession System Committee’s Shinji Hatano, Chair of the Expert Committee on Revenue Recognition Issues, and Masahiro
Kawanishi, Chair of the Expert Committee on Revenue Recognition Response, to speak about the ASBJ Statement No. 29,
Accounting Standard for Revenue Recognition, and points to consider in its application. They covered general points related
to accounting treatment, the standard’s effect on financial statements and notes, and related considerations to keep in mind.
3. Publication of Q&A on Basic Issues of Revenue Recognition
To support the smooth adoption of the
Revenue Standard, from July to October
Q&A
2020, the JICPA published a series of Q&A論点 1｜ 約束した財又はサービスが別個のものか否かの判断
style guides to basic issues of revenue recognition, explaining 16 fundamental questions
Q
related to the application of the Revenue
Standard with graphics and examples.
Furthermore, on March 31, 2021, weA
published a follow-up to this series focusedon issues pertaining to specific industries.
The whole series and the follow-up are
structured so that readers can benefit fromreading just about a specific issue or industry, without having to read the entire series. We have made these resources available to the public to promote understandingof the Revenue Standard more broadly, beyond CPAs.
The Japanese Institute ofCertified Public Accountants

収益認識の基本論点

Q&A 収益認識の基本論点

論点 1｜約束した財又はサービスが別個のものか否かの判断■ 会計基準等の定め（会計基準第32項、第34項、第127項から第131項、適用指針第6項）

The Japanese Institute ofCertified Public Accountants

Q&A 収益認識の基本論点

論点 1｜約束した財又はサービスが別個のものか否かの判断■ 事例 据付け作業を伴う製品の販売収益基準では、約束した財又はサービスが別個のものか否かの判断を図表1（会計基準第34項及び適用指針第6項を

A社は、製品を1,250千円で顧客に販売する契約を締結してい基に作成）のように定めています。

る。契約書において、A社は製品の据付け作業の実施にも合意し

図表1 約束した財又はサービスが別個のものか否かの判断ているが、製品の本体価格及び据付け作業の対価の内訳については契約書上では明示されていない。独立販売価格は、製品❶約束した財又はサービスが以下のいずれかを満たし、別個のものとなる可能性があるか。

1,200千円及び据付け作業50千円である。

（1）
財又はサービスから単独で顧客が便益を享受することができるか。

（2）
財又はサービスと顧客が容易に利用できる他の資源を組み合わせて顧客が便益を享受できるか。

A社

いいえ

可能性がある（P.2（1）他の財又はサービスとともにインプットとして使用し、結合後のアウトプットに

収益認識の会計処理を行うことになりますか。

（ 1,
20
（ 50
0千
千円
円）
）

業

ビスと区分して識別できない。

の財又はサービスの提供を約束する場合、どのような単位で作できるため、製品の販売と据付け作業の提供は別個のものとなる

売

別でき、契約の観点において別個のものとなるか。

例えば、以下の場合においては、企業はその財又はサービスを他の財又はサーけ契約に含まれる場合があります。顧客との契約において、複数的な据付け作業）と組み合わせて、製品の便益を享受することが販

顧客は容易に利用できる他の資源（他の企業でも提供できる標準❷財又はサービスを顧客に移転する約束が契約に含まれる他の約束と区分して識付据付け作業が他の企業も提供できる標準的なものである場合製品の販売とそれに付随するサービスの提供が1つの顧客との

の

据

■ケース1

はい

品

1

The Japanese Institute ofCertified Public Accountants

製

In accordance with the Business Accounting Council’s July 5, 2018 “Opinion on the Revision of the Audit Standards,” Key
Audit Matters (KAMs) have been introduced to auditing in Japan. This marks a significant shift from the standard wording of
conventional audit reports to audit reports that include more specific information on the individual company audited.
KAMs are matters that auditors deemed especially important in their audits of an organization’s financial statements in a
specific year, selected from the various things that they discussed with the corporate auditors and other parties during theaudit process. Including the KAMs in audit reports is expected to increase the transparency of financial statement audits andincrease the value of the information in audit reports. The KAMs are also expected to prompt the further enhancement of communication and discussions with corporate auditors and executives, helping to reinforce corporate governance and realize
more effective audits.
The JICPA has worked to promote awareness of and readiness for the application of the KAMs. Measures to this end include
publishing and updating related Chairman & President Statements, reports of the Auditing Standards Committee, the Audit
Report Q&A, and letters about the application of the KAMs, as well as holding the Symposium with Capital Market Actors.
The inclusion of KAMs applies, in principle, to all audits of listed companies under the Financial Instruments and Exchange
Act for fiscal years ended March 2021 and later. Before this, early adoption began with audits for the year ended March 2020.
Due in part to the impact of the COVID-19 pandemic, the KAMs were adopted early in the audits of only 48 companies, andthis group was skewed toward certain industries. Nevertheless, the early adopters provided many useful examples for thegeneral application of the KAMs. As such, the JICPA published a report analyzing examples of early adoption, including theresults of a survey of those involved, as part of a proactive efforts to facilitate the smooth general adoption of the KAMs in thefollowing year. Other efforts to this end included seminars on examples of KAM early adoption. Selections from these seminars
were published on our website to promote awareness broadly among our members as well as corporate auditors, investors,
and other capital market actors.
Given the challenging economic environment created by the COVID-19 pandemic, providing useful information to capital
markets is more important than ever from the perspective of contributing to the public interest. The KAMs, in coordination withcompanies’ initiatives in corporate governance and disclosure frameworks, will help reinforce corporate risk management. The
JICPA will therefore continue to implement necessary initiatives to advance their smooth implementation and establishment.

3

顧客

図表1の❶
（2）
）
。
また、
据付け作業の提供は標準的なもので製品の機能性に著しい影響を与えることはなく、重要な統合サービスの提供や著しい修正及び顧客仕様

統合する重要なサービスを提供している。

への変更を行うものではない。
また、製品と据付け作業は互いに著しい影響を与えないため、相互依存性及び相互関連（2）他の財又はサービスを著しく修正するか顧客仕様のものとする。

（3）相互依存性又は相互関連性が高く、それぞれが互いに著しく影響を受ける。

性は高くない。
したがって、製品の販売と据付け作業は契約の観点から別個のものとなり、それぞれ独立した履行義務として識別されることになる（P.2 図表1の❷
（1）
〜
（3）
）
。
この場合、
製品の販売1,200千円については製品の支配が顧客

はい

いいえ

に移転する一時点で収益認識され、据付け作業50千円については作業完了時に（又は作業期間にわたって）収益認識されることになる。

顧客に約束した財又はサービスが①別個のものとなる可能性

約束した財又はサービスは別個のもの（別個の履複数の財又はサービスを単一の財又はサービス

行義務）
である。

（単一の履行義務）
とする。

■ケース2

据付け作業が製品に大幅な修正や顧客仕様への変更を加える複雑なものである場合

据付け作業が、契約上、顧客向けに製品への大幅な修正や顧客仕様への変更を行う複雑なものである場合、製品の販があり、②契約の観点からも別個のものとなる場合、他とは区別

売と据付け作業の提供は契約の観点から別個のものではなく（P.2

して別個の財又はサービス（別個の履行義務）として会計処理し図表1の❷（2））、単一の履行義務となる。
この場

合、単一の履行義務1,250千円について、一定の期間にわたり充足される履行義務か、一時点で充足される履行義務ます。①又は②に該当しない場合、複数の財又はサービスを単重要性等に関する代替的な取扱い

一の財又はサービス（単一の履行義務）として会計処理するこかを検討することになる。

顧客との契約の観点で重要性が乏しい場合の取扱い

財又はサービスが別個のものか否かの判断について、重要性等に関する代替的な取扱いが設けられています。約束した財又はサービスが、顧客との契約の観点で重要性が乏しい場合、その約束が履行義務であるか否かの評価を省略することができます（適用指針第93項及び第166項）。

とになります。なお、代替的な取扱いとして、顧客との契約において約束した財又はサービスの重要性が乏しい場合、その財又2

Initiatives in Setting Standards for Ethics and Auditing

The Japanese Institute ofCertified Public Accountants

はサービスが別個のものか否かの評価を行わないことも認められます。

業務本部 企業会計グループ

102-8264 東京都千代田区九段南4-4-1
TEL:03-3515-1128

FAX:03-5226-3355

https://jicpa.or.jp

1

Processes of setting international ethics and audit standards have been criticized as being skewed unduly toward the perspective of CPAs. Against this backdrop, bodies that set ethics and audit standards are implementing governance reforms.
In light of this, the JICPA has begun to publish summaries of the proceedings of the Ethics Standards Committee and Audit
Standards Committee Expert Advisory Council in order to improve standard setting processes related to the Code of Ethics,
reports of the Auditing Standards Committee, and other related matters.
We also plan to establish an Ethics Standards Committee Expert Advisory Council within 2021.

Standard Setting Initiatives (Ethics and Auditing) (in Japanese)
https://jicpa.or.jp/about/activity/yuushikisya/

38

2

3

4. Research Paper
With the application of the Revenue Standard, the Accounting Standard for Construction Contracts and the Guidance on
Accounting Standard for Construction Contracts were abolished. The JICPA prepared and published a research paper layingout considerations for audits of the financial statements to which the Revenue Standard is applied for companies in the construction industry and the made-to-order software industry, which frequently applied the previous standard and guidance.

39

What We Do

What We Do

Meeting Social Needs
1

Responding to IPO-Related Needs

1

Overview

Interview with Deputy President Giichi Yanagisawa

In 2020, the number of companies that went public with initial public offerings (IPOs) in Japan reached 102 (including 10 on
the TOKYO PRO Market), surpassing 100 for the first time in 13 years. The increase in IPOs from 2019, despite the impact of
the COVID-19 pandemic, speaks to the strong desire to IPO among companies.
Accountability is indispensable for companies aiming to IPO and for their sound growth afterward. Financial statements
audits are, of course, essential to ensuring reliability in the information that enables accountability. However, in recent years,
companies seeking to IPO have increasingly had difficulties in
IPOs in Japan
forming engagements with auditors, due in part to a mis(IPOs)
match between their understanding about auditing and that
121
of audit firms (see Q2 on page 41).
11
To prevent such mismatches from hindering the IPOs of98
96 98 94 102
1
25
3
10
3
new, growing companies, the Financial Services Agency
86
8 4
7
80 6 29
14
3
established the Liaison Council on the Appointment of Audit
14
2 3 116
18
14
Firms (External Auditors) for Initial Public Offering (IPO) Audits in
58 11
49
December 2019, aiming to create an environment where com49
48 1 42
61
63
panies can engage with auditors as needed during the growth
37 2 2 1249 63 63
44
9
54
1 14
process. Through this council, audit firms and other capital
19 19 22 16
29market constituents as well as executives of companies aiming
23
1
23
10
11
8
12
to IPO shared their understanding of related issues and con20 1764
13 19 12 12 15
13 7
9
7 12
6
6
sidered initiatives by each participant for improvement.
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (Year)
Based on these efforts, the JICPA formulated an action
TSE
first and second sections
Mothers
JASDAQ
Herculesplan for realizing such initiatives and in July 2020 formed theTOKYO PRO
Other markets
IPO Audit Liaison Council, a cross-organizational projectNote: Includes new listings on the TOKYO PRO Market; excludes companies listed
team that considers specific measures in this area.
on other markets after being listed on TOKYO PRO Market and REITs

2

The JICPA’s IPO-Related Measures *For details, please refer to the interview on page 41.

(1) List of Practitioners Offering IPO Support(2) List of Small- and Medium-Sized Audits Firms Offering
Pre-IPO Audits(3) Sharing of the accumulated expertise and know-how of
big and second-tier audit firms and reinforcement of
resources for contacting such firms

3(4) Revision and promotion of the IPO Preparation
Guidebook(5) Utilizing professional accountants in business and outside
officers (directors and corporate auditors) at companies
aiming to IPO

IPO Accounting and Auditing ForumOn November 30, 2020, the JICPA held an online IPO accounting and auditing forumwith the theme of marshaling all CPAs to help support startups. This event drew approximately 700 participants, including CPAs and IPO market constituents (individuals fromstartups, securities companies (underwriters), venture capital, and stock exchanges).
Panel discussion with market constituents
Following a greeting from JICPA president Masahiko Tezuka, in the first part of theevent, Kaori Nishiyama, Director of the Disclosure Enforcement Office at the Financial
Services Agency, spoke about the report of the Liaison Council on the Appointment of Audit Firms (External Auditors) for Initial
Public Offering (IPO) Audits. This was followed by a panel discussion on the topic of the current status of IPOs and recommendations for growth, with JICPA deputy president Kanako Ogura serving as moderator, and market constituents Keiji
Kuramoto (executive director, IPO Department, Nomura Securities Co., Ltd.), Shinzo Nakano (Chairman, Japan Venture
Capital Association), and Masayuki Yokota (executive director, New Listings, Tokyo Stock Exchange, Inc.) as panelists.
In the second part, JICPA deputy president Giichi Yanagisawa spoke about the JICPA’s IPO-related initiatives, and Masaru
Miura, head of the IPO-related engagement support project team at the Tokyo Chapter of the JICPA, spoke about the JICPA’s
measures from the viewpoint of the regional offices of the JICPA. Lastly, Executive Board member Naruhito Minami (in chargeof support for small and medium practices) moderated a panel discussion about audit firms’ initiatives to support IPOs, withrepresentatives from big, second-tier, and medium and small audit firms as panelists.
40

Giichi Yanagisawa
Deputy President
JICPA

Q1

What are your thoughts on the expectations for CPAs from IPO market constituents?

Nurturing and developing startups that offer products andservices based on groundbreaking ideas and technologies
will be indispensable to the growth of Japan’s economy
going forward. IPOs are an effective way for startups toraise funds and make a major leap forward in growth.
CPAs support companies aiming to IPO, not only byproviding assurance to their financial data as auditors, but by
supporting the establishment of internal control, corporate
governance, and other internal systems through auditing.

Q2

Furthermore, in addition to serving as auditors, CPAs in
public practice around the country help startups as tax and
IPO-related advisors. Recently, a growing number of CPAs
in business have even been helping startups grow, serving
as CFO or heading the pre-listing team. Many CPAs also
serve as corporate auditors or outside directors, and thenumber of female CPAs in such positions has been growing
in recent years. Across all these roles, it is clear that expectations for CPAs are rising in this area.

Difficulty in forming audit agreements with companies working toward an IPO has been a
topic of growing concern. What are your thoughts about this?

Under Japan’s current Auditing Standards, a company must
develop its internal control and other systems to a certain
level (as illustrated by the items listed below) before accepting an audit engagement. However, some companies thinkthat they can be audited before they have such systems
fully set up. They may be hoping that undergoing an audit

will help them move forward with improving their internal
controls. This results in a mismatch in understanding about
the prerequisites for accepting an audit. Effective and thorough communication between auditors and companies toresolve this mismatch before engagement is ultimately thefastest path to an IPO.

Excerpt from the JICPA’s IPO Preparation Guidebook
To be audited, companies must address at minimum the following issues.
[...]• Establish a revenue base and business model• Select and consult with an audit firm, advisor, and lead managing
underwriter• Carry out a short review and confirm and address issues identified therein• Set up a governance system based on the stipulations of the Companies
Act and Corporate Governance Code• Recruit human resources (CFO, accounting/finance, internal auditing, andother internal management divisions)• Implement systematic management (set up medium-term management
plans and annual budgets and implement performance management
based on monthly management of accounts and analysis of budgets versus results)• Set up internal rules, including those regarding the separation of duties
and decision making• Set up internal management systems, including information systeminfrastructure• Set up accounting policies in line with the business model and substanceof the company• Set up a disclosure system, including non-financial information• Reorganize affiliate companies

41

What We Do

What We Do

Meeting Social Needs

Q3

What initiatives are being advanced by the JICPA in terms of IPO support?

Again, CPAs, are involved in a wide range of IPO-related
matters, from professional accountants in public practicethat serve in advisory roles during preparation for listing toaudit firms involved in the auditing of financial statements

1

Figure 1.
P ractitioners (CPAs) on the list: 327
Small- and medium-sized audit firms on the list: 64
Hokkaido Chapter ( 16 3)
Hokuriku Chapter ( 12)
Keiji Chapter ( 16 4)
Kinki Chapter ( 28 6)
Hyogo Chapter ( 17)

Tohoku Chapter ( 25)Tokyo Chapter ( 36 40)
Saitama Chapter ( 9)Chiba Chapter ( 22 1)
Kanagawa Chapter ( 27 1)

Chugoku Chapter ( 8)
Hokubu Kyushu Chapter ( 27 1)

Tokai Chapter ( 63 6)

4

The IPO Preparation Guidebook

Preparing for an IPO requires undergoing an accounting
audit, but many companies do not fully understand theaccounting standards nor what an audit entails. The JICPA
has prepared a guidebook to explain. The guidebook focuses on the basic issues to be resolved in the preparatory
stage before an IPO, particularly those related to systems offinancial reporting, and lays out how to prepare for a financial statement audit. It also covers a typical schedule ofsteps leading up to an IPO, items to check, the importanceof engaging with audit firms and advisors for IPO support

5

Furthermore, the large firms have a great deal of expertiseand know-how built up through long track records of auditing companies before they went public. To maximize thesharing of this expertise and know-how not just within firms,
but also with other CPAs, the JICPA holds regular training
sessions led by CPAs from large firms who are highly knowledgeable in this area. Through such ongoing efforts, we
are working to widen the range of CPAs who can perform
pre-IPO audits.

early on, and the conclusion of an audit engagement. The
guidebook is available for download on the JICPA’s website.
I hope that underwriters and the executives of companies
will use it to enhance their understanding of the pre-IPO
audit process and the applicable accounting standards.
The IPO Preparation Guidebook: Before Undergoingan Accounting Audit (in Japanese)
https://jicpa.or.jp/business/ipokansa/guidebook.html

Outside Director and Corporate Auditor Candidate Introduction System

Shikoku Chapter ( 10)
Okinawa Chapter ( 5)Minami-Kyushu Chapter ( 6 2)

listed companies are fully capable of auditing a company
working toward an IPO.
Small- and medium-sized audit firms registered in the
JICPA’s registration system for listed company audit firms
are regularly subject to quality control reviews by the JICPA
to ensure their systems of quality control, and many firms
have specific areas of expertise or networks that can further
enhance their audits of companies in certain industries.
We have recently published a list of small- and mediumsized audit firms that have expressed interest in a pre-IPO
audit engagement. The list is expected to be used by companies and underwriters. This list is effectively a subset ofthe firms in the JICPA’s registration system for listed company audit firms.

List of Small- and Medium-Sized Audits Firms that
Audit Companies Seeking to IPO (in Japanese)
https://jicpa.or.jp/business/ipokansa/list.html

Sharing the Expertise of Big and Second-Tier Audit Firms

Of course, given their capacity, big and second-tier audit
firms are crucial to carrying out auditing. Some IPOs can bequite large, raising billions of yen, or involve companies withnumerous overseas locations; such IPOs are best audited
42

List of Practitioners Offering IPO Support(in Japanese)
https://jicpa.or.jp/business/ipokansa/indivisual.html

List of Small- and Medium-Sized Audits Firms Offering Pre-IPO Auditing

Japan’s big audit firms audit about 80% of companies thatgo public. Combined with the second-tier firms, the market
share of IPO audits by large firms is more than 90%. As thenumber of companies seeking to IPO grows, big and second-tier audit firms simply do not have the resources tocarry out all the audits requested. This is, in part, due tomismatches in the understanding of audits between suchcompanies and audit firms. As such, there are growing
expectations for small- and medium-sized audit firms tostep up to audit companies aiming to IPO.
Currently, there are around 3,800 listed companies inJapan. Of these, more than 1,200 are audited by secondtier or small- and medium-sized audit firms, with the lattergroup accounting for the audits of almost 700 companies.
Regardless of the size of audit firms, audits are performedin accordance with a single set of auditing standards andconform to a certain level of audit quality. Being carried out
by a small- or medium-sized firm does not entail a lower
audit quality. Moreover, there are no specific auditing standards for IPOs, so regardless of their size, firms that audit

3

IPO-Related Initiatives at Big and Second-Tier Audit
Firms (in Japanese)
https://jicpa.or.jp/business/ipokansa/auditingfirm.html

List of Practitioners Offering IPO Support

Many startups are organizationally underdeveloped and, inparticular, do not always have the human resources theyneed to develop their administrative divisions and systems.
CPAs, with their abundant experience with such businessventures, can leverage their insight to work alongside theexecutives of startups, offering guidance to solve issues in
the lead up to an IPO and providing support for the establishment of administrative systems.
However, it can be difficult to find a CPA who will take on
this role. The JICPA has therefore created a list of practitioners who offer IPO support to help executives locate
CPAs that do such work in their respective regions. This list
is available on our website and currently includes approximately 330 CPAs across Japan (Figure 1). The list is divided
by regional chapter and offers information about the CPAs’
career histories and approach to IPO-related work.

2

and professional accountants in business.
Accordingly, the JICPA is implementing support measures
for startups in various growth stages under the banner ofbringing the full strengths of Japan’s CPAs to supporting IPOs.

expertise and know-how; and revising organizational
structures and allocating human resources accordingly.
The JICPA’s website includes a portal page with contact
information about IPO support at the big and second-tieraudit firms.

by large audit firms. Accordingly, big and second-tier firms
are also advancing efforts to ensure the quality of pre-IPO
audits by securing and properly allocating the necessary
resources; building, gathering, and effectively utilizing

The securities listing regulations of the Tokyo Stock
Exchange (TSE) require listed companies to secure at least
one independent officer—an outside director or an outside
corporate auditor who is independent of management. The
TSE’s Corporate Governance Code requires companies tohave at least two independent outside directors, and theCompanies Act requires that at least half of the corporate
auditors of large companies be outside corporate auditors.
Securing outside officers is thus a necessary hurdle thatcompanies seeking to IPO must clear and crucial to corporate growth. I think having a CPA serve as an outside officer
can be beneficial in many ways, not limited to improving acompany’s governance. I am sure that having a CPA toassist with the auditing process can also help to resolve

Q4

mismatches in understanding between companies’ boards
and auditors. Today, the majority of listed companies have a
CPA as an outside director or corporate auditor.
In contrast, many startups and similar companies do nothave robust relationships with CPAs and do not know
where to start their search for outside officers. To address
this need, we have launched a system to match companies
with CPAs as outside officer candidates, which I hope will
be of great use.
Outside Officer Candidate CPA Introduction System(in Japanese)
https://jicpa.or.jp/business/independent-directors/

Please tell us about the JICPA’s initiatives in this area going forward.

The star of an IPO is ultimately the company’s business modeland growth, so until now, auditing has tended to take a backseat. However, going forward, I think it will be important toactively promote the JICPA’s IPO support measures to market
participants so that they can fully take advantage of them tobetter contribute to the growth of companies and capital
markets. We have prepared a brochure that lays our IPO
support measures, which I invite anyone interested to check.
Furthermore, to encourage JICPA members to proactively
engage in IPO-related work, we will continue to enhance
training aimed at improving the knowledge and skills of CPAs
in the area of supporting IPOs. Such efforts include IPOrelated skill development seminars held by the Tokyo Chapter

and a training series in cooperation with big audit firms.
We recently held an online IPO accounting and auditing
forum, which we plan to hold regularly going forward as we monitor
the involvement of practitioners andsmall- and medium-sized audit firms
in this area. Furthermore, we plan tovisit underwriters that manage IPOs
to explain our initiatives directly. I
hope to create opportunities for
dialogue between CPAs involved in
IPOs and underwriters and othercapital market constituents.
43

What We Do

What We Do

Meeting Social Needs

2

Tax System Reform Requests and Recommendations

1

Tax System Opinions and Requests

3

The JICPA prepares and publishes an annual document titled “Tax System Opinions and Requests,” detailing its opinions anddesired actions mainly regarding the current tax system.
In 2020, this document included 9 opinions and requests regarding five fields in the category “Policy Requests,” related tostructural problems in Japan’s tax system, as well as 72 opinions and requests in the category “Individual Requests,” related
to specific tax system rules, for a total of 81 opinions and requests.

Policy Requests
1. C alculation of taxable income and adjustments to corporate
accounting under the Corporation Tax Act• Amendment to the Corporation Tax Act in line with corporate accounting standards, while keeping in mind the objectives of such calculation• Increased flexibility in permitted methods of confirmation of intent,
including relaxation of filing requirements to formally fix obligations
and loss accounting requirements, for listed companies and otherorganizations with reliable tax compliance measures
2. Tax system for supporting business succession• Revisions to the special requirements of the succession planning tax
system in light of their applications

2

3. Preferential tax systems for venture capital investment• Further enhancing the preferential tax system to encourage venture
capital investment
4. Reduced consumption tax rate system and invoice system• Preventing new exempted consumption tax• Design of an invoice system that will not be confusing to adopt forbusiness operators• Establish safe harbor rules for cases when invoices are found to be
fraudulent or invalid
5. The tax payment environment, etc.
• Organizing and unifying numbers used in tax procedures• Ensuring adequate discussion and awareness of tax system revisions

Recommendations Regarding Public Spending

The Japanese government implemented a variety of emergency economic measures to address the COVID-19 pandemic. In
addition to measures related directly to preventing the spread of infection and providing medical care, these measures sought
to address such issues as maintaining employment and supporting business continuity. One such measure was the Small andMedium Enterprise Agency’s Subsidy Program for Sustaining Businesses, aimed at supporting small and medium enterprises
facing difficulties regarding business continuity.
However, upon its implementation, the Subsidy Program for Sustaining Businesses generated public concerns regarding its
transparency and efficiency. In response, the Small and Medium Enterprise Agency conducted an interim examination, andthe Ministry of Economy, Trade and Industry set up the Spending Review Meeting to review the procedures for executing contracts and issuing subsidies, etc., in the use of the ministry’s budget. The result was a report issued in January 2021.
The JICPA sees the public concerns over the Subsidy Program for Sustaining Businesses’ transparency and efficiency as
partly due to the program’s particular urgency, complexity, and scale, but also as a reflection of concern over public spending
generally. Accordingly, the JICPA recommended third-party experts to provide advice regarding the interim examination of the
program and established a project team to provide support for said experts and study public spending generally. The project
team published its report on March 25, 2021.
The report examined the results of the interim examination of the Subsidy Program for Sustaining Businesses and the findings of the Spending Review Meeting to identify underlying causes and derivative issues. It further divided these into issues inpublic spending methods and issues in public spending governance, examining each in detail and indicating approaches foraddressing them. Finally, based on these approaches, it provided recommendations regarding public spending systems. We
hope that this report will be of use to CPAs involved in public spending governance, including the auditing of national orregional public entities, and that it will contribute to discussions about revisions to public spending methods and related governance practices and systems.
Report from the project team on public spending
Public spending issues and approaches—improving efficiency with an emphasis on value for money and adopting a Japaneseversion of gateway reviews (in Japanese)
https://jicpa.or.jp/specialized_field/20210407efa.html

Recommendations Regarding the Tax System

In addition to the “Tax System Opinions and Requests,” since 2016, we have worked to identify problems in Japan’s changing
social conditions, both preparing and publishing recommendations on the tax system as a policy tool to address these issues.
In 2020, we published the following seven recommendations in three areas.

Report Summary
I.	Overview of and issues with the Subsidy Program for Sustaining
Businesses

IV.	Issues regarding public spending governance
V.	Recommendations regarding public spending systems

II.	Overview of systems of public spending
I

Strengthening the International
Competitiveness of Companies and ofJapan as a Place of Business
1. B uild an effective tax system for thedigital economy
2. Introduce a new tax system for educational funding to produce more entrepreneurs and build a tax system toencourage the growth of startups

II

Responding to Changes in
Socioeconomic Structures,
Demographic Graying and Other Issues

1. Make it easy for anyone to file a tax
return in line with the diversification ofwork styles
2. Consider income calculation methods
in line with changes in work styles anddiversifying life styles and career paths

III

Correcting Uneven Asset Distribution
between Generations

III.	Issues regarding public spending methods

1. Revise inheritance and gift tax burdens to encourage the smooth transfer of assets to younger generations
2. Include considerations of assets (a“stock approach”) in the taxation of
public pensions

3. Consider introducing household-leveltaxation as a way of addressing the lowbirth rate and promoting women’s
workforce participation
Note: The JICPA also published “Requests Related to Recovery-Oriented Tax Systems After the Lifting of the State of Emergency (Supplement to Tax System Opinions andRequests),” at the same time as the above requests and recommendations. Please refer to page 14 for details.

44

45

What We Do

What We Do

Securing and Developing Human Resources1

Maintain and improve the qualifications of CPAs who utilize their skills as outside directors andcorporate auditors, as in-house accountants, or in public sector accounting, and support their work

As Japan’s economy grows more sophisticated, complex, and international, the number of CPAs serving as outside directors
and corporate auditors or as in-house accountants is steadily growing. In fact, a total of 2,092 CPAs serve as external directors or external corporate auditors at 2,269 companies, or approximately 60% of all listed companies (JICPA survey of securities reports filed for the April 2019–March 2020 fiscal year). To encourage the expansion of the sphere of CPA activity and thesmooth, efficient movement of human resources, the JICPA has set up networks for these types of CPAs. To maintain andimprove their skills, we are holding training and other events for CPAs registered with these networks.
In August 2020, the JICPA launched the Outside Officer Candidate Introduction System to help connect companies considering the appointment of a CPA as an outside director or corporate auditor with CPAs interested in doing such work.
In addition, a growing number of CPAs are working at the front lines of national and regional public entities facing mounting
challenges related to rising social security costs and aging public facilities and infrastructure. The JICPA has offered seminars
for CPAs working in public sector accounting or serving on regional assemblies, in regional public entities, or as employees of
the central government.

2

Develop professionals who can express professional opinions internationally and provide
them opportunities and support to do so

The JICPA and its members provide opinions to a wide range of international institutions, mainly in the areas of accounting
and auditing. For example, the International Federation of Accountants (IFAC) has established independent standard-settingboards in the four areas of auditing and assurance, ethics, public sector accounting, and education. These boards, in which
many individuals from Japan take part, represent accounting professionals on the global stage and provide suggestions andother information related to such issues as setting international standards for accounting professionals, in addition to maintaining and improving accounting professionals’ qualifications and the quality of their work.
Japanese CPAs Serving in Major International Institutions (As of March 31, 2021)
Organization, etc.

Nominating Committee

Organization, etc.

Position

Name

Confederation of Asian and Pacific Accountants (CAPA)
MemberAiko Sekine

MemberKohei Kan

Technical Advisor

Hisashi SatoInternational Auditing and AssuranceStandards Board (IAASB)Member

Sachiko Kai

Technical Advisor

Kohei YoshimuraInternational Ethics Standards Board
for Accountants (IESBA)

MemberHironori Fukukawa*

Associate Member

Hisashi Sato

Technical Advisor

Masahiro Yamada

Associate Member

Tatsuya Arai

International Public Sector AccountingStandards Board (IPSASB)

MemberMari Kobayashi*Technical Advisor

Takeo Fukiya

Hisashi Sato

Yoshinori Kawamura

Board

MemberMemberTechnical Advisor

Tatsuya Arai

MemberNaofumi Higuchi

Education Directors Working Group

Shintaro Goto

Technical Advisor

Hironori Okada

Tax Directors Working Group

Takae Akatsuka

MemberIchiro Waki

Column• Date: Thursday, January 21, 2021
• Format: Online seminar• Speakers
Panelists
Masahiro Sonoda (Director, Public Accounting Office, Legal Division, Budget
Bureau, Ministry of Finance; CPA)
Toshiko Takeya (Upper House member; CPA)
Tomohiro Mori (Mayor, Yokkaichi City; CPA)
Mikito Yoshida (Former Iwaki City Council member; CPA)
Coordinator
Masaya Kawaguchi (Researcher in charge of public sector accounting, JICPA; CPA)
• Program: Focusing on the topic of CPAs in government, the panel invited CPAs working in national and regional government to speak about their experience and discuss how the skills of a CPA can be effectively applied in the public sector.

Name

IFAC Boards and Committees

Board

Public Accounting Council Seminar: “CPAs in Government”

PositionInternational Panel of Accountancy
Education (IPAE)
Small and Medium Practices Advisory
Group (SMP AG)
Professional Accountants in Business
Advisory Group (PAIB AG)

Board

CouncilMemberMasahiko Tezuka

Framework Panel

MemberYoichi Mori

Satsuki Miyahara

Technical Advisor

Mamoru Honda

Member Development Committee (MDC) Member

Mamoru Honda

ASEAN Federation of Accountants (AFA)

Global Accounting Alliance (GAA)

World Business Council for Sustainable Development (WBCSD)
Assurance Working GroupInternational Integrated Reporting Council (IIRC)

MemberMember

Hiromasa Niinaya

Names marked with * are not JICPA members.

The JICPA continuously works to develop professionals with
the international knowledge and experience to represent Japan
at such international organizations. These efforts include theestablishment of a fund to provide support for members totake part in study abroad programs.
At the same time, to enhance the diversity of globally capable accounting human resources, we are proactively communicating the appeal of global work through such means as
posting interviews with CPAs working in international fields on
our website (“Vision for the future.”) and holding seminars.

Vision for the future. (in Japanese)
https://jicpa.or.jp/vision_future/

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47

What We Do

What We Do

Public Relations

Securing and Developing Human Resources

Increase the appeal of the CPA profession by supporting the professional success offemale CPAs

3

We believe that the CPA industry should seek to build a society that embraces diversity. Accordingly, the JICPA aims to createa world in which diverse CPAs have equal opportunities to succeed across a wide range of fields. To this end, the JICPA has
established key targets regarding the proportion of women among its members and associate members and among successful CPA examination candidates to better promote the professional engagement of women in accounting, and is examining
and implementing measures to achieve these targets.

Goal

1

Broadening Public Understanding of CPAs

Fiscal 2021 press conference dates
2020 Wednesday, April 21

1. Press conferences
The JICPA holds periodic press conferences as part of efforts to communicate about the JICPA to the public. In fiscal 2021, the JICPA held six press
conferences. Summaries of the JICPA’s press conferences are available on
its website (in Japanese).

Monday, September 28

Thursday, June 18
Monday, September 7

Friday, November 27
2021

Tuesday, March 9

Summaries of past press conferences (in Japanese)
https://jicpa.or.jp/news/jicpa_pr/2018/kaiken17.html

A world in which diverse CPAs have equal opportunities to succeed across a wide range of fields

Press conference(1) Raise the proportion of women among JICPA members and associate members to 30% by fiscal 2049

Key Targets(2) Raise the proportion of women among successful CPA examination candidates to 30% by fiscal 2031

Monitoring
Indicators

Total number of information sessions about the
CPA system for junior high school, high school,
and university students and events targeting
female students (The Council sets and monitors the targets.)

Total number of professional education andnetworking events targeting female CPAs (TheCouncil sets and monitors the targets.)

Proportion of women among candidates forleadership positions in the national JICPA andregional chapters, according to their respective
circumstances (The JICPA and regional chapters
set the targets, which the Council monitors.)

Actions

Measures to encourage young women to work
toward becoming CPAs

Measures to prevent women currently registered as CPAs from becoming deregistered

Measures to enable women currently registered as CPAs to engage further

Proportion of Women among JICPA Members and Associate Members

Proportion of Women among Successful CPA Examination Candidates

Percentage of women

Percentage of women

December 2018

14.9%

2018

20.4%

December 2019

15.1%

2019

23.6%

December 2020

15.5%

2020

24.6%

We are holding events for female students to increase the appeal of the CPA profession.
Event

2. Video for overseas audiences
The JICPA created a video titled “Origins and Future” for overseas audiences
about its history, present, and future.

Origins and Future
https://jicpa.or.jp/english/public_relations_materials/index.html

2

CPA System Information Sessions

To spark as much student interest as possible while furthering knowledge
and understanding of those who aim to become CPAs in the future, we holdinformation sessions about the CPA system and the work of CPAs at highschools, universities, and test prep schools, in both in-person and online formats. In addition, we have created an animated short to introduce the workof CPAs to interest students in this work and the CPA qualification.
Activities in Fiscal 2021
• 23 sessions for high school students, with 1,100 participants• 24 sessions for university students, with 2,100 participants
A poster promoting the CPA examination

Event for female college students: Women Seeking More—The Right Choice Day• Date: Saturday, March 6, 2021
• Format: Online event• Program: This event provided an opportunity for women working as professionals in various fields
to respond to the worries and anxieties of students about their present and future in light of the
COVID-19 pandemic.
The event featured JICPA council member Noriko Umeki as facilitator and moderator and Kanae
Takeuchi as emcee, with guests working as professionals in a variety of fields: entertainer andmodel Maomi Yuki, stylist Satomi Iwasaki, Sonoka Shimoo of the Horipro Publicity Department, andwillsi Co., Ltd. director Atsuko Yoseda. The participating students submitted their worries and concerns ahead of time, and the speakers addressed them from a variety of angles. The guests also
spoke about their careers, providing an opportunity for the students to think about their own
careers and the future. Although the event was held online, the participants engaged in lively,interactive discussion, with the speakers responding to comments in the meeting chat.

48

 nimated short about the work of CPAs (in Japanese)A
https://jicpa.or.jp/sitemap/prmovie.html

49What We Do

What We Do

Social Contribution Activities
The JICPA aims to contribute to society through the professional activities of CPAs and its support for such activities as well
as a wide range of other contribution efforts.

1

Initiatives Aimed at Building a Sustainable Society

Initiatives aimed at building a sustainable society are growing in Japan and around the world. Notably, the September 2015
United Nations Sustainable Development Summit adopted the 2030 Agenda for Sustainable Development, including the
Sustainable Development Goals (SDGs), a set of 17 goals and 169 targets for 2030. Building on this, the Japanese government has established the Sustainable Development Goals Promotion Headquarters.
The realization of a sustainable society is the foundation for the development of the national economy. With this in mind, the
JICPA established the Committee for the JICPA’s Challenges and Initiatives for Building a Sustainable Society. Based on anunderstanding of the goals and targets of the SDGs as well as the issues facing Japanese society, this committee examines
the roles of the JICPA and CPAs in society as well as the challenges they face in helping build a sustainable society and theways they can take action to do so.
As part of these efforts, the JICPA published a special August 2020 edition of the Accounting & Audit Journal featuring contributions of CPAs to achieving the SDGs, highlighting their activities in various regions and fields.
In recent years, society has seen an increasing need for the roles provided by CPAs. In light of this, we hoped to communicate to readers that, across the country, CPAs are working hard to meet society’s expectations in fields other than financial
statement auditing. To this end, the special edition highlights CPAs who are contributing to the achievement of the SDGs
across a variety of fields, including local government, disaster recovery, support for small and medium-sized businesses,
education, poverty, and climate change.

2

Support for Emerging Countries

In 2016, the JICPA, the Myanmar Institute of Certified Public Accountants (MICPA), and the Daiwa Myanmar JapanFoundation signed a memorandum of understanding to support the development of CPAs in Myanmar and the reinforcementof the MICPA. The parties renewed this memorandum of understanding in April 2020. Based on this memorandum, the threeorganizations are advancing joint initiatives to develop accounting professionals in Myanmar and reinforce the country’s
accounting and auditing systems on an ongoing basis.
In fiscal 2021, to develop the abilities of Myanmar’s CPAs, we held training on topics including IPOs, corporate governanceand internal control, and auditing accounting estimates.

3

Hello! Accounting“Hello! Accounting” is a free accounting class for elementary and junior high school students. Launched in 2005, it is part of
the JICPA’s efforts to promote basic accounting education. The easy-to-follow lesson, which makes use of examples using
familiar foods, such as cake and takoyaki octopus treats, has been well received. Implemented mainly by JICPA’s regional
chapters, lessons at schools and lessons open to the public have been held at more than 200 locations to date.
In fiscal 2021, classes (in-person and online) for schools were held 15 times, and those open to the public held 10 times, fora total of approximately 2,000 participants.
In light of the COVID-19 pandemic, in fiscal 2021, we offered these classes in an online format for the first time.

ColumnAbout “Hello! Accounting” (in Japanese)
https://jicpa.or.jp/about/activity/hello-schedule/

Accounting & Audit Journal Special Edition—CPAs’ Contributions to Achieving
the SDGs in Various Regions and Fields (in Japanese)
https://jicpa.or.jp/news/information/2020/20200928jif.html• Making Yonago City Sustainable: Takashi Igi• Supporting Recovery from the Kumamoto Earthquake: Masaya Yamashita• Supporting Recovery from the Great East Japan Earthquake: Masamichi Morikawa• Addressing Issues in Succession Planning in Japan: Yasushi Utsumi, Akihisa Ogido• Communicating Clearly About Accounting: Yasuhiro Tanaka• Poverty and Helping the Economically Disadvantaged Achieve Independence: Kumi Kodama• Promoting Sustainability through Wood Biomass Power Generation: Ikuhiro Okada• Female CPAs Working in Regional Areas: Emiko Manabe

Poster for “Hello! Accounting” lessons

To further raise awareness of the SDGs among JICPA members and officers and to express broadly,
both inside the JICPA and externally, our commitment to further engaging with the SDGs, in August2020 we created an SDG pin, which JICPA officers are encouraged to wear.
The Committee for the JICPA’s Challenges and Initiatives for Building a Sustainable Society published an interim report in June 2019. “The Contribution of CPAs to Building a Sustainable Society”
lays out a number of challenges and approaches for addressing them. Based on these, we are working toward the realization of a society that, while undergoing population decline and slow economic
growth, invests resources efficiently, effectively, and speedily to address wide-ranging social issues,
simultaneously achieving both economic development and the resolution of social issues.
Specifically, we are engaging in dialogue with diverse stakeholders as we continue working to define
concrete initiatives and consider and implement measures to better enable CPAs to leverage their strengths—such as
wide-ranging expert knowledge and practical experience, a strong sense of ethics, and ability to identify and solve issues—tocontribute to society as “professional partners that work together to build a sustainable, evolving society.”

50

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What We Do

What We Do

Social Contribution Activities

4

Basic Accounting Education

Introduction
In April 2021, Japan’s junior high school curriculum guidelines were amended, establishing accounting as a topic covered insocial studies classes. Similarly, from April 2022, high school guidelines concerning the content of government and economics
and public affairs classes will be revised, meaning that junior high and high school students across Japan will learn aboutaccounting. Because this will be the first time that accounting will be part of the standard curriculum, the JICPA has createdand published three types of materials to support schools (texts for students, worksheets for students, and texts for adults).
In parallel with efforts related to education in schools, in 2020, the JICPA created and published the Accounting Literacy
Map. Accounting is an integral part of daily life, and improving the accounting literacy of the public—the main actors in economic activity—is important to maintain social sustainability. The Accounting Literacy Map offers a clearly organized overview
of what ordinary people should learn at the various stages of their lives.
Following approval at the 2016 Annual General Assembly, the JICPA established the Basic Accounting Education Promotion
Council, jumpstarting efforts to promote basic accounting education as part of its social contribution activities. As an organization of CPAs—experts in accounting—we are advancing initiatives in line with the belief that accounting is an essential part oflife-long education for all people, and that accountability is at the core of accounting.

Makie Suzuki
Executive Board Member
JICPA

About accounting-related junior high and high school curriculum guidelines (in Japanese)
https://jicpa.or.jp/about/activity/basic-education/tools.html#koumin

Q2

Why should CPAs and the JICPA be involved in basic accounting education?

Interview with the Executive Board Member in Charge of Basic Accounting Education

Q1

Why is basic accounting education necessary?

For many people, the word “accounting” conjures up something difficult that is only relevant to a narrow group of specialists. In reality, however, the fundamentals of accounting
are simple and very relevant for ordinary people.
Accounting is about accountability, which consists ofrecording and calculating the movement of money (economic activity), that is, how and why money came in orwent out, and reporting the results. For example, imagine
that you’re given some money to go buy something on
someone’s behalf. You go to the store and pick out theitem, pay for it, and then bring back the item, the change,
and the receipt. You hand these over and report what youbought, how much it cost, and how much change you got.
This is a form of accounting. Accountability—reporting theresults of economic activity—requires accuracy as well as
fairness and honesty, and is the core of accounting.
The most important part of learning about accounting is
not studying specific data points or techniques, but developing an accounting perspective and way of thinking. An

52

accounting perspective and way of thinking are very usefulfor understanding economic activities and for making decisions about one’s life or events in society. The most important thing they offer, however, is the idea of accountability attheir core. In our families, at school, or in our communities,
we often have to report our actions (decisions and judgements). Earning the trust of those around us requires doing
so in a fair and honest way. By building up that trust overtime, we can maintain positive relationships with thosearound us—I’m sure that many of us have experienced thisfirst-hand. I believe that building this kind of trust at the individual level, as it gradually expands to more people, canhelp us achieve a sustainable society.
In this way, accounting is crucial to achieving a sustainable society and is a key form of literacy that everyone
should learn and develop throughout their lives in order tocorrectly understand economic activity and participate
broadly in society.

First, CPAs are experts in accounting and have a wealth ofknowledge and experience. CPA is a profession that contributes to realizing socioeconomic sustainability as a professional partner in accounting, mainly by keeping watch infinancial markets through accounting audits. The public is
the main actor in economic activity, and I think that CPAs,
as accounting experts, should apply their professional
knowledge and experience to accounting education to promote the public’s lifelong accounting literacy as a form ofsocial contribution.
Second, CPAs and the JICPA already have a track recordin accounting education. Individual CPAs visit their almamaters to teach accounting classes, offer regular endowed
lectures at universities, and engage in accounting education
in a variety of other forms. The JICPA, meanwhile, offers“Hello! Accounting” classes for elementary and junior highschool students. This long-running class, ongoing since2005, boasts a wealth of content and programs.
Third, the JICPA is an expert professional organization towhich all CPAs in Japan belong and proactively engages in
activities related to social sustainability, including the SDGs.
In terms of accounting education, the JICPA can gather
views from across the industry and lobby related institutions. In fact, in October 2016, the JICPA suggested that
accounting education be included in social studies curriculum during a public comment period regarding the Ministryof Education, Culture, Sports, Science and Technology’s
deliberations on new curriculum guidelines. Furthermore,basic accounting education aligns with the JICPA’s stanceon promoting the SDGs, specifically Goal 4: “Ensure inclusive and equitable quality education and promote lifelong
learning opportunities for all.”53

What We Do

What We Do

Social Contribution Activities

Q3

Please tell us about the JICPA’s initiatives in more detail.

To support education in schools, based on the new curriculum guidelines, we prepared three types of materials for use
in classes and made them available on our website in April
2020. Since then, we have continued discussions withjunior high school teachers and implemented a survey of
300 junior high schools across the country. This survey
found that many teachers were uneasy about dealing withaccounting in class. The main reason they gave for thisunease was not having a knowledge of accounting themselves. In light of this, in addition to the previously publishedmaterials, I hope that we can develop a variety of supplementary materials to eliminate the unease felt by the teachers actually implementing the new curriculum in schools.
Our goal is for students to take an interest in accounting
and understand it as a familiar part of their lives and forteachers to be excited to teach it.
We published the Accounting Literacy Map on our website in October 2020 and then incorporated it into our “Thisis Accounting” pamphlet about accounting education. In the

Q4process of creating the Accounting Literacy Map, we considered what kind accounting literacy people need. This led
us to the consensus that understanding the idea of
accountability is the most basic form of accounting literacy
and the core of accounting. The map also indicates relevant
content to be taught in schools and where the curriculum
guidelines for each school subject come in. The horizontal
axis depicts life stages and lines up with the Financial
Literacy Map published by the Committee for the Promotionof Financial Education in 2016. We hope that developing
accounting literacy will contribute to more effective financial
and economic education. Furthermore, the “This is
Accounting” pamphlet also lays out ways that accounting
relates to daily life by age group so that readers can better
understand accounting as something familiar and relevant.
Going forward, we will develop various approaches tailoredby age group to enhance opportunities for the educationneeded at each life stage.

Please tell us about your initiatives going forward.

First, our highest priority is to further advance and evolve
the three main pillars of our current efforts. These aresupport for education in schools, providing learning
opportunities based on the Accounting Literacy Map, and“Hello! Accounting” classes. The first two, in particular,
are finally moving to the real-world implementation stage,
so we will need to reinforce coordination with various relevant institutions.
From there, we hope to advance communication to further spread basic accounting education. Increasing opportunities for teachers, students, and everyone in Japan tounderstand the importance and utility of basic accounting

education will be crucial. Of course, we will also advancecommunications within the CPA industry to form consensus
and involve more CPAs in educational initiatives.
Furthermore, to promote basic accounting education
across society, we hope to create deliberative bodies tocoordinate with related governmental bodies, education officials, academic organizations and other relevant groups inorder to build a broader promotional structure.
Going forward, we will continue to advance basic
accounting education, aiming for the JICPA to provide
appropriate, timely information as resource freely available
to anyone who wants to learn about accounting.

Accounting Literacy Map (in Japanese)
https://jicpa.or.jp/about/activity/basic-education/literacy-map.html（日本公認会計士協会・2020）“This is Accounting” pamphlet (in Japanese)
https://jicpa.or.jp/about/activity/basic-education/pr.html

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How We Operate

Organization

Self-Regulatory Monitoring Conference
Board of Corporate Auditors

Board of Councilors

Chairman and President

Compensation Committee

Deputy Presidents
Chief Executive

SelfRegulation
Aspiring CPA Education
Development

Review Board forAppropriate ProceduresCouncilElection Supervisory Committee

JICPA Operations
Advisory Council

Executive Board

Nominating Committee

Quality Control Committee
Dispute Mediation Committee

Listed Company Audit Firm Subcommittee

Audit Practice Review and Investigatory Committee

Tokyo Chapter

Kanagawa Chapter

Tokai Chapter

Hokuriku Chapter

Keiji Chapter

Kinki Chapter

Hyogo Chapter

Chugoku Chapter

Shikoku Chapter

Hokubu Kyushu Chapter

Minami-Kyushu Chapter

Okinawa Chapter

Audit Standards Committee Expert Advisory Council

Continuing Professional Education Committee

Final Assessment Committee

Practice Training Council

Auditing Standards Committee
Ethics Standards Committee

Quality Control Standards Committee
Auditing and Assurance Practice Committee
Accounting System Committee
Industry-specific committees
Information Technology Committee
International Affairs Committee
Not-for-Profit Organization Accounting and Audit Practice Committee
Public Sector Accounting and Audit Practice Committee
School Accounting and Audit Practice Committee
Laws, Regulations and Systems Committee
Small and Medium Practices Policy Committee
Tax Research Committee
Management Research Committee

Saitama Chapter

Chiba Chapter

Special Committee on Corporate Disclosure and GovernanceTohoku Chapter

Small and Medium Practices Committee
Institute Journal Editorial Committee

Women in Accounting Professional
Promotion Council
Associate Members Council

Local Government Body Accounting and
Auditing Subcommittee
Public Accounting Council

Social Security Working GroupCouncil for Accountants Serving as
Outside Directors and Corporate Auditors
Internal Accountants Council

Tax-Related Work Council

Tax-Related Work Subcommittee

Hokkaido Chapter

Free Job Placement Office (Tokyo/Osaka)

Regional Chapter Chair Committee

Chapters

Committee for Challenges and Initiatives
within Sustainable Social Structures

Basic Accounting Education Promotion Council

General Affairs Committee

Qualification Review Committee

Registration Review Committee

Public Relations Committee

Publications Committee

Specific Attribute Committees

Disciplinary Committee

Council Members

Executive Board Members

How We Operate

Professional Standards and Practices
General Affairs Public Relations
andandRegistration
Publications

As a self-regulatory body for the accounting profession, the JICPA conducts organizational operations with transparency and neutrality. The
JICPA has 16 regional chapters, which are closely involved in activities
aimed at enhancing the qualifications of their respective members.

Governance System
1

The JICPA’s governance system comprises the General Assembly, which serves as the topmost decision-making body; theExecutive Board and Council, which are responsible for the execution and oversight of institute operations; a range of advisorycommittees; and the Board of Corporate Auditors and Self-Regulatory Monitoring Conference, which provide monitoring.
JICPA organs that particularly require transparency or expertise other than that of CPAs include outside experts.
Organization (As of March 31, 2021)

General Assembly
Accounting auditor

Organizations in blue include outside experts.

57How We Operate

How We Operate

Organization

JICPA Officers (As of March 31, 2021)

Officers
The JICPA’s officers comprise the chairman and president, deputy presidents, chief executive, executive board members,
council members, and corporate auditors. The total number of officers is capped at 90.
Officers are mainly CPAs elected by the JICPA’s members. However, to ensure the transparency of JICPA operations,two council members and one corporate auditor are non-CPA outside experts. In addition, the chief executive may be either a
CPA or an outside expert.

Chairman andPresident

Masahiko Tezuka

Deputy Presidents(7)

Giichi Yanagisawa Kazutoshi Kogure

Chief Executive

Hisashi Sato

Executive Board
Members(32)

Shuichiro Akiyama Tatsuya Arai
Naoaki Kobayashi Toshio Sato
Makie Suzuki
Hideki Chijimatsu
Hisatoshi Hirota Takako Fujimoto
Hidehiko Yuki
Yoshio Yukawa

Council Members(44)

Ikuko Akamatsu Kosuke Araki
Yuichi Ishizawa
Kuniyoshi Iwata
Noriko Umeki
Masaharu Ota
Yasushi Kaneko Yasuo Kameoka Yoichi Kubo
Seiji Sakashita
Toshihiko Shibusa Yuko Suzuki
Satoe Tsuge
Kenichi Tsutsumi Yusuke Nakano
Hayato Miyata
Yoshizo Miyamoto Shigeki Yagi
Akiyoshi Oba* (Chairman, Japan Investment Advisors Association)

Yasushi Inagaki
Koichi Inoue
Shinji Inoue
Kazuki Iwashita
Yoshitsugu Ogawa
Noriyuki Kakazu Shigeru Kajita
Shin Kato
Seigo Ko
Ryoichi Komatsu Akira Koyama
Hirofumi Sakai
Mitsuhiro Takemura Masao Tanaka
Yoshitaka Tanaka Emi Chujo
Masazumi Nishikawa Takao Furusho
Akihiko Masuda Hitomi Masuda
Yasuhisa Yajima
Koji Yasui
Yoko Yamada
Osamu Yoshii
Hisashi Yamaura* (Professor Emeritus, Meiji University/former Commissioner, Board of Audit)

Kazutomi Asai

Muneharu Otsuka* (Professor Emeritus, Waseda University/former Commissioner, Board of Audit)

Corporate Auditors(4)

Tatsuya Kato

Kiyonobu Takeuchi

Toru Kajikawa Yoshito Kaneyama
Hiroshi Shiina
Kiyohiko Shinokawa
Mitsuo Tsuruta Minoru Tobari
Mitsujiro Fuseya Naruhito Minami
Ichiro Waki
Yoshiki Watanabe

Katsuhiko Ogata Hitoshi Hori

Kanako Ogura

Yoshiyuki Minegishi

Hiroki Kitagata
Sayaka Shimura
Toshiyuki Nishida
Satsuki Miyahara

Kazuya Kitazumi
Motoharu Shoji
Keiko Hayashi
Tetsuya Mogi

Hisae Kitayama

Shintaro Goto
Keiko Sugaya
Tadashi Hisamatsu
Toru Yasuhara

Names marked with * are outside experts.

Officer Responsibilities (as of March 31, 2021)
Division

General Strategy, Planning, andCommunication

Deputy Presidents/Chief Executive

Tatsuya Kato
Kiyonobu Takeuchi (International affairs)
Hisashi Sato

Self-Regulation

Kazutoshi Kogure

Auditing, Corporate Accounting
and Corporate Disclosure

Kanako Ogura

Giichi YanagisawaSocial Support

Kiyonobu Takeuchi❺

1Masahiko Tezuka
2Hisae Kitayama
5Yoshiyuki Minegishi 6Tatsuya Kato
9Giichi Yanagisawa

3Kanako Ogura
4Hisashi Sato
7Kiyonobu Takeuchi 8Kazutoshi Kogure

❻

❹
❷

❼
❽
❶

❾
❸

Human Resource Development
General Affairs

Regional Chapters

58

Giichi Yanagisawa
Kiyonobu Takeuchi
Hisashi Sato
Yoshiyuki Minegishi (Chairman)
Hisae Kitayama (Vice Chairman)

Role

General strategy and planning
Public relations
Spokesperson
International affairs
External affairs
JICPA Vision (SDGs)
Rulemaking and operational development
Research and publishing
Quality control
Audit practice review and investigation
Disciplinary review (facilitator)
EthicsAuditing and quality control standards
Auditing, assurance and IT
Industry-specific accounting and auditing
Corporate accounting and disclosure
Diversity and inclusion
Taxes
Management
Support for small- and medium-sized companies
Regional revitalization
Support for small- and medium-sized practices
Basic accounting education
CPA system and laws
Public sector accounting and auditing
Not-for-profit organizations
Incorporated schools
CPE
Aspiring CPA development
General affairs (general affairs management)
General affairs (operational management)
Financial management and information management
Regional chapters

Executive Board Members

Tatsuya Arai
Tatsuya Arai
Tetsuya Mogi

Satsuki Miyahara
Toru Kajikawa

Kazuya Kitazumi

Keiko Sugaya

Mitsujiro Fuseya
Keiko Hayashi—
Toshiyuki Nishida
Sayaka Shimura
Hidehiko Yuki
Naoaki Kobayashi
Takako Fujimoto
Ichiro Waki
Yoshiki Watanabe
Kazuya Kitazumi
Toru Yasuhara
Tetsuya Mogi
Naruhito Minami
Makie Suzuki
Yoshio Yukawa
Hiroshi Shiina
Shuichiro Akiyama
Minoru Tobari
Yoshito Kaneyama
Mitsuo Tsuruta
Tetsuya Mogi
Hiroki Kitagata
Keiko Sugaya
Tetsuya Mogi
Motoharu Shoji
Hideki Chijimatsu

Hisatoshi Hirota

Makie Suzuki
Toshio Sato

Shintaro Goto

Kiyohiko Shinokawa
Tadashi Hisamatsu

59

How We Operate

How We Operate

Organization

JICPA Operations Advisory Council

Nominating Committee

The JICPA Operations Advisory Council is made up of non-CPA outside experts and meets three times a year to provide
advice as needed regarding improvements to the work of CPAs.

Candidates for the position of chairman and president are solicited from among the officers elected by JICPA members. The
Nominating Committee then selects the candidate it views as best suited, whom it recommends to an assembly of the newly
elected officers and, by receiving their confidence, the chairman and president is selected.
The Nominating Committee comprises 16 members, two of whom are non-CPA outside experts. The committee selects
candidates to recommend for chairman and president based on dispassionate, objective considerations of important factors,
including candidates’ understanding and awareness of the mission of CPAs and the JICPA’s operations, as well as the individual’s eagerness to concentrate on said operations.

Advisors (As of March 31, 2021)

Naoki Izumiya

Akira Kiyota

Honorary Advisor, Asahi Group Holdings, Ltd.

Director & Representative Executive Officer, Group
CEO, Japan Exchange Group, Inc./ President & CEO,Tokyo Stock Exchange, Inc.

Apr. 1972	Joined Asahi Breweries, Ltd.
Mar. 2003	Director, Asahi Breweries, Ltd.
Mar. 2004	Managing Director, Asahi Breweries, Ltd.
Mar. 2009	Senior Managing Director and Senior Managing
Corporate Officer, Asahi Breweries, Ltd.
Mar. 2010	President and Representative Director, Asahi
Breweries, Ltd.
Jul. 2011	President and Representative Director, COO, Asahi
Group Holdings, Ltd.
Mar. 2014	President and Representative Director, CEO, Asahi
Group Holdings, Ltd.
Mar. 2016	Chairman and Representative Director, CEO, Asahi
Group Holdings, Ltd.
Mar. 2018	Chairman and Representative Director, Asahi Group
Holdings, Ltd.
Mar. 2019	Chairman of the Board, Asahi Group Holdings, Ltd.
Mar. 2021	Honorary Advisor, Asahi Group Holdings, Ltd.

Ryuko Sakurai
Former Justice of the Supreme Court of Japan/
Former Director, Women's Bureau, Ministry of Labor
Apr. 1970	Joined the Ministry of Labour
Jun. 1998	Director, Women's Bureau, Ministry of Labour
Apr. 2001	Member of Cabinet Office Information Disclosure
Review Board (Chair of the Third Division)
Jun. 2004	Invited Professor, Graduate School of Law, Osaka
University (Labor Law)
Apr. 2007	Visiting Professor, Faculty of Law, Kyushu University(Labor Law)
Sep. 2008	Justice of the Supreme Court of Japan
Jan. 2017 Retired from Supreme Court of Japan

Kosei Shindo
Representative Director and Chairman, NIPPON STEELCORPORATION/Vice Chair, Japan Business Federation
Apr. 1973	Joined NIPPON STEEL CORPORATION
Jun. 2005	Director and General Manager, Corporate Planning
Division, NIPPON STEEL CORPORATION
Apr. 2007	Director (under the Executive Management System)
and General Manager, General Administration
Division, NIPPON STEEL CORPORATION
Apr. 2009	Executive Vice President (under the Executive
Management System), NIPPON STEEL CORPORATION
Jun. 2009	Representative Director and Executive Vice President,
NIPPON STEEL CORPORATION
Oct. 2012	Representative Director and Executive Vice President,
NIPPON STEEL & SUMITOMO METAL CORPORATION
Apr. 2014	Representative Director and President, NIPPON STEEL& SUMITOMO METAL CORPORATION
Apr. 2019	Representative Director and Chairman, NIPPON STEELCORPORATION

Apr. 1969	Joined Daiwa Securities Co. Ltd. (now Daiwa
Securities Group Inc.)
Apr. 1999	President, Daiwa Securities SB Capital Markets Co.
Ltd. (now Daiwa Securities Co. Ltd.)
Jun. 2008	Chairman of the Board and Corporate Executive
Officer, Daiwa Securities Group Inc.
Jun. 2011	Honorary Chairman, Daiwa Securities Group Inc.
Jun. 2013	Director, Japan Exchange Group, Inc.
President & CEO, Tokyo Stock Exchange, Inc.
Jun. 2015	Representative Executive Officer, Group CEO, Japan
Exchange Group, Inc.

Nominating Committee Members (As of March 31, 2021)
Aiko Sekine
Atsushi Takada
Naohide Endo
Keiko Kishigami
Yuki Sato
Akira Takashina

Kazuo Takahashi
Hitomi Takahashi
Tadafumi Torisu
Tsunetoshi Harada
Hitoshi Hori
Koichi Mori

Haruhiko Yamada
Fusahiro Yamamoto
Atsushi Shimizu* Attorney/Chief Justice, Hiroshima High Court
Kazuhiko Fushiya* Chairman, The Institute of Internal Auditors – Japan

Names marked with * are outside experts.

Noriaki Shimazaki
Outside Director, Nomura Holdings, Inc./Former
Trustee, IFRS Foundation
Apr. 1969	Joined Sumitomo Corporation
Jan. 2003	Member, Business Accounting Council, Financial
Services Agency
Jan. 2009	Trustee, IASCF Foundation (now the IFRS Foundation)
Jul. 2009	Special Advisor, Sumitomo Corporation
Jun. 2011	Director, Financial Accounting Standards Foundation
Public Governor and Chairman of the Self-regulation
Board, Japan Securities Dealers Association
Sep. 2013	Advisor, IFRS Foundation Asia-Oceania OfficeJun. 2016	Outside Director, Nomura Holdings, Inc.

Mariko Bando

Compensation Committee
The Compensation Committee comprises five members, of whom two are non-CPA outside experts. The committee ischarged with deciding the compensation paid to officers (the chairman and president and chief executive) and policy for
deciding such compensation, and making recommendations to the Council.
Compensation Committee (As of March 31, 2021)
Aiko Sekine
Atsushi Takada

Haruhiko Yamada

Noriaki Shimazaki* Outside Director, Nomura Holdings, Inc./Former Trustee, IFRS Foundation
Riichiro Takahashi* Attorney/Former Vice President, Japan Federation of Bar Associations

Chancellor, Showa Women’s University/Former Director
General, Gender Equality Bureau Cabinet Office
Apr. 1969	Joined the Prime Minister's Office
Jul. 1989	Director of Consumer Statistics Division, Statistics
Bureau, Management and Coordination Agency
Apr. 1995	Vice-Governor of Saitama Prefecture
Jun. 1998	Consul General of Japan in Brisbane, Australia
Jan. 2001	Director General of Gender Equality Bureau, Cabinet
OfficeOct. 2003	Director, Showa Women’s University
Apr. 2007 	President, Showa Women's University
Apr. 2014	Chancellor, Showa Women’s University
Jul. 2016	Chairperson of the Board, Showa Women’s University

Names marked with * are outside experts.

Board of Councilors
The JICPA’s former chairmen and deputy presidents serve as councilors. The Board of Councilors meets three times a year
and provides advice as needed regarding improvements to the work of CPAs.
Councilors (As of March 31, 2021)
Hiroshi Nakachi (former chairman)
Akio Okuyama (former chairman)
Tsuguoki Fujinuma (former chairman)

Koichi Masuda (former chairman)
Shozo Yamazaki (former chairman)
Kimitaka Mori (former chairman)

Aiko Sekine (former chairman)
Masaji Suzuki (former deputy president)
Haruhiko Yamada (former deputy president)

Shigeru Takahama (former deputy president)
Atsushi Takada (former deputy president)

Kazuhiko Fushiya
Chairman, The Institute of Internal Auditors –Japan/Former President, Board of Audit of Japan/
Former Commissioner, National Tax Agency
Apr. 1967	Joined the Ministry of FinanceJul. 1999	Commissioner, National Tax Agency
Jul. 2001 	Deputy Governor, National Life Finance Corporation
Jul. 2002	Assistant Chief Cabinet Secretary
Jan. 2006	Commissioner, Board of Audit of Japan
Feb. 2008	President, Board of Audit of Japan
Jan. 2009	Retired from the Board of Audit of Japan
Jun. 2009	Chairman, Institute of Internal Auditors – Japan

60

61

How We Operate

How We Operate

Organization

2

Regional Chapters

3

The JICPA’s maintains 16 regional chapters covering all of Japan to guide, connect, and supervise CPAs across the country
and help ensure that they provide consistent, high-quality services.
Chairmen and CPA members of the Regional Chapters (As of March 31, 2021)

Administrative Offices

The JICPA’s administrative offices comprise 22 groups within five divisions and the offices of the 16 regional chapters.
These administrative offices support the Group’s operations.
As of March 31, 2021, the divisions have a staff of 208 (144 men and 64 women), and the regional chapters a total staff of104 (56 men and 48 women). Of these, a total of 70 (54 men and 16 women) are qualified as CPAs.
Administrative Organization (As of March 31, 2021)
Chief Executive

Hokkaido Chapter

Hokkaido Chapter
Chairman:Kiyohiko Shinokawa
CPA members: 386(49)

Okinawa Chapter

Okinawa Chapter
Chairman:Noriyuki Kakazu
CPA members: 87(11)

Tohoku Chapter

Hokuriku Chapter
Keiji Chapter
Hyogo Chapter

Saitama Chapter
Tokyo Chapter

Kanagawa Chapter
Tokai Chapter
Shikoku Chapter

Saitama Chapter
Chairman:
Masazumi Nishikawa
CPA members: 780(82)

Kinki Chapter

Minami-Kyushu Chapter

Hokubu Kyushu Chapter
Chairman:
Hideki Chijimatsu
CPA members: 804(113)

Chugoku Chapter
Chairman:
Shigeru Kajita
CPA members: 493(48)

Hyogo Chapter
Chairman:
Hayato Miyata
CPA members: 820(125)

Keiji Chapter
Chairman:
Yusuke Nakano
CPA members: 683(99)

Hokuriku Chapter
Chairman:Seiji Sakashita
CPA members: 303(29)

Tokyo Chapter
Chairman:
Yoshiyuki Minegishi
CPA members: 19,098(2,907)

Divisions

Chiba Chapter
Hokubu Kyushu
Chapter

SelfRegulation• Quality Control: Quality control reviews and related administrative work as well as administrative work related to the Listed
Company Audit Firm Subcommittee• Audit Practice and Review: Individual reviews of the appropriateness of members’ auditing and audit opinions as well as
necessary measures• Discipline: Disciplinary action and other matters related to the standing of members and associate members

Tohoku Chapter
Chairman:Yuichi Ishizawa
CPA members: 423(44)

Secretary General

Chugoku Chapter

Planning
Division• Planning: Planning and coordination related to the overall CPA system• Public Relations: Planning and coordination of public relations activities related to the JICPA’s business and operations• International Relations: Planning and promotion of basic strategy concerning international matters• Publications: Planning, editing, publishing, and communications related to JICPA newsletters, journals, and other publications• Research (JICPA Research Laboratory): Surveys and research related to the CPA system and the work of CPAs, including
auditing, accounting, and tax matters

Professional
Standards andPractices• Accounting and Corporate Reporting: Research, planning, and materials collection and preparation related to the theory andpractice of accounting of companies subject to audit under the Financial Instruments and Exchange Act or Companies Act andother for-profit corporations• Non-Profit and Public Sector: Research, planning, and materials collection and preparation related to the theory and practice ofaccounting and auditing of incorporated schools, public interest corporations, and other non-profit corporations as well as public
sector accounting• SMP – SME Networking: Research, planning, and materials collection and preparation related to measures for small and medium
practices and enterprises as well as administrative work related to diversity networking (the Internal Accountant Council, Council for
Accountants Serving as Outside Directors and Corporate Auditors, and Women in Accounting Professional Promotion Council)• Research and Consultation: Consultation desk for inquiries from members regarding auditing and professional ethics• Ethics and Auditing: Research, planning, and materials collection and preparation related to norms and case studies regarding
members’ professional ethics, the theory and practice of auditing (including non-audit assurance services, etc.), and laws related
to the work of CPAs and the CPA system (including the CPA systems of other countries)

General Affairs
Division• General Affairs: Operations of the General Assembly, Council, Executive Board, committees and other bodies and administrative
work related to member benefits• Legal: Establishment, amendment and abolition of elements of the JICPA Constitution and other rules as well as handling ofcontracts, registrations, lawsuits, and other legal procedures• Personnel: Administration related to personnel affairs• Member Registration: Registration of CPAs, junior accountants, CPAs of other countries, and specified partners of audit corporations• Accounting: Drafting budget guidelines as well as preparing and managing budgets• Member Management: Requesting and receiving standard membership fees and auditing membership fees as well as proposing
and implementing operational process improvements for the Headquarters and regional chapters• Continuing Professional Development: Operation of the continuing professional education (CPE) system and administrative work
related to final CPA assessment

Information
Management
Center• Information Systems: Creation and management of information systems and operation of information security systems• Statutory Audit Information Management: Receiving documents related to statutory audits from members, storing said
documents, reminding members to submit them, and necessary information collection to this end

Regional chapters

Minami-Kyushu Chapter
Chairman:
Kosuke Araki
CPA members: 217(18)

Shikoku Chapter
Chairman:
Osamu Yoshii
CPA members: 239(22)

Kinki Chapter
Chairman:
Hisae Kitayama
CPA members: 3,630(575)

Tokai Chapter
Chairman:Tadashi Hisamatsu
CPA members: 2,140(312)

Kanagawa Chapter
Chairman:
Masaharu Ota
CPA members: 1,614(195)

Chiba Chapter
Chairman:
Motoharu Shoji
CPA members: 761(93)

Note: Numbers in parenthesis indicate the number of female members.

62

Note that, as of April 1, 2021, the following changes have been made to the JICPA’s administrative structure.
1. The Information Management Center has been abolished, and its functions have been transferred to other bodies.
• The creation and management of information systems has been transferred to the General Affairs Division.
• Administration related to statutory audit documents has been transferred to the Self-Regulation Division .
2. The Professional Standards and Practices Division’s Ethics and Auditing Group has been split into the Ethics Group and the
Auditing Group.

63

How We Operate

How We Operate

Financial Summary
Key Financial Indicators (Year ended March 31)

1

Revenue Structure

The JICPA’s main sources of revenue comprise the following three categories.

Standard memberships are ¥6,000 per month, while associate memberships are ¥1,500 per month.

Membership fees borne equally by members
Standard fee / Chapter fee

Membership fees borne by members who
engage in auditing that is the exclusive purview of CPAs
Auditing membership fee

Business revenue

Chapter fees are distinct from standard membership fees. Chapter fees support the specific operationsof each regional chapter and are borne by the respective chapter’s members. These fees, ranging
from ¥3,500 to ¥4,500 per month, depend on such factors as the size and number of members of theregional chapter.

Members who form agreements pertaining to the services described in Article 2-1 of the Certified Public
Accountants Act or the services specified in the membership fee rules (commonly referred to as audit
agreements) are required to pay the JICPA a certain percentage of the audit fees they receive for the
fiscal years pertaining to such agreements. The rates applied vary slightly by audit type.
* For audits pertaining to fiscal years ending on or after December 1, 2020, a flat rate of 1% is applied.

(Millions of yen)

2017

2018

2019

2020

2021

Ordinary revenues

6,326

6,502

6,643

6,837

7,260

Ordinary expenses

6,385

6,561

6,868

6,656

6,103

Net ordinary changes

(59)

(59)

(225)

181

1,157

Total changes of unrestricted net assets

(55)

(60)

175

855

1,160

Unrestricted net assets at end of year

11,441

11,381

11,557

12,412

13,573

Restricted net assets at end of year

919

903

879

849

853

Cash flows from operating activities

221

219

(112)

139

1,393

Cash flows from investing activities(1,974)

753

(50)

90

(723)

Cash flows from financing activities

—

—

—

—

—

2,318

3,291

3,128

3,358

4,028

Cash and cash equivalents at end of year

Revenues from the book sales of publishing operations, final CPA assessment fees, educational seminar
fees, etc.

Ordinary Revenues and Ordinary Expenses (Year ended March 31)

In the year ended March 31, 2021 (fiscal 2021), the JICPA collected standard membership fees of ¥2,291 million, regional
chapter fees of ¥1,411 million, and auditing membership fees of ¥3,130 million. The total of these fees, ¥6,833 million, represented approximately 90% of the JICPA’s ¥7,260 million in ordinary revenues for the year.

Fiscal 2021 Financial Results

In fiscal 2021, the JICPA recorded a positive net change, amounting to ¥1,157 million, on its statements of changes in net assets.*
Compared with fiscal 2020, ordinary revenues increased. This was due to a hike in the standard membership fee in April
2020 as well as a rise in auditing membership fees reflecting increased compensation for statutory audits, including thoseof newly mandated matters. Ordinary expenses were down, reflecting changes in institute operations due to the COVID-19
pandemic, such as the cancellation or postponement of measures and cancellation of travel.
For CPAs to meet society’s expectations and demands, the JICPA must continue to reinforce its frameworks for supporting
CPAs as they engage in expanding and diversifying work. We will continue to examine and discuss the JICPA’s financial structure to ensure adequate support for institute activities with a view toward changes in society after the COVID-19 pandemic.
* As of the publication of this report, the fiscal 2021 financial results are still under calculation and subject to change. The final results will be published on the webpage below(in Japanese).

7,260
7,000

6,326 6,385

6,502 6,561

6,643

6,868

6,837

6,656
6,103

6,000
5,500
5,000

2017

2018

2019

2020

2021

Net Ordinary Changes and Breakdown of Ordinary Expenses (Year ended March 31)
Operating costs (left scale)(Millions of yen)

Administrative costs (left scale)

7,500
6,000

Activity Reports and Plans/Budget and Financial Results (in Japanese)
https://jicpa.or.jp/about/activity/report/

Ordinary expenses

7,500

6,500

2

Ordinary revenues(Millions of yen)

Net Ordinary Changes (right scale)

1,157
2,300

2,376

2,366

2,465

2,357

4,500

(Millions of yen)

1,200
900
600
300

3,000

4,085

4,185

1,500

(59)

(59)

2017

2018

4,502

4,191

3,746

0
-100

(225)

181

-200
-300

0

64

2019

2020

2021

65

4-4-1, Kudan-Minami, Chiyoda-ku, Tokyo 102-8264, Japan
https://jicpa.or.jp/english/

August 2021
©The Japanese Institute of Certified Public Accountants
No part of this report may be reproduced without permission.