April 7th, 2022
To JICPA members
The Japanese Institute of Certified Public Accountants
Audit Considerations for the Fiscal Year Ended March 31, 2022 (Summary)(Regarding audit responses in light of the current international situation
surrounding Ukraine)
Please find below the summarized English translation of the original in Japanese.
Please be reminded that JICPA shall provide this English translation to be used solely asa reference material (concise translation, not word-for-word translation of original fullsentences) to aid in the understanding of our original release in Japanese.
The international situation surrounding Ukraine has affected the business activities of thecompanies and auditors operating globally, and it has been reported that some Japanesecompanies have also been affected. The auditor considers the possibility that businessrisks and other factors may give rise to a material misstatement of the financial
statements through obtaining an understanding of the impact of the international situation
surrounding Ukraine on the business activities of the audited entity, and is required toobtain sufficient appropriate audit evidence to express an audit opinion. The following arethe matters the auditor should be aware of during the audit for the fiscal year ended March31, 2022. Additional matters may be added as the situation changed. The following
provisions in the Auditing Standards Committee Statement (ASCS1) 315 “Identifying andAssessing the Risks of Material Misstatement” and the ASCS 540 “Auditing Accounting
Estimates and related Disclosures” are based on the provisions applied in principle forthe fiscal year ended March 31, 2022.
1. Communication with management and those charged with governanceIn order to provide a basis for the identification and assessment of risks of material
misstatement under the current international situation surrounding Ukraine, it is considered

1Auditing standards generally accepted in Japan consist of Auditing Standards codified by the BusinessAccounting Council (BAC), and Auditing Standards Committee Statements (ASCSs) and a Quality Control
Standard Committee Statement (QCSCS) issued by the Japanese Institute of Certified Public Accountants(JICPA). The ASCSs and a QCSCS are developed based on Auditing Standards codified by the BAC, and toconverge with the International Standards of Auditing (ISA) and the International Standard on Quality
Control 1 (ISQC 1) issued by the International Auditing and Assurance Standards Board (IAASB)."-1-

to communicate with the management and those charged with governance of the audited
entity in a timely manner to understand how management assesses and responds to therisks regarding the current and future situation. (ASCS 315, Paragraph 5(1))
2. Consideration of whether or not the risk assessment needs to be revised basedon the situation
If there is direct or indirect impact on the business activities of the audited entity withrespect to the current international situation surrounding Ukraine, the auditor needs toconsider whether to update and change the overall audit strategy and the audit plan asnecessary during the course of the audit in accordance with the paragraph 9 of ASCS
300 “Planning an Audit of Financial Statement”. As a result of the need to update andchange the overall audit strategy or the audit plan, it may be necessary to update andchange the nature, timing and extent of originally planned further audit procedures.
3. Auditing Accounting Estimates
The impact of the current international situation surrounding Ukraine on the business
operated by the audited entity, as described in Section 2 above, is expected to affect thevarious assumptions on which the accounting estimates made by management are based.
In addition, at the moment, this situation has not yet been resolved, which is considered
to be increasing the estimation uncertainty. Considering the impact of changes incircumstances on the risk assessment of the accounting estimates, the auditor considers
whether to revise the risk assessment and modify the further planned audit procedures
accordingly. (ASCS 315, Paragraphs 30 and A38)
For the environment with a high degree of estimation uncertainty, such as when theoutcome of the events is uncertain, “Audit Consideration related to COVID-19 (Part 2)”
published by JICPA (revised on May 12, 2020) may also provide useful guidance.
It should be noted that, in the audit of the financial statements for the year ended March
31, 2022, the auditor shall include in the auditor's report, those matters that, in theauditor’s professional judgment, were of most significance in the audit of the financial
statements as key audit matters with respect to the accounting estimates.
4. Communicating key audit matters in the independent auditor's report
The purpose of communicating key audit matters is to enhance the communicative valueof the auditor’s report by providing greater transparency about the audit that wasperformed. The auditors consider carefully the impact of the current international situation
surrounding Ukraine.
-2-In determining those matters that required significant auditor attention in performing theaudit from the matters communicated with those charged with governance, the auditor
needs to consider the direct and indirect impact of the international situation surrounding
Ukraine on the audited entity in accordance with ASCS 701 “Communicating Key Audit
Matters in the independent Auditor’s Report” Paragraph 8.
The auditor shall determine which of the matters determined in accordance withparagraph 9 were of most significance in the audit of the financial statements of thecurrent period and therefore are the key audit matters. (ASCS 701, Paragraph 9)
5. Group audit
When there are restrictions on the corporate activities of the components or on the workof the component auditors due to the current international situation surrounding Ukraine,or when the risks of material misstatement and/or the significant risks of the groupfinancial statement are newly identified, the group audit team will need to communicate
more closely with the audited entity and the component auditors. The group auditor
shall evaluate the effect on the group audit opinion in instances where there has been an
inability to obtain sufficient appropriate audit evidence. (ASCS 600, Paragraph 44)
6. Written representations from the management
The auditor may ask management to make written representations regarding the impactof the current international situation surrounding Ukraine on the business. In accordancewith ASCS 580 “Written Representations” and other ASCSs, in some cases it may benecessary for the auditor to confirm the appropriateness of accounting or thecompleteness of information provided from management.
7. Other information
ASCS 720 “The Auditor's Responsibilities Relating to Other Information”, which wasrevised in January 2021, becomes effective from the audits of financial statements for theperiods ending on and after March 31, 2022 as the first year of the mandatory application.
In obtaining the other information, the auditor shall (1) Read the other information, (2)Consider the other information, and then include the result of the auditor’s work in theauditor’s report. In particular, it should be noted that other information may include
descriptions regarding the international situation surrounding Ukraine at this time, suchas the outlook for future business, and therefore the auditor may need to communicate
more closely with management, those charged with governance and others within theentity, in performing procedures required on the other information.
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