RESTRICTED
WORLD TRADE S/WPPS/W/7/Add.16
12September 1996
ORGANIZATION
(96-3548)
Working Party onProfessional Services Original: English
COMMUNICATION FROM JAPAN
Response tothequestionnaire ontheaccountancy sector
Thefollowing communication iscirculated attherequest ofJapan.
________
I. GENERAL
1. What aretheprofessional titlesofaccountants inyourcountry? Arethese professional titles
protected? Please specify how.
Seeresponse toB3OECD survey.
"KOUNIN-KAIKEISHI(certified public Accountant)" Protected bylaw.
2. Howistheaccountancy sector regulated inyourcountry: bylaw,professional self-regulation,
acombination ofboth?
Seeresponse toB1andB2IFAC survey.
Bylawandbyprofessional self-regulation.
3. Arethere anyprovisions toprotect company names, whether national orforeign, inyour
country?
Theprovisions ofJapanese Commercial Code orinternational conventions towhich Japan is
aparty mayapply ininstances where atradename isperceived asbeing deceptively similar
toother trademarked name.
With respect toaccounting firms (audit corporation), noperson other thanaudit corporation
canusethewords "audit corporation" init'sname.
Seeresponse toA6OECD survey.
4. What aretheprofessional bodies inyourcountry? Aretheyrecognised bylawasaregulatory
ordisciplinary bodyfortheaccountancy profession inyourcountry, orarethese functions
fulfilled byother institutions (please specify)?
TheJapanese Institute ofCertified Public Accountants isthenational professional body. See
response toA2,B4andB5IFAC survey.S/WPPS/W/7/Add.16
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5. How many members dothese professional bodies have? What istheestimated proportion
ofthose inpublic practice?
In1995, of10,424 JICPA members, almost allqualified were inpublic practice.
6. What isthescope ofactivities regularly practised byaccountants inyourcountry?
Seeresponse toB8,B9.1 andB9.2 IFAC survey.
7. Which ofthese activities areregulated inyourcountry?
Seeresponse toB10IFAC survey.
InJapan, apractitioner mustbelicensed asa"certified public accountant" (Konin-kaikeishi)
toperform audits ofcompanies.
8. Which ofthese activities arereserved bylawtoaccountants, shared byaccountants withother
professions (please specify), orevenforbidden toaccountants inyourcountry, e.g.byfull
prohibition orbynotallowing cumulation ofcertain activities which areconsidered
incompatible ormutually exclusive?
SeeAnswer toQuestion 7.
II. QUALIFICATION REQUIREMENTS
9. What arethequalification requirements forthese activities inyour country interms of
university/higher education degree, practice andprofessional exam? Specify thenumber
ofyears required foreach element, andthedifferences according totheactivities (audit,
insolvency, tax,etc.)covered bythequalification.
Seeresponse toC3.2 andC3.3 IFAC survey.
10. Arethere anypre-conditions tomeet tostarttheprofessional education: minimum age,
particular diploma ortitle,prior education, registration withaprofessional body, payment
ofafee,other (please specify)?
No.
11. What arethesubjects tobecovered bytheeducation: accounting, audit, tax,general law,
economics, ethics, information technology, other (please specify)?
There isnoqualification requirements astouniversity/higher education degree. However, the
subjects covered bythe2ndCPA exam, while the1stexam covers onlygeneral knowledge
equivalent totheliberal artscourse incollege/university, arebookkeeping, financial accounting,
costaccounting, auditing theory, Commercial Code andtwochoices outofbusiness
administration, economics andCivil Code.
Before taking the3rd(final) exam, applicant must complete the"Practice Training Course"
attherelevant authority, inwhich accounting, auditing, financial analysis, economics, ethics,
management, tax,information technology andrelevant lawsarecovered.S/WPPS/W/7/Add.16
Page3
III. TECHNICAL STANDARDS AND ETHICS
12. Inrelation towhich activities donational standards exist(audit, accounting, insolvency,
other)? Please specify theirmain policy objectives.
There arenational standards forauditing, inorder toensure certain levelofquality ofaudit
services, andforaccounting, inorder torecognize, measure andpresent inafairmanner
financial condition andresults ofoperation ofacompany andensure comparability ofthe
financial information.
Withrespect toinsolvency practice, thereistheBankruptcy Law.(However, insolvency practice
isgenerally handled bythelegalprofession.)
13. Which bodyorinstitution develops thesestandards andmonitors theirimplementation? What
aretheconsequences ofabreach ofthestandards (fortheprofessional, forclients, etc.)?
Accounting standards andauditing standards aredeveloped bytheBusiness Accounting
Deliberation Council (BADC), aconsultative body totheMinister ofFinance.
There isnobodyorinstitution thatregularly "monitor" thecompliance withthese standards.
Incasethere isamaterial falsestatement inthefinancial statements, thecompany andthe
accountant maybesubject tocivilliability andcriminal penalty. Inaddition, theaccountant
maybesubject tosanctions suchassuspension ofpractice andcancellation ofregistration.
14. Aretheinternational standards developed byIFAC (International Education Standards and
Guidelines, International Standards onAuditing) andIASC (International Accounting
Standards) recognised orusedinyourcountry? Ifyes,please explain how. Ifno,please
explain why.
International Education Standards andGuidelines, International Standards onAuditing (ISA)
andInternational Accounting Standards (IAS) arenotrecognized inJapan, because Japan has
itsownstandards. However, harmonization withtheinternational standards areconsidered
byBADC etc.totheextent practical.
With respect toInternational Accounting Standards, theInternational Accounting Standards
Committee isnowworking todevelop acomprehensive setofstandards which, ifconsidered
asacceptable, canbeendorsed bytheInternational Organization ofSecurities Commissions
(IOSCO) asanalternative tonational standards incross-border offerings andlistings.
Withrespect toInternational Standards onAuditing, discussion isnowunderway intheIOSCO
astotheendorsement ofthese standards asauditing standards thatcanbeusedasalternative
tonational standards incross-border offerings andlistings.
15. Inrelation towhich activities does aparticular ethical code exist (audit, accounting,
insolvency, other)? Please specify itsmain policy objectives.
There isaRuleofConduct forpractices ofaccountants ingeneral.
TheRules areprescribed bytheJapanese Institute ofCertified Public Accountants (JICPA)
toensure reliable professional services andtoprotect thepublic interest.S/WPPS/W/7/Add.16
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16. Which body orinstitution develops thiscodeandmonitors itsimplementation? What are
theconsequences incaseofbreach oftheethical codebyaprofessional orafirm?
SeeAnswer toQuestion 15.
17. Arethere restrictions onmarketing, solicitation, advertising?
Seeresponse toC6OECD survey.
18. Arethere restrictions onfee-setting (minimum/maximum levels imposed, indicative scale,
etc.)?
Seeresponse toC7OECD survey.
IV. LICENSING REQUIREMENTS AND PROCEDURES
19. Apart fromthequalification requirements, whatarethelicensing requirements forindividuals
inyourcountry?
Seeresponse toB1,B4,B6andCOECD survey.
20. Arethere anyconditions imposed tobeeligible formembership oftherelevant professional
body(ies)? Please specify.
There isnocondition astotheeligibility formembership intheJICPA other thanthe
qualification requirements.
21. Arethere specific licensing requirements forprofessional firms?
There isnolicensing requirements forfirms. But,firms must beregistered totheJICPA.
22. Cananapplication forlicensing befiledatanytimeoftheyearorarethere specific dates
torespect? Howlongdoesittaketocomplete thewhole licensing procedure? Please specify
incaseofdifferences between individuals andfirms.
Seeresponse toC10IFAC survey.
Licensing applications maybefiledbyaperson orafirmatanytime, buttheCPAexamination
isonlyonceayear.
23. Arethere differences interms oflicensing requirements and/or procedures, according to
theactivities covered bythelicence (audit, insolvency, etc.)? Please specify. What kind
ofdocumentation isnecessary/accepted? Aredocuments issued inother countries acceptable?
Please specify.
Seeresponse toB11andC1IFAC survey.S/WPPS/W/7/Add.16
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24. What happens when thelicensing conditions arenolonger respected bytheindividual or
thefirm?
Incasethelicensing requirement isnolonger satisfied, oneisnotallowed toperform regulated
service, i.e.,audit service.
V. RECOGNITION OFQUALIFICATIONS
25. Arethereanypossibilitiesfortakingaccountofqualificationsacquiredbyforeignprofessionals
inanother country? Arethere bilateral agreements withother countries inthisrespect?
Seeresponse toB3,B5andB6bOECD survey.
26. Arethere anyautomatic recognition ormutual recognition agreements between your
professional bodies andtheircounterparts inother countries? Ifso,please specify themain
characteristics ofsuchagreements; ifnot,please explain why.
Seeresponse toH3IFAC survey.
27. Where possibilities oftaking account offoreign qualifications exist, isafulllocalexamination
oralocaltraining exceeding 12months required? Please specify. Isalocallicence always
necessary topractice aregulated accountancy activity? Please specify when thisisnotthe
case.
Seeresponse toB6OECD survey andB7IFAC survey.
28. Whataretheaccreditation/licensingrequirementsimposedonforeignprofessionalsauthorised
topractice intheirhome country? Maycertain (regulated) activities becarried outonthe
basis ofaforeign licence?
Seeresponse toB1,B2,B3,B4B5andB6OECD survey.
VI. REGULATIONS GOVERNING THE ESTABLISHMENT OFACOMMERCIAL
PRESENCE
29. Arethere anyrestrictions ontheform under which onecanestablish (partnership,
incorporation, other)? Please specify.
Seeresponse toA1OECD survey.
30. Arethere restrictions onforeign direct investment andownership, including restrictions
applying tonotlocally qualified individuals orfirms? Please specify.
Seeresponse toA2OECD survey.
31. Isthere arequirement ofaminimum number orpercentage oflocal directors, managers
orstaff(please specify)?
Seeresponse toA2OECD survey.S/WPPS/W/7/Add.16
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32. Arethererestrictionsontheabilityoflocallyestablishedfirmstodevelopinternationalrelations
(membershipofaninternationalnetwork,associationwithforeignfirms,etc.)?Pleasespecify.
Seeresponse toA5OECD survey.
33. Istheuseofinternational orforeign names restricted forfirms?
Seeresponse toA6OECD survey.
VII. REGULATIONSGOVERNINGTHEENTRYANDTEMPORARYSTAYOFNATURAL
PERSONS FOR THE PURPOSE OFSUPPLYING ACCOUNTANCY SERVICES
34. Istheentry andstayofprofessionals subject tolabour market testsoranyother restrictions?
Please specify.
Seeresponse toA4andC2OECD survey.
35. Isthere anyprocedure facilitating thetemporary entry andstayofprofessionals tosupply
accountancy services? Please explain.
Seeresponse toB2OECD survey.
36. Arethereanyrestrictions onhiring oflocalprofessionals byforeign firms andprofessionals?
Please explain.
Seeresponse toC4OECD survey.
VIII. NATIONALITY/RESIDENCY REQUIREMENTS
37. Isacondition ofnationality/citizenship imposed topractice certain activities, tostartan
education, toobtain alicence, tobecome member ofaprofessional body, etc.? Please specify.
Seeresponse toB1OECD survey.
38. Isacondition ofestablishment, prior residency orresidency imposed topractice certain
activities, toobtain alicence, tobecome member ofaprofessional body, etc.? Please specify
theconditions andthedefinition ofestablishment, residency, etc.when relevant. Isitpossible
tohaveaprofessional establishment inmore thanonecountry?
Seeresponse toB4andC1OECD survey.