It was reported that these losses went undisclosed even after inspections and examinations by the Ministry of Finance and by the Bank of Japan. Distrust of financial statements of Japanese financial institutions and of the supervisory system in general is getting stronger not only in Japan, but also abroad as a result of these collapses. Even in Japan, more and more financial institutions with tight fund positions tend to rely on credit from the Bank of Japan. Many people no longer trust corporate financial statements. However, when economic growth declined and the bubble collapsed, the evaluation of designated money in investment trusts by acquisition cost became a means to conceal losses.
Traditional audits are mere shells.
Auditors of big companies bear the responsibility for carefully inspecting the propriety of balance sheets and profit and loss statements. If auditors do not fulfill this responsibility, they must indemnify third parties who suffered by placing faith in financial statements published by companies. Many companies refrain from having their accounts audited by accountants and incorporated accounting firms known to be strict auditors. Distrust of internal auditing systems of Japanese companies is increasing. This revelation led to a recognition that securities companies did not fulfill the fiduciary duties they are obligated by law to fulfill.